DoorDash offers $17 billion for Instacart in what would be a big consolidation for grocery delivery

DoorDash is offering $17 billion to buy Instacart to supercharge its grocery delivery business in what would be a big consolidation in grocery delivery.

DoorDash said the Instacart brand name and app will remain, and Instacart shoppers would be able to continue fulfilling orders as before. Grocers can also choose to work with Instacart or DoorDash. Instacart customers will now have access to 50,000 additional stores covered by DoorDash, the company said.

Instacart, founded in 2012, specializes in grocery and convenience store delivery in the U.S. and Canada. Its 600,000 “shoppers” — who are independent contractors — completed 338 million orders last year, according to company filings. Instacart has a market value of $14 billion.

DoorDash, founded in San Francisco in 2013, began as a restaurant delivery business but has expanded to pet food and electronics. Operating in 40 countries, it completed more than 3 billion orders last year using a network of 9 million independent delivery workers. It has a market value of $73 billion.

DoorDash began delivering groceries in 2020 amid a surge in pandemic-era demand. Grocers were initially cautious. Kroger partnered with the San Francisco company in 2022 but initially allowed the company to deliver only flowers, sushi and prepared meals from a limited number of stores.

The partnership with one of the nation’s largest grocery chains expanded last fall, and DoorDash now lists the full inventory of all 2,700 U.S. Kroger stores in its online marketplace. DoorDash scored another coup last month when it added delivery from Costco.

Tony Xu, co-founder and CEO of DoorDash, said the acquisition will combine Instacart’s expertise in grocery with DoorDash’s expertise in logistics and delivery.

“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.”

DoorDash’s aggressive market-share gains by have hurt Instacart. Five years ago, Instacart commanded 26% of spending on U.S. delivery platforms; that share has fallen to 18%, according to Consumer Edge, a market research company. DoorDash’s share grew from 44% to 59% in that same period. Uber Eats’ share held steady at just under 20%.

It’s not yet clear what the deal will mean for some partnerships. Instacart offers delivery from Walmart, for example, but DoorDash stopped providing Walmart delivery in 2022.

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