DoorDash agrees to acquire Instacart for $17 billion, expanding grocery delivery access as competition intensifies across US online delivery platforms.
DoorDash has agreed to acquire Instacart in a $17 billion deal aimed at strengthening its grocery delivery business and expanding access to stores across the United States.
DoorDash said the Instacart brand name and app would remain in place after the acquisition. Instacart shoppers would also continue fulfilling orders through the platform, while grocery retailers would retain the option of working with either Instacart or DoorDash.
The deal will give Instacart customers access to an additional 50,000 stores covered by DoorDash, according to the company.
Founded in 2012, Instacart specialises in grocery and convenience store deliveries across the United States and Canada. Company filings show that its network of 600,000 shoppers, who work as independent contractors, completed 338 million orders last year. The company has a market value of about $14 billion.
DoorDash, founded in San Francisco in 2013, initially focused on restaurant deliveries before expanding into other categories, including pet food and electronics. The company operates in 40 countries and completed more than three billion orders last year through a network of nine million independent delivery workers. Its market value stands at about $73 billion.
DoorDash began offering grocery deliveries in 2020 during a surge in demand for online shopping amid the COVID-19 pandemic. However, grocery retailers were initially cautious about partnering with the company.
Kroger, one of the largest grocery chains in the United States, partnered with DoorDash in 2022, initially allowing deliveries of flowers, sushi and prepared meals from a limited number of stores.
The partnership expanded last year, with DoorDash subsequently listing the full inventory of all 2,700 Kroger stores in the United States on its online marketplace. The company further strengthened its grocery delivery operations last month by adding deliveries from Costco.
DoorDash co-founder and Chief Executive Officer Tony Xu said the acquisition would combine Instacart’s grocery expertise with DoorDash’s logistics and delivery capabilities.
Xu said online grocery shopping remained challenging, particularly when selecting fresh produce, finding suitable substitutes for unavailable items and ensuring frozen products arrived before melting.
He added that the combined businesses could provide retailers of different sizes with better tools and expand the potential of grocery delivery.
The acquisition comes as DoorDash continues to gain market share at Instacart’s expense.
According to market research company Consumer Edge, Instacart’s share of spending on US delivery platforms fell from 26 per cent five years ago to 18 per cent. Over the same period, DoorDash’s share increased from 44 per cent to 59 per cent, while Uber Eats maintained a share of just under 20 per cent.
However, the implications of the acquisition for some existing partnerships remain unclear.
Instacart currently offers grocery deliveries from Walmart, while DoorDash ended its Walmart delivery services in 2022. The future of that arrangement following the acquisition has yet to be established.