DoorDash to buy Instacart for $17 billion in grocery delivery mega merger

DoorDash is set to significantly bolster its grocery operations through a $17 billion purchase of Instacart.According to DoorDash, both the Instacart app and brand will be preserved, allowing Instacart shoppers to keep carrying out orders. Supermarkets and retailers will be able to partner with either service, while Instacart users gain access to 50,000 extra storefronts currently served by DoorDash.Established in 2012, Instacart focuses on grocery and convenience store delivery across the U.S. and Canada. Corporate filings indicate its network of 600,000 independent contractor "shoppers" handled 338 million orders over the past year. Instacart maintains a market valuation of $14 billion.DoorDash was created in San Francisco in 2013 as a meal delivery service, later broadening its scope to include items such as electronics and pet supplies. Today, the $73 billion enterprise spans 40 countries, fulfilling over 3 billion orders last year through 9 million independent couriers.Instacart’s position has been eroded by DoorDash’s rapid expansion (Getty)DoorDash entered the grocery sector in 2020 to meet a surge in demand during the pandemic. Retailers initially proceeded with caution; when Kroger teamed up with the San Francisco firm in 2022, it limited deliveries to prepared foods, sushi, and floral arrangements across select locations.That arrangement with the major supermarket chain grew significantly last fall, leading DoorDash to offer the complete product range from all 2,700 Kroger locations in the U.S. The company achieved another major milestone last month by securing a delivery arrangement with Costco.Tony Xu, co-founder and CEO of DoorDash, noted that the deal brings together Instacart’s grocery specialization with DoorDash’s delivery infrastructure and logistics capabilities."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."Instacart’s position has been eroded by DoorDash’s rapid expansion. Market research firm Consumer Edge notes that Instacart held 26% of U.S. delivery platform spending five years ago, a figure that has declined to 18%. Over the same timeframe, DoorDash’s market share expanded from 44% to 59%, while Uber Eats remained stable at slightly beneath 20%.Questions remain regarding how the merger will affect existing commercial ties. While Instacart currently handles fulfillment for Walmart, DoorDash severed its own delivery arrangement with the retail giant in 2022.