Summary
The deal could help DoorDash’s grocery business compete against Amazon and Walmart. DoorDash has announced that it’s buying Instacart in a deal value…
The deal could help DoorDash’s grocery business compete against Amazon and Walmart.
DoorDash has announced that it’s buying Instacart in a deal valued at approximately $17 billion. The acquisition will give DoorDash a bigger presence in online grocery delivery thanks to Instacart’s established grocery marketplace and retailer partnerships, with Instacart CEO Chris Rogers saying the deal will make “online grocery more seamless and affordable” for millions of households.
DoorDash says the acquisition will give Instacart users acces to more than 50,000 additional stores, and allow DashPass and Instacart Plus members to “pay one membership fee instead of two.” The deal is expected to close “in the end of 2027 or the first half of 2028,” subject to regulatory approvals and other closing conditions. When finalized, DoorDash says it will preserve Instacart’s brand, enterprise technology products, and app, so the services will remain separate instead of being merged into a single platform.
In its post-close commitments, DoorDash said local grocers won’t be limited by platform exclusivity, and will be free to work with either delivery service. Instacart shoppers will also retain flexibility around their working hours and which orders to accept, and will be able to choose whether to take on DoorDash orders or just stick with shopping for Instacart.
DoorDash, which started as a restaurant courier service, already has its own grocery delivery business, but that faces ongoing competition from Instacart, Uber, Walmart, and Amazon. DoorDash is also incentivized to diversify further because its rivals have been stepping into the food delivery territory it’s best known for, with Uber acquiring Postmates and Delivery Hero.
Here’s what DoorDash said regarding increasing competition:
“Most grocery shopping still happens in stores, but more people are buying groceries and everyday goods online. They expect fast, affordable delivery and an easy way to order. The biggest online retailers and grocers are racing ahead, building their own delivery fleets, warehouses, membership programs, and AI shopping assistants. A grocer or retailer running on thin margins cannot build all of that alone, and with AI, the playing field risks being tilted even further away from local commerce.”
Rumors around the deal started circulating last week after The Information reported that Instacart was in talks with rival platforms Uber and DoorDash regarding a potential sale. By Monday, The Wall Street Journal reported that DoorDash was in “advanced talks” with Instacart, and that a deal could be reached “as soon as this week.” That proved to be accurate, though finalization will take much longer — giving stockholders and regulators time to voice their feelings about the acquisition.
“Grocery is one of the hardest things to get right online,” DoorDash CEO Tony Xu said in the announcement. “Instacart has spent years learning to do that well for grocers, while DoorDash has built a delivery network and technology that local stores rely on every day. Together, we could give stores of every size more of those tools and unlock the potential of grocery delivery.”
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Source: The Verge
