Instacart joins DoorDash in $17 billion merger to expand grocery delivery reach

DoorDash has agreed to acquire Instacart for 17 billion dollars, a move that merges the two largest grocery delivery platforms in North America.

Under the terms of the agreement, the Instacart name and mobile application will remain in service. Customers will continue to place orders through the Instacart interface. Supermarkets will have the option to partner with either Instacart or DoorDash.

The merger expands the retail footprint for Instacart shoppers. DoorDash stated that Instacart customers will gain access to 50,000 additional stores currently covered by its delivery network.

Instacart was founded in 2012 and focuses on grocery and convenience store deliveries in the United States and Canada. The company reported a market value of 14 billion dollars. Its workforce consists of 600,000 independent contractors, known as shoppers, who completed 338 million orders last year.

DoorDash was founded in San Francisco in 2013. It began as a restaurant delivery service and has since expanded into pet food and electronics. The company operates in 40 countries and employs a network of 9 million independent delivery workers. DoorDash completed more than 3 billion orders last year and holds a market value of 73 billion dollars.

The shift in market share over the past five years prompted the acquisition. Consumer Edge data shows Instacart's share of US delivery platform spending fell from 26 percent to 18 percent. During the same period, DoorDash's share rose from 44 percent to 59 percent. Uber Eats maintained a stable share just under 20 percent.

Tony Xu, co-founder and CEO of DoorDash, said the deal combines Instacart's grocery expertise with DoorDash's logistics capabilities. He noted in a statement that groceries are difficult to deliver online because workers must select ripe produce, find suitable substitutes, and keep frozen items cold. Xu added that the combined company will provide tools to stores of all sizes to unlock the potential of grocery delivery. The agreement leaves some existing retail partnerships unclear, as Instacart delivers for Walmart while DoorDash ended its Walmart delivery service in 2022.