NEW YORK, United States (AFP) — DoorDash is offering US$17 billion to buy Instacart in a deal that could consolidate the grocery delivery business in the US and abroad.

Instacart, founded in 2012, specialises in grocery and convenience store delivery in the US and Canada. DoorDash said the Instacart brand name and app would remain, and Instacart’s 600,000 shoppers — who are independent contractors — would be able to continue fulfilling orders as before.

Consumers who are currently paying US$9.99 per month for separate DashPass and Instacart+ memberships, which give them free delivery on most orders and other perks, would be able to pay one fee instead of two, DoorDash said. Instacart customers would also have access to 50,000 additional stores that are on DoorDash’s platform.

Grocers would also be able to choose either delivery platform. Tony Xu, DoorDash’s co-founder and CEO, said the deal could help local grocers compete with larger players. Walmart is the largest US grocer, with 21 per cent share of spending, followed by Costco and Amazon, which each have eight per cent share, according to Numerator, a market research company.

“Over the past decade or even two decades, what you see is the largest companies are only eating more and more of the pie. Why is that? It’s because they’ve invested aggressively into capabilities like a modern technology stack, like fast delivery, like new fulfillment models,” Xu said Thursday during a conference call with investors. “That’s what this combination is really about, where DoorDash and Instacart can give every retailer a fighting chance at competing in the modern-day era.”

The deal would also help DoorDash and Instacart fend off rivals like Walmart, which has been moving into restaurant delivery. Walmart partnered with Subway, its largest in-store restaurant tenant, this past summer to let customers order items from 1,400 Subway locations inside the store and have the meal delivered in under 30 minutes. Walmart has since expanded to select locations at Dunkin’ and Papa Johns, and says it now has 2,400 restaurant locations on its restaurant delivery platform.

DoorDash, founded in San Francisco in 2013, began as a restaurant delivery business but has expanded to pet food, electronics and many other businesses. Operating in 40 countries, it completed more than 3 billion orders last year using a network of nine million independent delivery workers. That dwarfs Instacart, which fulfilled 338 million orders last year. DoorDash has a market value of US$73 billion.

DoorDash began delivering groceries in 2020 amid a surge in pandemic-era demand. Grocers were initially cautious. Kroger partnered with the San Francisco company in 2022 but initially allowed the company to deliver only flowers, sushi and prepared meals from a limited number of stores.

The partnership expanded last fall, and DoorDash now lists the full inventory of all 2,700 US Kroger stores in its online marketplace. DoorDash scored another coup last month when it added delivery from Costco.

DoorDash’s move into grocery has hurt Instacart. Five years ago, Instacart commanded 26 per cent of spending on US 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.

Apoorva Mehta, who founded Instacart but left the company after its initial public offering in 2023, said Thursday that he and Xu had explored the idea of combining Instacart and DoorDash for years.

“We kept coming back to it because the industrial logic has always been clear. Customers have 21 meals a week to figure out. Groceries and restaurant delivery each solve part of that problem. Serving customers well means bringing together the best of both,” he said.

Mehta said the combination would also benefit shoppers, who would have more opportunities to earn money.

The deal is expected to be finalised by the end of 2027 or in early 2028 if it’s approved by Instacart shareholders and government regulators.

DoorDash shares rose six per cent in early trading Thursday. Instacart shares were flat.