Instacart vs. DoorDash - Which is the Better Investment Today? (Pt.1)
Summary
- Instacart (CART) and DoorDash (DASH) are pursuing the online grocery and convenience market from different angles — CART through deep grocery integration and value-add services, DASH via delivery scale and logistical efficiency.
- CART’s retail media business is critical for profitability, leveraging real-time inventory data to deliver high-margin ad products, while DASH lags due to weaker grocer integration.
- CART emphasizes customer experience and item accuracy through a vertically integrated labor model, whereas DASH focuses on batching and modular logistics for cost optimization.
- CART is vulnerable to price-sensitive competition from Walmart, Amazon, and emerging ecommerce players, but retains strategic partnerships with high-volume retailers like Costco.
- While DASH benefits from higher restaurant margins and convenience culture today, CART is better positioned for a future shaped by health trends, AI personalization, and integrated food planning.
- While CART looks better positioned for consumer facing agentic AI, DASH has invested in DashMarts, its own stores which position it strongly for a future of robotic picking/packing and AV deliveries.
Executive Summary
Instacart (CART) and DoorDash (DASH) are tackling the online grocery opportunity from two fundamentally different starting points — and with very different missions. CART is laser-focused on helping consumers eat healthier, stay within budget, and reduce the stress of meal planning. Its platform reflects that: tight grocer integrations, real-time inventory visibility, and tools like shoppable recipes and budget-based search. DASH, meanwhile, is optimizing for convenience — offering fast, frictionless access to anything a customer might want, whether it’s sushi, shampoo, or snacks. This divergence in mission is shaping product decisions, operating models, and ultimately how each platform monetizes. In essence, in simplistic terms, we would say CART is focused on driving more revenue and higher margins via attaching increasingly more value to each consumer and grocer through deep integrated innovation, while DASH is doing the same via finding ways to optimize deliveries to get things to consumers faster while driving cost savings.
CART is doubling down on being the digital brain of grocery stores — deep integrations, full-stack fulfillment, and powerful retail media. DASH is leaning into its logistical engine — order batching, parallel workflows, and DashMarts — to drive scale and margin. One is aiming to reinvent how families shop and eat; the other is expanding a delivery network that’s as agnostic as possible to what’s inside the bag so that they have maximum scope in which to optimize delivery. As COVID tailwinds fade and margins come into sharper focus, the contrast between these two models is becoming more important for investors to understand. This report unpacks those contrasts — strategic, operational, and financial — to assess who’s better positioned for the next chapter of online grocery and convenience.
Click here the link below for access to the DCF valuations for CART and DASH and change the parameter options accordingly. Go to the two worksheets to the farthest right to see CART and DASH. We shall discuss the valuations at the end of Part 2.
https://docs.google.com/spreadsheets/d/1YBZ7_DnYViK86gY51V0h5Hml1hjByb4ck5P3YTHVFv0/edit?pli=1&gid=1570836338#gid=1570836338
Brief History & Business Fundamentals
A YC Summer 2012 camp startup, CART was founded by Apoorva Mehta, a former Amazon supply-chain engineer. According to his story of inspiration, he found himself staring into an empty refrigerator in his San Francisco apartment. Without a car, the prospect of a trip to the grocery store was inconvenient, a feeling amplified by his memories of enduring cold Canadian winters on bus trips for groceries with his mother. Mehta, who had already tried and failed to launch around 20 other startups, including a social network for lawyers, was a great fit for this type of business that requires relentless tries and grinds as we've seen in other founders involved in tech+physical businesses.
CART’s intelligent and adaptive competitive strategy was crucial to its rise as a leader in the grocery delivery industry. This strategy was built on several key pillars:
- Asset-Light Business Model: CART was originally built as a consumer-facing app that allowed users to order groceries online from existing retail stores. Instead of building warehouses or holding inventory, CART employed an asset-light model using independent contractors — personal shoppers — to pick, pack, and deliver orders. This allowed rapid scaling with minimal overhead. Over time, CART evolved to more formally partner with grocers, integrating directly into their systems to improve efficiency and shopper experience.
- Strategic Retail Partnerships: A cornerstone of CART's strategy has been its deep partnerships with a vast network of established grocery chains, local stores, and major retailers. By teaming up with trusted brands like Costco, Kroger, and ALDI, CART offers customers a wide selection of products from the stores they already know and love. This approach benefits retailers by expanding their online presence and sales, while offering consumers unparalleled choice.
- Focus on Technology and User Experience: CART has positioned itself as a technology company, investing heavily in creating a seamless and user-friendly platform. The app and website feature personalized recommendations powered by AI, easy-to-use shopping lists, and real-time order tracking. This data-driven approach extends to suggesting relevant substitutions for out-of-stock items, ensuring a smooth customer experience.
- Diversified Revenue Streams: The company generates revenue through multiple channels, including delivery and service fees from customers, and commissions from retail partners. A significant and growing part of its business is Instacart Ads, which allows consumer packaged goods (CPG) brands to promote their products directly on the platform, reaching customers at the point of purchase.
- Adaptable Service Offerings: Recognizing diverse customer needs, Instacart introduced services like Instacart+ (formerly Instacart Express), a subscription model offering benefits like free delivery on eligible orders, which helps foster customer loyalty. The company also expanded its offerings to include alcohol delivery, pickup options, and items beyond groceries, such as electronics and household essentials.
The COVID-19 pandemic marked a pivotal moment for Instacart, as demand for grocery delivery skyrocketed. The company responded by hiring hundreds of thousands of additional shoppers to meet the surge in orders. This period of intense growth solidified its position in the market and was followed by its IPO in September 2023, which raised $660 million. The company partners with more than 1,500 national, regional, and local retail banners to facilitate online shopping, delivery and pickup services from more than 85,000 stores across North America on the Instacart Marketplace
Prior to 2019, CART was largely seen as a modest survivor in an industry littered with failures. It operated as a straightforward on-demand grocery delivery platform — essentially a more agile successor to Webvan, the infamous dot-com bust that became a textbook case of flawed business models in online grocery. While competitors burned through cash and folded, CART managed to defy the odds and build a sustainable operation. The key was its founder’s sharp business instincts and willingness to tackle the industry’s hardest problem head-on: fulfillment costs. By shifting last-mile logistics to a flexible network of gig workers — borrowing from the Uber playbook — CART offloaded its most variable cost and created a scalable model without heavy capital expenditure.
But when it came time to prepare for an IPO, CART still faced a major obstacle: profitability. Although it avoided the catastrophic cash burn that plagued its predecessors, it hadn’t cracked the code on generating strong margins. Grocery retail, by its nature, is a brutally low-margin, operationally complex business — and layering an on-demand delivery model on top only compounds those challenges. Consumers are highly price-sensitive, and the cost of fulfillment remains high, making it incredibly difficult to achieve attractive margins through service fees alone. That changed in 2019 when CART launched its retail media business, allowing CPG brands to pay for prominent ad placements within the app. This marked a strategic breakthrough: instead of extracting more from customers or retailers — both of whom are sensitive to margin pressure — CART monetized brands, who typically enjoy fatter margins and are eager to promote products. While CART does charge delivery and service fees to consumers, and commissions to merchants, these largely offset operating costs. The real engine of profitability — the margin unlock — is retail media.
