DoorDash agreed to buy Instacart for $17 billion to expand its delivery and retail technology business and help merchants compete with larger companies, Bloomberg reported, citing the company's chief executive.
The acquisition would give DoorDash access to Instacart's advertising business and software for retailers, alongside its grocery delivery service. Amazon and Walmart have their own shopping websites and do not need to depend on third-party delivery apps.
DoorDash's chief executive described the agreement as a way to give retailers more ability to compete during a call excerpted on Bloomberg Technology, published Oct. 29.
“This is about giving every retailer the ability to compete,” the chief executive said. He described a world where technology changes faster, disruption happens more quickly and the biggest companies become larger.
The agreement is pending, with completion expected toward the end of 2027 or possibly in 2028. The remarks did not establish a firm closing date.
DoorDash plans to combine its paid DashPass membership with Instacart+, allowing customers to pay for one subscription instead of maintaining both. The combination is also expected to give customers of both services more choice.
The proposed membership change forms part of DoorDash's plans for the combined business while the acquisition awaits completion. The discussion did not specify the price of the combined subscription or when customers would gain access.
Instacart's advertising and enterprise operations account for about 30% of its revenue in almost every quarter, Bloomberg reported. Those operations would add another business to DoorDash's delivery services and broaden the technology it offers merchants.
The advertising operation is part of the attraction alongside the software Instacart supplies to retailers. DoorDash would gain access to that technology through the purchase, extending the agreement beyond the combination of two consumer delivery services.
DoorDash has also bought restaurant table management business SevenRooms, other technology companies and Grubhub's campus dining business. Those purchases have expanded the software and services available through the company.
The Instacart agreement continues that expansion into technology used by businesses alongside DoorDash's consumer delivery operations. Its purpose is to give retailers more tools to compete as larger rivals expand, DoorDash said.
The chief executive's comments focused on the position of retailers facing bigger competitors. The discussion left open how DoorDash would bring the services together beyond the planned membership combination, and how quickly merchants would receive the additional technology.
