DoorDash to buy Instacart for $17 billion

DoorDash Inc. has agreed to purchase Instacart Corp. for $17 billion. The transaction represents a major consolidation in the grocery delivery sector and aims to merge the two companies' operational strengths.

Under the terms of the deal, the Instacart brand name and mobile application will continue to operate. Current Instacart shoppers, who are independent contractors, will maintain their existing workflows for fulfilling orders. Retailers will retain the option to partner with either Instacart or DoorDash for delivery services. DoorDash stated that Instacart customers will gain access to 50,000 additional stores currently covered by the DoorDash network.

Instacart, which launched in 2012, focuses on grocery and convenience store deliveries in the United States and Canada. The company employs 600,000 independent contractor shoppers. According to corporate filings, these workers completed 338 million orders during the previous year. Instacart currently holds a market valuation of $14 billion.

DoorDash, founded in San Francisco in 2013, expanded from restaurant delivery into pet food and electronics. The company operates in 40 countries and utilized a network of 9 million independent delivery workers to complete more than 3 billion orders last year. DoorDash maintains a market value of $73 billion.

The market shift reflects DoorDash's aggressive expansion since it entered the grocery space in 2020. Consumer Edge data indicates that DoorDash’s share of spending on U.S. delivery platforms increased from 44% to 59% over the last five years. During the same period, Instacart’s share declined from 26% to 18%. Uber Eats maintained a steady share of just under 20%.

Tony Xu, co-founder and chief executive of DoorDash, explained that the acquisition combines Instacart's grocery focus with DoorDash's logistics capabilities. “Grocery is one of the hardest things to get right online. Someone has to pick a ripe avocado, find a substitute you’d choose yourself, and get the ice cream to you before it melts,” Xu said in a statement. “Together, we could give stores of every size more of those tools and unlock the potential of grocery delivery.”

The deal may impact existing retail partnerships. Instacart currently offers delivery services for Walmart, a retailer that stopped using DoorDash for that purpose in 2022. DoorDash previously expanded its partnership with Kroger to include the full inventory of 2,700 U.S. stores and added delivery from Costco last month.