Amazon’s aggressive expansion into same-day grocery delivery has rattled the market, sending DoorDash and Instacart shares tumbling—yet savvy investors should look beyond the headlines. While Amazon’s plan to scale same-day delivery of perishables to over 2,300 cities by year-end is undeniably a game-changer, the narrative that this spells doom for third-party delivery platforms is far too simplistic. Here’s why the battle for your grocery order is far from over—and why investors should consider a nuanced strategy now.
Market Reaction: Overdone Panic or Real Threat?
Following Amazon’s announcement, DoorDash shares dropped 4%, Instacart plunged 14%, and Walmart’s stock also dipped over 3%. It’s easy to interpret these moves as a sign that Amazon’s dominance will crush competitors. However, Bernstein analyst Zhihan Ma’s recent research challenges this knee-jerk reaction. Ma argues the sell-off is overblown, highlighting that the online grocery delivery market still has significant room to grow and accommodate multiple players.
Why DoorDash and Instacart Aren’t Out of the Game
Here’s the crux: Amazon’s grocery delivery strength lies in its vast logistics network and the Whole Foods brand, but third-party platforms like Instacart and DoorDash offer something Amazon can’t easily replicate—unmatched retailer variety and consumer choice. Instacart, for instance, partners with Costco, Kroger, and other major grocers, giving consumers access to their favorite stores without switching ecosystems. This retailer diversity is a moat that Amazon’s model struggles to breach.
DoorDash, meanwhile, benefits from its strong foothold in restaurant delivery, which provides a robust revenue base and operational leverage. Bernstein’s Ma points out that DoorDash’s subscription bundles and optimized gig-worker delivery model create cost efficiencies and customer loyalty that Amazon will find hard to disrupt quickly.
Unique Insight: The Power of Subscription Bundles and Delivery Thresholds
A key insight that investors might overlook is the strategic use of subscription bundles and free delivery thresholds. Instacart’s ability to lower free delivery minimums can attract a broader customer base, especially price-sensitive shoppers. This tactic not only boosts order frequency but also deepens customer engagement—two critical factors for long-term profitability.
Similarly, DoorDash’s DashPass subscription offers convenience and savings that encourage repeat use, creating a sticky customer base. As delivery services evolve, these subscription models could become primary drivers of growth and margin expansion.
What Investors Should Do Now
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Look Beyond Short-Term Volatility: The recent stock dips present a buying opportunity rather than a signal to sell. Bernstein’s price targets—$310 for DoorDash (25% upside) and $63 for Instacart (43% upside)—suggest substantial growth potential remains.
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Focus on Market Share and Margin Expansion: Investors should track how these platforms optimize their delivery networks and subscription offerings. Growing subscription adoption will be a key indicator of sustainable earnings power.
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Watch Retailer Partnerships Closely: Instacart’s partnerships with big-box retailers like Costco and Kroger are strategic assets. Any shifts in these relationships could significantly affect competitive dynamics.
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Monitor Amazon’s Execution: While Amazon’s expansion is aggressive, it’s not invincible. Investors should watch for signs of logistical bottlenecks or customer satisfaction issues that could slow its momentum.
What’s Next? The Grocery Delivery Landscape in 2025 and Beyond
Deutsche Bank analyst Lee Horowitz adds that Amazon’s expansion is more likely to grow the overall grocery delivery market than cannibalize existing volumes. This aligns with broader industry trends: online grocery penetration is still in early innings, with McKinsey reporting that only about 10-15% of grocery sales in the U.S. occur online as of early 2024. The pie is expanding, and multiple players can capture slices.
Moreover, the convergence of grocery and restaurant delivery services under platforms like DoorDash signals future cross-selling opportunities that could boost customer lifetime value. Investors should keep an eye on how these companies innovate around delivery speed, product variety, and subscription economics.
Final Takeaway: Diversify Your Exposure to Delivery Platforms
For investors and advisors, the takeaway is clear: don’t put all your eggs in Amazon’s basket just yet. DoorDash and Instacart remain well-positioned to capitalize on growing consumer demand for convenience and choice. A diversified approach that includes these third-party platforms could yield significant returns as the grocery delivery market matures.
In essence, the grocery delivery wars are heating up, but the battlefield is large enough for several winners. Strategic investors who understand the nuances of partnerships, subscription models, and delivery economics will be best positioned to capitalize on this evolving landscape. Keep your eyes on the metrics that matter—market share growth, subscription uptake, and margin improvement—and prepare for a dynamic and competitive future in grocery delivery.
Source: Amazon’s expansion of grocery delivery isn’t the death knell for these stocks. Here’s why