Tony Xu to Pay $17 Billion for Instacart to Build Grocery Logistics Powerhouse
The acquisition combines two major US grocery delivery networks, with the Instacart brand and app remaining operational under new ownership.
By Renata Mehta ·
DoorDash will purchase Instacart for $17 billion, merging the two largest grocery delivery platforms in the United States. The deal preserves the Instacart name and application, allowing existing customers to continue placing orders through their familiar interface. Supermarkets will retain the option to partner with either brand, and Instacart users will gain access to an additional 50,000 stores currently served by DoorDash.
The two companies have been growing in parallel since the early 2010s. Instacart launched in 2012 and focused exclusively on grocery and convenience store delivery in the US and Canada. Its network of 600,000 independent contractors completed 338 million orders last year. DoorDash, founded in San Francisco in 2013, began as a restaurant delivery service before expanding into pet supplies and electronics. It now operates in 40 countries, with 9 million independent drivers completing over 3 billion orders annually.
DoorDash entered the grocery market in 2020 as pandemic demand surged. Initial partnerships with major chains were limited. Kroger, one of the largest grocery retailers in the country, began working with DoorDash in 2022 but restricted the service to flowers, sushi, and prepared foods from a small number of locations. That restriction ended last fall when DoorDash gained access to the full inventory of Kroger’s 2,700 US stores. The company added Costco to its network last month.
Tony Xu, DoorDash’s co-founder and CEO, stated that the acquisition combines Instacart’s grocery expertise with DoorDash’s logistics infrastructure. He noted in a statement that grocery delivery is complex, requiring staff to select ripe produce and keep items like ice cream cold. Xu said the combined entity will provide more tools to retailers of all sizes to improve grocery delivery performance.
Market share data from Consumer Edge shows a shift in the sector over the past five years. Instacart’s share of US grocery delivery spending dropped from 26% to 18%. DoorDash’s share rose from 44% to 59% in the same period. Uber Eats maintained a steady position just below 20%.
The merger leaves the status of some existing partnerships uncertain. Instacart currently delivers for Walmart, while DoorDash ceased Walmart deliveries in 2022. The two companies are expected to finalize the transaction in the coming weeks, subject to regulatory approvals.
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