DoorDash Proposes $17 Billion Acquisition of Instacart

DoorDash has proposed to purchase Instacart for $17 billion, a move that would consolidate the grocery delivery market under one corporate umbrella.

The San Francisco-based company stated that the Instacart name and mobile application would remain active. Independent contractors known as shoppers would continue fulfilling orders in the same manner, while grocery retailers would retain the option to work with either platform. DoorDash indicated that Instacart customers would gain access to 50,000 additional stores currently covered by its delivery network.

Instacart, which launched in 2012, focuses on grocery and convenience store deliveries across the United States and Canada. According to company filings, its 600,000 independent contractors completed 338 million orders in the previous year. The company’s current market value stands at $14 billion. DoorDash, founded in 2013, has expanded beyond restaurant delivery to include pet food and electronics. It operates in 40 countries and processed more than 3 billion orders last year through a workforce of 9 million independent delivery workers. Its market value is $73 billion.

DoorDash entered the grocery sector in 2020 during a surge in pandemic demand. Initial retailer participation was limited; for instance, Kroger partnered with the company in 2022 but restricted deliveries to flowers, sushi, and prepared meals from select locations. That partnership expanded last fall to include the full inventory of Kroger’s 2,700 U.S. stores. DoorDash also secured delivery rights from Costco last month.

Tony Xu, co-founder and CEO of DoorDash, stated that the acquisition combines Instacart’s grocery expertise with DoorDash’s logistics capabilities. In a statement, Xu noted that grocery delivery requires precise execution, such as selecting ripe produce and managing temperature-sensitive items. He said the merger would provide stores of all sizes with improved tools for online fulfillment.

Market data from Consumer Edge shows a shift in spending over the past five years. Instacart’s share of U.S. delivery platform spending dropped from 26% to 18%, while DoorDash’s share rose from 44% to 59%. Uber Eats maintained a share of just under 20% during that period.

The transaction leaves some existing retailer partnerships in uncertain status. Instacart currently provides delivery services for Walmart, but DoorDash ceased offering Walmart delivery in 2022.