DoorDash Bids $17 Billion for Instacart in Grocery Delivery Shake-Up

DoorDash is offering $17 billion to buy Instacart, a deal that would consolidate grocery delivery in the U.S. and abroad and put roughly 77% of American delivery-platform spending under one roof. The companies say the tie-up combines DoorDash's global logistics reach with Instacart's purpose-built grocery technology and long-standing grocer relationships — and helps both fend off Amazon.

The math behind that 77% is stark. Five years ago, Instacart commanded 26% of spending on U.S. delivery platforms; that share has fallen to 18%, according to market research firm Consumer Edge. DoorDash's share climbed from 44% to 59% over the same period. Uber Eats held steady just under 20%.

Investors gave the move a split verdict on Thursday: DoorDash shares rose 5% in afternoon trading, while Instacart slipped 1.6%.

What does the deal change for consumers?

DoorDash says the Instacart brand and app will survive, and Instacart's 600,000 independent-contractor shoppers will keep fulfilling orders as before. Subscribers get the most tangible benefit: anyone currently paying $9.99 per month for both DashPass and Instacart+ could eventually pay one fee instead of two. Instacart customers would also gain access to 50,000 additional stores on DoorDash's platform.

Grocers, meanwhile, would be able to choose either delivery platform. DoorDash co-founder and CEO Tony Xu cast the deal as a lifeline for smaller players competing against giants.

"Over the past decade or even two decades, what you see is the largest companies are only eating more and more of the pie. Why is that? It's because they've invested aggressively into capabilities like a modern technology stack, like fast delivery, like new fulfillment models," Xu said Thursday on an investor call. "That's what this combination is really about, where DoorDash and Instacart can give every retailer a fighting chance at competing in the modern-day era."

The competitive stakes are real. Walmart is the largest U.S. grocer with 21% of spending, followed by Costco and Amazon at 8% each, according to Numerator. Walmart has also been pushing into restaurant delivery, partnering with Subway this past summer and expanding to select Dunkin' and Papa Johns locations — it now lists 2,400 restaurant locations on its delivery platform.

How DoorDash caught — and passed — Instacart

DoorDash, founded in San Francisco in 2013 as a restaurant delivery service, now operates in 40 countries and completed more than 3 billion orders last year through 9 million independent delivery workers. That dwarfs Instacart, which fulfilled 338 million orders. DoorDash's market value stands at $73 billion.

The grocery push began in 2020 amid pandemic-era demand. Kroger partnered cautiously in 2022, letting DoorDash deliver only flowers, sushi and prepared meals from a limited number of stores. The partnership expanded last fall; DoorDash now lists the full inventory of all 2,700 U.S. Kroger stores. Last month it added Costco delivery.

Antitrust scrutiny is coming

The deal, expected to close by the end of 2027 or early 2028 pending Instacart shareholder and regulatory approval, will face antitrust review in the U.S. and elsewhere — at a moment when consumers are angry about food price inflation.

"As a general economic principle, less competition and more consolidation tends to be worse for consumers," said Randall Sargent, a grocery and retail partner at Oliver Wyman. "They were competing for a share of consumers' wallet."

Ethan Litwin, an antitrust attorney and partner at New York-based Shinder Cantor Lerner, flagged a specific risk: many grocers use Instacart's technology to power their online storefronts. "DoorDash could therefore cut rivals off, outmatch them on targeting and logistics, or monitor competitors' pricing and discounting in real time, which could facilitate coordination on pricing," Litwin said. "An advantage big enough to build a monopoly will not stay consumer-friendly for long."

The advertising upside — and the labor question

Sargent sees ad revenue as a major prize. Instacart currently knows only what's in grocery baskets; a combined company could also see takeout orders. "The more you can hand them an audience that you know all about, the more formidable a challenger this new company is," she said.

Instacart founder Apoorva Mehta, who left after the company's 2023 IPO, said he and Xu had explored a combination for years. "Customers have 21 meals a week to figure out. Groceries and restaurant delivery each solve part of that problem. Serving customers well means bringing together the best of both," he said. He argued shoppers would benefit from more earning opportunities.

Drivers may not. "In many markets, these two companies are two of the three major buyers of shopper labor," Litwin said. The SEIU, which has unionized gig workers in California, did not immediately respond to a request for comment.

Watch the regulatory filings over the next two years — the deal's fate, and the shape of U.S. grocery delivery, now rests with antitrust enforcers on both sides of the Atlantic.