Key takeaways DoorDash agrees to acquire Instacart for $17 billion Both delivery platforms already report positive quarterly profits Advertising and memberships could reshape grocery delivery
Imagine ordering groceries for $100. Someone must travel to the supermarket, find the products, replace unavailable items and deliver everything before the ice cream melts.
Now imagine doing that millions of times while keeping delivery charges low enough that customers return.
That financial challenge sits behind DoorDash's October 29 agreement to acquire Instacart for approximately $17 billion, one of the biggest transactions in the history of online grocery delivery.
According to the official acquisition announcement, DoorDash will pay $65 per Instacart share, representing a 26% premium to its October 22 closing price. At least 75% of the consideration will be cash.
Why Grocery Delivery Is Harder Than Delivering DinnerA restaurant typically prepares a finished order before a courier collects it. Grocery delivery introduces another labor-intensive step: selecting individual products across supermarket aisles.
Substitutions, refrigerated goods, heavy purchases and delivery distances complicate the process.
Yet Instacart is already profitable. During the third quarter, it generated $1.095 billion in revenue and $147 million in net income on $10.53 billion in gross transaction value.
DoorDash reported $4.62 billion in quarterly revenue and $466 million in net income attributable to common shareholders.
Those results suggest grocery delivery's problem is no longer simply achieving profitability. The challenge is expanding earnings without allowing labor, promotions and logistics costs to grow equally quickly.
That pressure is familiar across retail. Coinpaper previously explored how grocery chains have struggled with competition and rising operating expenses.
The merger could improve delivery density by connecting restaurant orders, supermarket purchases and other local deliveries through a larger distribution network.
But bigger networks don't automatically make each individual order cheaper.
Instacart's Real Opportunity May Be Advertising, Not DeliveryThe most revealing number in Instacart's latest earnings report isn't its delivery volume.
It's the $331 million generated from advertising and other revenue during the third quarter, up 23% year over year.
That accounted for approximately 30% of Instacart's total revenue, demonstrating that the business earns substantial income beyond collecting fees on grocery orders.
Retailers and consumer brands pay for visibility inside shopping applications, creating a different revenue stream from physically transporting products.
Walmart has pursued a similar strategy. Its advertising business grew 38% globally in a recent quarter, complementing its expanding e-commerce operations.
Memberships offer another opportunity.
Costco's $5.91 billion membership business demonstrates how recurring fees can support companies operating with narrow merchandise margins.
DoorDash and Instacart plan to connect their membership offerings, potentially giving subscribers more reasons to place frequent orders.
However, subscribers who order repeatedly can also generate substantial fulfillment costs.
Why DoorDash Is Paying $17 Billion for ScaleDoorDash isn't buying an unprofitable startup in the hope that it will eventually discover a working business model.
It's purchasing an established platform with 91.4 million quarterly orders, profitable operations and technology used by thousands of grocery retailers.
The strategy also reflects intensifying competition.
Walmart has invested heavily in faster delivery and logistics, while Amazon continues expanding grocery fulfillment.
DoorDash has already experimented with stablecoin payments, another potential avenue for lowering transaction friction. That initiative is separate from the Instacart acquisition.
The companies expect the merger to close in late 2027 or early 2028, subject to shareholder and regulatory approval.
Regulators may examine whether combining two major delivery platforms weakens competition, while shareholders will watch how DoorDash finances the cash portion of the transaction.
