DoorDash offers $17 billion to acquire Instacart

DoorDash has proposed a $17 billion acquisition of Instacart, a move that would consolidate two major competitors in the grocery delivery market. The offer positions the San Francisco-based company to merge its logistics network with Instacart’s specialized grocery operations.

Under the terms of the deal, the Instacart brand and application would remain operational. The companies stated that Instacart shoppers, who are independent contractors, would continue fulfilling orders as they currently do. Grocers would retain the option to partner with either Instacart or DoorDash. Additionally, Instacart customers would gain access to 50,000 additional stores currently covered by DoorDash’s platform.

Instacart, founded in 2012, focuses on grocery and convenience store delivery across the U.S. and Canada. According to company filings, its 600,000 independent contractor shoppers completed 338 million orders last year. The company currently holds a market value of $14 billion. DoorDash, founded in 2013, expanded from restaurant delivery to include pet food and electronics. It operates in 40 countries and utilizes a network of 9 million independent delivery workers. DoorDash completed more than 3 billion orders last year and has a market value of $73 billion.

Tony Xu, co-founder and CEO of DoorDash, said the acquisition will combine Instacart’s grocery expertise 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. He added that the combined entity could provide tools to stores of every size.

DoorDash entered the grocery sector in 2020 during a surge in pandemic-era demand. Initial partnerships with major chains were limited. Kroger began working with DoorDash in 2022, initially allowing delivery of only flowers, sushi, and prepared meals from a limited number of locations. That relationship expanded last fall, and DoorDash now lists the full inventory of all 2,700 U.S. Kroger stores. The company also added delivery from Costco last month.

Market research firm Consumer Edge reports that Instacart’s share of spending on U.S. delivery platforms has declined from 26% five years ago to 18% today. During the same period, DoorDash’s share grew from 44% to 59%. Uber Eats maintained a share of just under 20%.

The transaction creates uncertainty regarding existing retail partnerships. Instacart currently offers delivery from Walmart, a service DoorDash discontinued in 2022.