Issue #114: Instacart Shops Itself To DoorDash

A big congratulations to everyone who ran the NYC marathon today. One of the best days in the city, if not the best each year! What an accomplishment!

Something you may not know about me is that I enjoy country music, especially the songs with more folk, guitar vibes. I think all music offers a great parable to business, and I often find myself turning to song lyrics when stumped, or even just musing about things in a business context. When I first heard the news about DoorDash potentially acquiring Instacart, my mind immediately jumped to the song Kenny Rogers popularized in 1978 song, “The Gambler.”

In Instacart’s case, it’s pretty clear they thought it was time to run. This isn’t the first time these two companies did an acquisition dance. In 2021, the two companies held preliminary talks about an acquisition for $40-50B, which would have seen Instacart join DoorDash. Those were certainly frothier times for eCommerce grocery, plus a different regulatory environment that would have most likely led to the deal being blocked. Since then, regulatory environments have shifted, and growth has looked like:

It is certainly an interesting commentary on the startup ecosystem and the future with AI that a business growing double digits year over year felt the need to sell, but now is not the time for that conversation. Instead, the focus is on a business that is supposed to be leading the charge, but is lagging the industry average instead. At the same time, their share of eCommerce has gone like this:

Overall, I think the numbers show why Instacart felt the need to sell. Their share of online grocery is down ~31%. But why did DoorDash feel the need to pay $17B, a premium of 26% at the time of what the company’s share price was? I would focus on four things.

I want to focus on point #4 the most. I believe that is the most crucial part of the deal, and one that most people are not aware of. Instacart has a business, Carrot Ads, that offers a retail media network as a service. What that means is that they have software that powers other retailers’ advertising networks via a white-label solution. Carrot Ads powers retail media networks and sponsored ad technologies for over 300 retail partners, including HyVee, UberEats, Thrive Market, and more. As of Q1, that represented $286M in revenue for that quarter, a growth of 16% compared to the same quarter in 2025.

Carrot Ads was a major, underrated bright spot in the Instacart business. DoorDash does not report advertising revenue as split out, but in 2024 announced it surpassed $1B in annual advertising revenue, the last known update. A lofty number, but only 10% compared to Instacart’s 20-30% of revenue coming from advertising. Walmart is also seeing strong retail media growth. The Carrot Ads acquisition will unlock new service lines and revenue for DoorDash, very similar to how the SevenRooms acquisition did.

The other interesting aspect of this deal is who said no to it. It was reported that Uber was also interested at a certain point. So why didn’t Uber purchase them? If I had to guess, it most likely came down to the premium they would have to pay. Uber has a nascent grocery business already, and they must have made the calculation that the $17B would go further invested in their own platform and technology. Plus, Uber recently committed to other acquisitions, like Delivery Hero, that I am sure are tying up capital there. A fascinating week for the retail industry!

It is certainly that time of year, when everyone is announcing their trend picks for the year. While you are going to have to wait a little while to hear the official “Retail Is Not Dead?” predictions, I wanted to share Whole Foods 2027 predictions. I picked out my top three that they shared and wanted to break them down here.

Large incumbents are very split when it comes to agentic commerce. Amazon has taken a very hard-line approach, blocking external agents. Walmart decided to do the opposite. Last week, Walmart announced that external agents would be allowed as long as they followed their guidelines, which seem pretty valid. Customers will be able to set up a specific profile for an agent in their profile. There is also a new Walmart Agent Gateway, which will give agents a faster, more reliable way to shop by using an MCP. Enabling shopping using an MCP is brilliant. However, as I mentioned, there are guidelines. At the end of the day, the customers are responsible for their agents’ actions. Overall, I think it is a very sensible approach, but it will be interesting to see how customers react. DoorDash recently reported they had only gotten a couple hundred orders from personal agents (maybe they can’t track it, though?).

Sometimes what trends on the internet is almost like spinning a wheel, and who knows what will happen. On September 3rd, Shayla Roberts, a nail technician, posted a short video showing how she orders the Cajun salmon from Cheesecake Factory. She swaps some of the sides out for loaded mashed potatoes, puts shrimp on top, asks for a pitcher of extra sauce, and a side of Cajun seasoning. She has about 55k followers on Instagram and 39k on TikTok. That idea resonated with customers, and since then it has organically taken over the internet. Coco Gauff even posted about it from the US Open. Google Trends has this topic up over 5000% versus the preceding year. Traffic was up 9.5%, while other comps in casual dining traffic were about flat. Same-store sales were also up 15.2%. Not too shabby a quarter, and it just goes to show the power of social media. It will be interesting to monitor how long this bump is able to be sustained.

For the past year or so, GLP-1s and their impact on consumption as well as health have been one of the hottest topics in the industry. Circana, one of the leading data providers in the CPG space, has been tracking the impact on grocery spend and shared a fascinating report this week. Their September receipt-panel survey found that 30% of U.S. households reported that they had a current GLP-1 user, and 37% reported some experience with the medications (including past users). Unsurprisingly, households with someone on the medicine are seeing an 8% decrease in grocery spend, but by the end of Year 2 on the medicine, spending is on par with before. Customers are reallocating spend more than cutting back. Portable protein and controllable portions are seeing rises. Indulgent items are still consumed in either portion-controlled or better-for-you formats. Convenient formats are also crucial. These consumers are not abandoning restaurant eating either. Overall, definitely some myth-busting going on in this report!

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