DoorDash to buy Instacart in $17 billion deal

DoorDash will purchase Instacart for $17 billion. The move combines two of the largest grocery delivery services in North America. Instacart will keep its name and app. Current Instacart shoppers can continue working under the Instacart brand. Supermarkets can choose to partner with either Instacart or DoorDash. Instacart customers will gain access to an additional 50,000 stores served by DoorDash.

Instacart was founded in 2012 and focuses on grocery and convenience store delivery in the United States and Canada. The company employs 600,000 independent contractors known as shoppers. Those workers completed 338 million orders last year. Instacart currently has a market value of $14 billion. DoorDash was founded in San Francisco in 2013. It started as a restaurant delivery service and expanded into pet food and electronics. DoorDash operates in 40 countries. It completed more than 3 billion orders last year through a network of 9 million independent drivers. Its market value is $73 billion.

DoorDash began grocery delivery in 2020 during a spike in pandemic demand. Supermarkets were initially cautious about the partnership. Kroger signed a deal with DoorDash in 2022 but limited it to flowers, sushi, and prepared foods from a small number of locations. The partnership expanded last autumn. DoorDash now offers full inventory from all 2,700 Kroger stores in the United States. DoorDash added Costco deliveries last month.

Tony Xu, DoorDash’s co-founder and CEO, said the deal merges Instacart’s grocery expertise with DoorDash’s logistics capabilities. He noted that grocery delivery is difficult to execute online. “Someone has to pick a ripe avocado, find a substitute that you’d pick yourself and bring home the ice cream before it melts,” Xu said in a statement. He added that the combined company could give stores of all sizes more tools to unlock the potential of grocery delivery.

DoorDash’s market share has grown while Instacart’s has shrunk. Five years ago, Instacart held 26% of the spending on delivery platforms in the United States. That share fell to 18%, according to Consumer Edge. DoorDash’s share rose from 44% to 59% in the same period. Uber Eats’ share remained stable at just under 20%.

It is not yet clear how the deal will affect existing partnerships. Instacart offers deliveries from Walmart. DoorDash stopped offering Walmart deliveries in 2022.