DoorDash Bids $17 Billion to Acquire Instacart

DoorDash has put a $17 billion price tag on Instacart, proposing a deal that would merge the two dominant forces in American grocery delivery. The offer significantly exceeds Instacart's current market value of $14 billion.

Under the terms outlined by DoorDash, the Instacart name and application would remain operational. Existing Instacart shoppers, who are independent contractors, would continue fulfilling orders as they do now. Retailers would retain the option to partner with either Instacart or DoorDash. DoorDash stated that Instacart customers would gain access to 50,000 additional stores currently served by DoorDash.

Instacart, which launched in 2012, specializes in grocery and convenience store delivery across the United States and Canada. Its network of 600,000 independent shoppers completed 338 million orders in the past year. DoorDash, founded in San Francisco in 2013, began as a restaurant delivery service and has since expanded into pet food and electronics. The company operates in 40 countries and relies on a workforce of 9 million independent delivery workers. DoorDash processed more than 3 billion orders last year and holds a market value of $73 billion.

DoorDash entered the grocery sector in 2020 during a spike in pandemic-era demand. Initial adoption by major grocers was slow. Kroger, one of the largest chains in the nation, began working with DoorDash in 2022 but initially limited the partnership to flowers, sushi, and prepared meals from select locations. The agreement expanded last fall, and DoorDash now lists the full inventory of all 2,700 U.S. Kroger stores. Last month, DoorDash added Costco to its delivery roster.

Tony Xu, co-founder and CEO of DoorDash, said the acquisition would blend Instacart's grocery focus with DoorDash's logistics infrastructure. In a statement, Xu noted that grocery delivery requires specific handling, such as selecting ripe produce and keeping ice cream frozen. He argued that the combined entity would provide tools to stores of all sizes to unlock the potential of online grocery shopping.

Market research from Consumer Edge shows a shift in spending shares over the last five years. Instacart's share of U.S. delivery platform spending dropped from 26% to 18%. During the same period, DoorDash's share increased from 44% to 59%, while Uber Eats remained steady at just under 20%.

The deal leaves the status of certain retail partnerships uncertain. Instacart currently offers delivery from Walmart, a service DoorDash discontinued in 2022. It is not yet clear how this conflict would be resolved under a unified corporate structure.