Delivery giant DoorDash is buying home grocery service Instacart for $17 billion, the company announced Thursday.
The deal means users will be able to order groceries and items from other retailers through DoorDash and its delivery network.
The companies said Instacart customers can now shop at more than 50,000 additional stores in addition to the current nearly 100,000 stores on the Instacart platform. DashPass and Instacart+ members will now also pay one membership fee instead of two.
DoorDash is expected to keep the Instacart brand and its technology. Until the transaction closes, DoorDash and Instacart will continue to operate as separate, independent companies.
“Over the past 14 years, Instacart has transformed online grocery shopping by helping retailers of all sizes compete and grow, and joining forces with DoorDash allows us to do even more,” said Chris Rogers, CEO of Instacart.
DoorDash shares gained more than 9% in premarket trading Thursday.
This deal represents the latest chapter of consolidation in the delivery industry. Last year, DoorDash bought UK-based Deliveroo, while Uber now owns Postmates and Delivery Hero.
DoorDash has become the most successful autonomous online delivery platform in America, accounting for about two-thirds of all food delivery volumes in 2024, according to Bloomberg data.
But over the past year, the company has seen its stock price fall by about a third, largely because of rising costs.
Instacart, meanwhile, reached the height of its success during the Covid pandemic, when lockdowns sent millions of consumers to their phones to order grocery deliveries.
But the company’s actions went nowhere over the past two years, as Instacart struggled to find new avenues for growth while facing increasing competition from grocery delivery offerings from Amazon and Walmart.
While a merger would save money by allowing the combined company to reduce its workforce and split some expenses, it’s unclear how much additional money is left to take from delivery customers.
Americans eating at home have started complaining about the cost of food delivery — and the situation has only gotten worse this year amid soaring fuel prices, which have led to new fees and surcharges.
A recent debate over the cost of delivering a burrito went viral, as social media users questioned whether $20 was a reasonable price to pay to have the Tex-Mex treat delivered.
Platforms like DoorDash and Instacart have also faced legal scrutiny over how they treat those who make deliveries for their respective platforms. Last month, DoorDash settled for $131.5 million with New York City regulators to resolve charges that allegedly deprived workers of millions of dollars in tips.
“Simply put, we made a mistake,” the San Francisco-based company said in a statement. “Our errors meant that some Dashers were underpaid or paid late. Even if these errors were not intentional, that does not make them acceptable.”
The proposed transaction was first reported by technology website The Information and the Wall Street Journal.
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