DoorDash Pays $17 Billion for Instacart, Merging Two Grocery Giants

DoorDash will pay $17 billion to acquire Instacart, a move that consolidates two major players in the grocery delivery market. The transaction values Instacart at a market cap of $14 billion, bringing it under the umbrella of DoorDash, which holds a $73 billion valuation.

The merger combines Instacart’s 600,000 independent shoppers, who completed 338 million orders last year, with DoorDash’s network of 9 million delivery drivers. DoorDash, which expanded from restaurant delivery to include pet food and electronics in 2020, processed more than 3 billion orders globally across 40 countries in the same period. Instacart, founded in 2012, specializes in grocery and convenience store delivery in the United States and Canada.

Customers using the Instacart app will retain the brand name and interface. Supermarkets will have the option to work with either Instacart or DoorDash. Instacart users will immediately gain access to 50,000 additional stores covered by the DoorDash network, a figure cited by the company in its announcement.

The acquisition follows DoorDash’s recent expansion into major retail partnerships. The company began delivering groceries in 2020 during the pandemic. While early supermarket partners were cautious, Kroger initially limited DoorDash to specific items in 2022. Last fall, that partnership expanded to include the full inventory of Kroger’s 2,700 U.S. stores. DoorDash added Costco deliveries last month.

Tony Xu, DoorDash’s co-founder and CEO, stated the deal merges Instacart’s grocery expertise with DoorDash’s logistics capabilities. In a statement, Xu noted that grocery delivery is difficult online, requiring staff to select ripe produce and keep cold items intact. He added that the combined entity will provide tools to retailers of all sizes to unlock the potential of grocery delivery.

Market share data from Consumer Edge shows Instacart’s influence declining over the past five years. Its share of U.S. grocery delivery platform spending dropped from 26% to 18%. During that same period, DoorDash’s share rose from 44% to 59%. Uber Eats remained stable, holding a share just under 20%.

The deal leaves some existing retail partnerships unclear. Instacart currently offers delivery from Walmart, but DoorDash stopped offering Walmart deliveries in 2022. The companies have not yet detailed how they will manage this overlap.