Target Buys Grocery Delivery Service Shipt for $550 Million
MINNEAPOLIS, MN – According to a survey by fulfilment software maker Temando, four out of five shoppers want same-day delivery, but only half of retailers offer it. While big names like Amazon and Walmart have been dominating online grocery and same-day delivery services, another major retailer is moving into online grocery after a recent acquisition. This week, Target purchased grocery-delivery startup Shipt for $550 million in cash in an effort to challenge its competitors in e-commerce orders and boost its overall online and instore sales.
“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,” said John Mulligan, Target’s Chief Operating Officer, in a company press release. “By the 2018 holiday season, we will be servicing every major market across the country with same-day delivery, and Shipt’s service-oriented approach aligns well with Target’s commitment to delivering an exceptional shopping experience for our guests.”
The retailer plans to rollout same-day grocery delivery across the country via Shipt’s platform starting in 2018, with the majority of stores offering the service by next year’s holiday season. Along with same-day grocery delivery, Shipt’s services also include personal shoppers who stay in touch with customers throughout the grocery delivery process.
While Shipt is now owned by Target, the grocery delivery startup will continue to work with other retailers. “We'll continue growing our marketplace and membership base, working with a variety of retailers to drive scale and efficiencies," Shipt's CEO, Bill Smith stated. "We are very excited to partner with Target, one of the most loved retailers in the country with a reputation for supporting local communities. 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."
According to Yahoo! Finance, Target had been working with Instacart to bring grocery delivery to certain markets. However, beginning mid-summer, the retailer began discussions with Shipt, with the acquisition following shortly after. As Target and Shipt move forward, Mulligan stated the company hadn’t reconvened with Instacart about the future yet.
In order to use Target’s new Shipt service, Target customers must become Shipt members and pay , an annual fee of $99. Over time, however, the retailer hopes to integrate Shipt’s services with Target.com and its own app.
This acquisition is one of Target’s biggest to-date and is expected to close before 2017 ends.
Will Target’s leap into the realm of grocery help the retailer make a name for itself as a grocer? AndNowUKnow will continue to report as the story unfolds.