When I predicted consolidation in the Fast Food sector way back in the mid 20-teens, I never expect-ed that to affect the Food Delivery industry. But a shadow war has been raging in the Delivery Sector. And Doordash has acquired Instacart – for $17 billion!
In a perfect world… Everyone would be happy with Food Delivery services.
But intense competition has driven Delivery Services to merge,
to attempt to be all things to all consumers…
Not to mention the overcrowded and stressful marketplace as a whole. There have been too many Delivery Services in play, even in a world where younger generations crave convenience more than ever. And something had to give…
Surprise merger
But I, at least, didn’t expect two of the largest DSs to merge. I figured some of the smaller ones would be acquired by the bigger ones, such as Doordash (DD) and Instacart (IC). But it was those two indust-ry leaders who joined forces. Actually, DD has purchased IC – for an almost unbelievable $17 billion!
Nevertheless…
It turns out that Walmart, Amazon and UBER Eats are all bigger than both Doordash and Instacart. And have gained tactical advantages, forging alliances with Fast Food giants, offering grocery delivery and folding other related services into their portfolios. Not to mention moving into drone and driver-less delivery…
Makes sense
“The deal, announced yesterday, marks an end for Instacart as an independent company,” CNN reports. “Instacart went public in 2023 and benefited from a pandemic-era boom for the grocery delivery service, but it has struggled to maintain its momentum against larger competitors, like Uber, Amazon and Walmart.”
“Combining Instacart and DoorDash would create a larger company that better competes with those rivals,” CNN explains. “Amazon, for example continues to expand its same-day grocery service, which now totals 2,300 locations, while Walmart now offers 30 minute delivery in some places. Meanwhile, Uber has expanded its offerings, recently inking a deal with Costco.”
Groceries + Meals = Stability
The combined company “will offer grocers and retailers of every size DoorDash’s delivery network and Instacart’s grocery and fulfillment technology,” the DD news release states.
“Grocery is one of the hardest things to get right online. Someone has to pick a ripe avocado, find a substitute you’d choose yourself, and get the ice cream to you before it melts,” said Tony Xu, co-founder and CEO of DoorDash. “Instacart has spent years learning to do that well for grocers, while DoorDash has built a delivery network and technology that local stores rely on every day.
“Over the last 14 years, Instacart has transformed online grocery by helping retailers of all sizes compete and grow, and joining forces with DoorDash allows us to do even more,” said Chris Rogers, CEO of Instacart.
My take
With DD now on an equal footing with its competitors, the scene is set for a Ragnarok-like faceoff between the big Delivery Services. Although… With the new webwork of alliances building on the ‘sending’ end, it could be that the Food Delivery Service industry will end up like a Medieval land-scape, with a few seemingly unassailable powers, each ensconced in its own corporate high castle…
It will be interesting to see how the Delivery Service saga unfolds over the next few years…
~ Maggie J.