DoorDash buys Instacart for about US$ 17 billion to grow in grocery

DoorDash announced it is buying Instacart in a deal valued at approximately US$ 17 billion. The transaction brings together the giant known for restaurant delivery with the leading grocery delivery platform in the United States.

In practice, the purchase gives DoorDash a bigger footprint in online grocery delivery. It gains Instacart's already established grocery marketplace and the partnerships the company has with retailers.

Why DoorDash wants grocery

DoorDash started as a restaurant delivery service and already has its own grocery delivery business. That segment, however, faces direct competition from Instacart, Uber, Walmart and Amazon.

The deal could help DoorDash's grocery business compete against Amazon and Walmart. These two retailers are now the main rivals to beat in online grocery delivery.

Defense against delivery rivals

DoorDash also has an incentive to diversify because competitors have moved into the territory where it is best known, food delivery. The move echoes other industry consolidations, with Uber acquiring Postmates and Delivery Hero.

With Instacart in-house, DoorDash eliminates a direct competitor in grocery and adds scale, catalog and relationships with supermarkets. For app users, the expected effect is a more complete offering that brings restaurants and groceries together in the same ecosystem.

How the deal leaked

Rumors about the deal began circulating last week, after The Information reported that Instacart was in talks with rival platforms Uber and DoorDash about a possible sale.

On Monday, The Wall Street Journal reported that DoorDash was in advanced talks with Instacart and that a deal could be finalized as soon as this week. The announcement confirmed the reporting and made the combination of the two operations official.