MINNEAPOLIS — Target Corp. has purchased online same-day delivery platform Shipt Inc. for $550 million. The discounter will leverage its store network and Shipt’s proprietary technology platform and community of shoppers to provide same-day delivery across the country.
The acquisition will accelerate Target’s digital fulfillment efforts, bringing same-day delivery services to approximately half of its stores by early this year. The service will be offered at the majority of Target outlets, and in all major markets, before the 2018 holiday selling season.
The discounter will initially offer same-day delivery of groceries, essentials, home goods, electronics and other products, expanding the available categories over time. By the end of 2019, same-day delivery will include all major product segments.
“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 executive vice president and chief operating officer John Mulligan. “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.
“Shipt’s service-oriented approach aligns well with Target’s commitment to delivering an exceptional shopping experience for our guests,” he adds.
Founded in 2014 and based in Birmingham, Ala., Shipt is a rapidly growing membership-based grocery marketplace and same-day delivery platform. The service leverages a network of more than 20,000 personal shoppers to fulfill orders from various retailers and deliver within hours in more than 72 markets.
Chuck Grom, an analyst with Gordon Haskett, writes in a research note, “Building upon an array of initiatives and partnerships to offer guests more fulfillment options, Target made an intelligent decision … While one could debate whether buying versus building versus partnering was the best route, or if the $550 million price tag is warranted, what remains clear to us is that the puck is moving in this direction and same-day delivery will soon be par for the course, in the same way free two-day shipping and BOPUS [buy online, pick up in store] has become standard in recent years.”
Greg Portell, lead partner in the retail practice at A.T. Kearney, says that Target is aspiring to compete directly with Amazon “and needs same-day capability.”