Consolidation: DoorDash Seeks $17B Instacart Deal to Merge Grocery Fleets

DoorDash has proposed a $17 billion acquisition of Instacart to consolidate its grocery delivery operations.

The San Francisco-based company stated that the Instacart brand and application will remain separate entities following the close of the deal. Instacart shoppers, who operate as independent contractors, will continue fulfilling orders under their existing protocols. Grocers retain the option to partner with either platform or both. DoorDash said Instacart customers will gain immediate access to 50,000 additional stores currently covered in the DoorDash marketplace.

Founded in 2012, Instacart specializes in grocery and convenience store deliveries across the United States and Canada. Company filings indicate that its workforce of 600,000 independent shoppers completed 338 million orders last year. The company currently holds a market value of $14 billion. DoorDash, founded in 2013, expanded beyond restaurant delivery to include pet food and electronics. It operates in 40 countries and reported more than 3 billion completed orders last year via a network of 9 million independent delivery workers. DoorDash is valued at $73 billion.

DoorDash entered the grocery sector in 2020 during a spike in pandemic-era demand. Initial partnerships with major grocers were limited. Kroger began working with DoorDash in 2022 but restricted the service to flowers, sushi, and prepared meals from a small number of locations. The scope of that partnership expanded last fall to include the full inventory of all 2,700 U.S. Kroger stores. DoorDash also added delivery from Costco last month.

Tony Xu, co-founder and CEO of DoorDash, said the merger combines Instacart's grocery expertise with DoorDash's logistics capabilities. In a statement, Xu noted that grocery delivery requires precise handling, such as selecting ripe produce and preventing frozen items from melting. He said the combined platforms would provide stores of all sizes with tools to improve grocery delivery efficiency.

Market research firm Consumer Edge reported that Instacart's share of U.S. delivery platform spending fell from 26% five years ago to 18% currently. Over that same period, DoorDash's share rose from 44% to 59%. Uber Eats maintained a share of just under 20%.

The transaction's impact on existing partnerships remains under review. Instacart currently provides delivery services for Walmart, while DoorDash discontinued Walmart delivery in 2022.