Two major players in the food delivery sector are looking to combine forces as competition rises in the grocery delivery business.
DoorDash Inc. has announced a deal to buy Instacart in a transaction valued at US$17 billion as it looks to expand its grocery delivery segment in the U.S. Instacart specializes in grocery and convenience store delivery in the U.S. and Canada, while DoorDash began delivering groceries in 2020 amid a surge in pandemic-era demand.
Instacart CEO Chris Rogers says the deal will help it innovate in the grocery industry and make online grocery delivery easier and more affordable.
“When our purpose-built grocery technology and trusted retailer and brand relationships are combined with DoorDash’s global consumer reach and logistics capabilities, we can create new opportunities for our retail and brand partners, offer an even better experience for customers and shoppers, and deliver compelling value for our shareholders,” he said in a news release.
Graham Heuman, a research and insights lead at J.C. Williams Group, said in a statement Thursday that he is not surprised by the deal, given DoorDash has previously been aggressive in acquisitions. It bought U.K. food delivery firm Deliveroo in a US$3.9-billion deal that closed in October of last year.
“With Instacart more focused on grocery, and DoorDash more on foodservice, the acquisition makes sense to broaden their customer base. Instacart has had their market share decrease while DoorDash has had theirs increasing, so it would be a good time to buy,” he said.
In Canada, he said the food delivery market has always been more concentrated compared to other nations, due mainly to geography. He said the market is not necessarily “oversaturated,” but consumers are likely choosing platforms based on their existing shopping habits.
Under the terms of the deal, DoorDash will pay US$65 per share for Instacart, whose board has unanimously approved the agreement. The deal will be at least 75 per cent cash, but Instacart shareholders will be able to choose between cash, DoorDash shares, or a combination of both, subject to certain thresholds.
“While there are many logical reasons for DoorDash to acquire Instacart, the move also reflects an online grocery market that is becoming far more competitive and cost intensive. Against those two dynamics, scale is now a prerequisite for success,” Neil Saunders, managing director of GlobalData, said in a note Thursday.
“Although it comes with a hefty US$17 billion price tag, buying Instacart gives DoorDash a much more significant foothold in online grocery, and grants it access to retailers it doesn’t currently serve.”
DoorDash’s aggressive market-share gains have hurt Instacart’s U.S. operations. Five years ago, Instacart commanded 26 per cent of spending on U.S. delivery platforms; that share has fallen to 18 per cent, according to Consumer Edge, a market research company. DoorDash’s share grew from 44 per cent to 59 per cent in that same period. Uber Eats’ share held steady at just under 20 per cent.
Saunders said DoorDash should look to improve the economics of grocery deliveries in part by leaning into technology and automation rather than simply being a delivery provider.
He said another priority would be to maintain and grow trust.
“DoorDash will need to ensure that it is seen as a partner that enables retailers to succeed, rather than an increasingly powerful intermediary that extracts value from the business. This may also be a potential area of regulatory scrutiny,” the note said.
It’s not yet clear what the deal will mean for some partnerships.
Earlier this month, Skip announced a new partnership with Instacart in Canada that allows Skip customers to gain access to Instacart through its app.
The DoorDash transaction is expected to close by the end of next year or in the first half of 2028 and will be subject to approval from Instacart shareholders, regulators including in Canada, and other conditions.
Heuman said there are some broader concerns about consolidation in the industry.
“This is going to be a large portion of the delivery market being operated by one company, moving from oligopoly further towards monopoly,” he said.
One of the main risks is that although there is now a minimum wage for gig workers, but not between orders, the operator could make it less feasible for gig workers to make a living, he said.
“On the other hand, when we move further towards a single player, there is the opportunity for them to raise business’ fees to operate with the software … as well as the opportunity to charge consumers more for the service at the same time,” Heuman said.
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Daniel Johnson, The Canadian Press
With files from the Associated Press.
This report by The Canadian Press was first published Oct. 29, 2026
