DoorDash agrees $17bn deal to acquire grocery delivery rival Instacart
The $17bn deal keeps the Instacart app and brand, gives Instacart customers access to 50,000 more stores and follows DoorDash's push into groceries since 2020.
At a glance
- DoorDash has agreed to acquire Instacart for $17bn, consolidating two major US grocery delivery businesses.
- Instacart's brand, app and shopper network will remain; its customers gain access to 50,000 more stores covered by DoorDash.
- Instacart's share of US delivery spending fell from 26% to 18% in five years, while DoorDash's rose from 44% to 59%.
DoorDash has agreed to acquire Instacart for $17bn, consolidating two of the biggest players in US grocery delivery and expanding DoorDash's grocery business.
DoorDash said the Instacart brand name and app will remain, and Instacart shoppers can continue fulfilling orders for Instacart. Grocers will be able to choose whether to work with Instacart or DoorDash. Instacart customers will gain access to 50,000 additional stores covered by DoorDash, the company said.
Two companies, two models
Instacart, founded in 2012, specialises in grocery and convenience store delivery in the US and Canada. Its 600,000 "shoppers" – independent contractors – completed 338m orders last year, according to company filings, and it has a market value of $14bn.
DoorDash, founded in San Francisco in 2013, began as a restaurant delivery business and has expanded into pet food and electronics. It operates in 40 countries, completed more than 3bn orders last year using a network of 9m independent delivery workers, and has a market value of $73bn.
Grocery push since 2020
DoorDash began delivering groceries in 2020 during a surge in pandemic-era demand. Grocers were initially cautious. Kroger partnered with the San Francisco company in 2022 but at first allowed it to deliver only flowers, sushi and prepared meals from a limited number of stores. The partnership expanded last fall, and DoorDash now lists the full inventory of all 2,700 US Kroger stores in its online marketplace. Last month it added delivery from Costco.
Tony Xu, co-founder and chief executive of DoorDash, said the acquisition would 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."
Market share shift
DoorDash's market-share gains have hurt Instacart. Five years ago Instacart commanded 26% of spending on US delivery platforms; that share has fallen to 18%, according to Consumer Edge, a market research company. DoorDash's share grew from 44% to 59% over the same period, while Uber Eats held steady at just under 20%.
It is 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.
Source: The Guardian Business.
Questions and answers
- How much is DoorDash paying for Instacart?
- DoorDash has agreed to buy Instacart for $17bn. Instacart has a market value of $14bn, while DoorDash's market value is $73bn.
- Will the Instacart app and brand stay after the DoorDash deal?
- Yes. DoorDash said the Instacart brand name and app will remain, Instacart shoppers can keep fulfilling Instacart orders, and grocers can choose to work with either company.
- Why is DoorDash buying Instacart?
- DoorDash says the deal combines Instacart's grocery expertise with its own logistics and delivery expertise, and gives Instacart customers access to 50,000 additional stores.
