DoorDash Puts $17 Billion Offer on Instacart as Delivery War Tightens

DoorDash is proposing a $17 billion acquisition of Instacart, a move that would merge the two largest players in the American grocery delivery sector. The offer, announced Thursday, seeks to unify the fragmented market where DoorDash currently holds a 59% share of spending and Instacart has seen its share drop from 26% to 18% over the past five years. If the deal closes, the Instacart brand and app will remain, and its 600,000 independent contractor shoppers will continue operating under the same conditions.

The consolidation comes as DoorDash expands its reach beyond restaurant delivery. Founded in San Francisco in 2013, the company now operates in 40 countries and completed over 3 billion orders last year using a network of 9 million workers. Its foray into grocery delivery began in 2020 during the pandemic. While grocers were initially cautious, Kroger began partnering with DoorDash in 2022, limiting it to flowers and prepared meals. That relationship expanded last fall to include the full inventory of all 2,700 U.S. Kroger stores. DoorDash also added Costco to its platform last month.

Instacart, founded in 2012, specializes in grocery and convenience store delivery in the U.S. and Canada. It fulfilled 338 million orders last year, a fraction of DoorDash's volume. The acquisition would allow consumers to pay a single monthly fee instead of the separate $9.99 charges for DashPass and Instacart+ memberships. Instacart customers would also gain access to 50,000 additional stores currently on the DoorDash platform.

Tony Xu, DoorDash's co-founder and CEO, stated that the merger is designed to help local retailers compete with giants like Walmart, which holds a 21% share of grocery spending. Xu noted that large companies have invested heavily in technology and fulfillment models, allowing them to capture more market share. He said the combination would give every retailer a chance to compete in the modern era.

Walmart has recently entered the restaurant delivery space, partnering with Subway, Dunkin', and Papa Johns. The retailer now lists 2,400 restaurant locations on its delivery platform. This move has added pressure on existing delivery services. Apoorva Mehta, who founded Instacart and left after its 2023 initial public offering, said he and Xu had discussed a merger for years. Mehta argued that combining the platforms would allow them to serve customers who need both grocery and restaurant delivery more effectively.

DoorDash shares rose 6% in early trading on Thursday, while Instacart shares remained flat. The deal requires approval from Instacart shareholders and government regulators. If approved, it is expected to be finalized by the end of 2027 or in early 2028.