The proposed DoorDash/Instacart deal promises better delivery technology and broader consumer reach, but it could also give one company considerably more influence over grocery ecommerce.
DoorDash’s proposed $17 billion acquisition of Instacart is being pitched as a way to make grocery delivery faster, more efficient and more affordable. There’s a reasonable case for that: Combining DoorDash’s enormous delivery network with Instacart’s grocery technology, retailer relationships and advertising business could produce a formidable ecommerce platform.
But for supermarket operators, this has “double-edged sword” potential. Two companies that currently compete for their business could become one. For many companies the impact will be negligible. For others, it’s going to be interesting. And of course, that has industry implications that go far beyond simple grocery delivery.
Fewer Competitors, More Leverage
Instacart works with more than 2,200 retail banners and provides access to nearly 100,000 stores. DoorDash has steadily expanded its grocery business, building relationships with retailers including Kroger and Costco. The proposed combination would bring much of that activity under one corporate roof.
That could simplify operations for grocers, particularly smaller chains and independents that lack the resources to develop their own sophisticated ecommerce systems. A single provider offering ordering, fulfillment, delivery, advertising and customer acquisition has obvious appeal.
But then there’s the question of dependence.
Retailers already face financial pressure from delivery commissions, fulfillment expenses and the cost of reaching customers through third-party platforms. Combining two major providers could eventually weaken their ability to negotiate favorable terms.
For its part, DoorDash says the combined company will remain an open platform, allowing retailers to work with competing services. That’s encouraging, but contractual freedom and genuine negotiating leverage aren’t necessarily the same thing.
The Bigger Prize: Retail Media
To be clear, delivery is only part of what DoorDash is buying. Instacart has extensive retail technology and advertising business, giving grocery retailers and CPG manufacturers tools to promote products, manage online storefronts and influence purchasing decisions.
Those capabilities could become much more valuable if they’re plugged into DoorDash’s consumer network. The combined network is the real prize here.
For manufacturers, the combination could create another powerful advertising channel. For retailers, it could mean better targeting, improved conversion and additional retail media revenue. It could also mean another intermediary collecting fees from an increasingly important part of the grocery business.
The real strategic value here could prove to be ability to influence what consumers see, what they buy and which retailers receive their orders.
The Subscription Play Is Worth Watching
DoorDash and Instacart also plan to combine DashPass and Instacart+ benefits under a single subscription, estimating that customers could save $100 million annually in membership costs.
That could encourage more frequent grocery orders and make delivery more attractive to households that currently view the fees as excessive. But a unified subscription could also strengthen customer loyalty to the platform rather than to individual supermarkets.
Grocery retailers have spent decades building customer relationships through pricing, promotions, loyalty programs and merchandising. It would be a mistake to be indifferent to another company becoming the primary point of contact with those shoppers.
Regulatory Approval Is Far From Certain
The transaction isn’t expected to close until late 2027 or the first half of 2028, and regulators will have plenty to examine. The combination would eliminate a significant competitor in third-party grocery delivery while creating a much larger participant in retail technology and advertising. New York City officials have already raised concerns about consolidation and delivery worker protections.
Whether those concerns ultimately prevent the deal remains to be seen. The companies haven’t announced changes to retailer contracts, commissions or advertising rates, and it’s premature to assume those costs will rise.
Still, grocers should be evaluating their options now rather than waiting for the transaction to close.
The bottom line: DoorDash and Instacart could build a better grocery delivery platform. They could also build a more powerful gatekeeper between supermarkets and their customers.
In light of this merger, the industry’s challenge will be making sure retailers retain enough control over pricing, customer relationships and fulfillment economics to benefit from that efficiency.
A $17 billion transaction is likely to create substantial value. Grocery operators need to decide how much of that they’ll get to keep.