Target is making a major push into the online marketplace — with an emphasis on groceries. The retailer has agreed to pay $550 million cash to acquire Shipt, Inc., a leading online same-day delivery platform that’s known for its grocery delivery service.
The acquisition significantly accelerates Target’s digital fulfillment efforts, bringing same-day delivery services to guests at approximately half of Target stores by early 2018. And Target says the service will be offered from the majority of Target stores, and in all major markets, before the 2018 holiday season.
At launch, Target will offer same-day delivery of groceries, essentials, home, electronics and other products, while expanding the products offered over time. By the end of 2019, same-day delivery will include all major product categories at Target.
Specifically, Target says it plans to leverage its network of stores and Shipt’s proprietary technology platform and community of shoppers to quickly and efficiently bring same-day delivery to guests across the country.
Basically, Shipt works by paring what are essentially personal shoppers with users who put in an order. Under the company’s current business model, it charges a $99 annual fee and by paying that members get most deliveries at not additional charge.
“We laid out an ambitious strategic agenda in early 2017, which included a focus on giving our guests a number of convenient ways to shop with Target, whether it’s ordering online and picking up in one of our stores, driving up to pick up an order, or taking advantage of services like our new Restock program,” says John Mulligan, executive vice president and chief operating officer for Target. “With Shipt’s network of local shoppers and their current market penetration, we will move from days to hours, dramatically accelerating our ability to bring affordable same-day delivery to guests across the country."
Founded in 2014 and located in Birmingham, Ala., Shipt is a rapidly growing membership-based grocery marketplace and same-day delivery platform. The service leverages an extensive network of more than 20,000 personal shoppers to fulfill orders from various retailers and deliver within hours in more than 72 markets.
Shipt values a personalized, customer-first delivery experience that simplifies life and saves time for members. Through Shipt’s app, members are connected to local, reliable shoppers who help facilitate a quality delivery experience that is personalized, efficient and convenient.
“We are very excited to partner with Target, one of the most loved retailers in the country, with a reputation for supporting local communities,” says said Bill Smith, Shipt’s founder and CEO. “Partnering with Target and the national scale they provide allows Shipt to further accelerate our growth, bringing our service to more people, in more markets across the country,”
Shipt will be a wholly owned Target subsidiary, and will continue to run its business independently.
It also plans to expand partnerships with other retailers seeking same-day, last-mile capabilities. All current Shipt employees will continue to be employed by Shipt and will work from their current offices in Birmingham and San Francisco.
Smith will remain in his current role, and will report to Target COO John Mulligan. In addition to same-day delivery capabilities, Target will also leverage Shipt’s expertise as the company enhances and strengthens its supply chain, including integration with the recently acquired transportation technology company, Grand Junction.