Shares of Instacart (Nasdaq: CART) tumbled on Monday after Kroger Co. (NYSE: KR) and DoorDash Inc. (NYSE: DASH) announced an expanded partnership to deliver groceries to consumers' homes, a move analysts say could further erode Instacart's market position. By afternoon trading, Instacart's stock had dropped 6.6%, reflecting growing concerns about its ability to compete in the increasingly crowded grocery delivery market.
The expanded collaboration between Kroger and DoorDash will see nearly 2,700 Kroger-owned stores offering delivery through DoorDash starting October 1. This service will include Kroger's full range of groceries and essentials, with deliveries promised in as little as an hour. The partnership extends to Kroger's other chains, such as Ralphs, Fred Meyer, and Mariano's.
Wedbush analysts were quick to highlight the competitive implications of the announcement, stating, "DoorDash's extended partnership with Kroger directly challenges Instacart's position among intermediaries." The analysts noted that Kroger accounts for more than 10% of Instacart's gross transaction value, making the development particularly significant.
While Instacart will continue to power Kroger's same-day delivery service, the analysts believe the DoorDash partnership signals a shift in Kroger's preferences. "Instacart may be losing its perceived position as Kroger's preferred partner for same-day delivery," they said.
The partnership also includes plans for retail media collaboration, allowing brands to advertise within Kroger's online ecosystem, as well as new delivery models leveraging Kroger's store network and DoorDash's technology. This deepened relationship builds on Kroger's 2022 decision to use DoorDash's marketplace for delivering items like flowers and sushi.
DoorDash, which began offering on-demand grocery delivery in 2020, has been steadily expanding its presence in the sector. The company's growing footprint, along with investments from competitors like Uber Technologies Inc. (NYSE: UBER), has intensified the pressure on Instacart.
According to Wedbush analysts, Instacart's market share in grocery delivery has been steadily declining. In 2022, the company accounted for around 70% of third-party grocery delivery sales volume, but that figure dropped to 58% by 2023. The analysts attributed these losses to increased competition from DoorDash and Uber, both of which have invested heavily in logistics and grocery delivery initiatives.
The announcement comes at a challenging time for Instacart, which has faced mounting competition and a shrinking market share. In August, Wedbush analysts downgraded Instacart's stock, citing concerns over its ability to fend off rivals. Monday's news only reinforced those fears.
"In our view, Instacart is at risk of losing incremental market share to other leading intermediaries and grocers that can leverage their scale and success in adjacent categories to capture demand for online grocery and convenience," the analysts said.
Instacart's stock has struggled throughout 2025, down 4.6% year-to-date. The latest developments with Kroger and DoorDash add to the company's challenges as it navigates an increasingly competitive landscape.
As grocery delivery becomes a larger part of U.S. retail chains' business strategies, the competition among third-party platforms is only expected to intensify. With DoorDash and Uber making significant inroads, Instacart faces the dual challenge of retaining its existing partnerships and innovating to stay ahead in a rapidly evolving market.
