Target to buy Shipt, promises same-day delivery by end of 2019

Gladys Abbott
December 14, 2017

American bricks-and-mortar retailer Target to purchase Shipt, an online same-day domestic delivery platform, for US$550 million in cash.

With Walmart rolling out grocery pickup at many more stores and looking at same-day delivery, and Amazon making similar moves with more expected in the wake of its acquisition of Whole Foods this year, Target has no choice but to pick up the pace. Groceries, essentials, home, electronics, and other products will be available for same-day delivery at launch, with all major product categories by the end of 2019.

"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", said John Mulligan, EVP and COO at Target in a statement.

It now maintains a network of 20,000 shoppers in 72 markets.

Target will use the remainder of the new year to get its other half of stores up to speed with Shipt shoppers - well before the 2018 holiday season.

Shipt, whose management team will remain in place and will operate independently in its hometown of Birmingham, Ala., now serves 70 US markets, compared to 30 a year ago.

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So this move Target's response. The company, which had raised $65 million to date and competes with Instacart, will continue to run its business independently and work with other retailers.

That said, this deal - expected to close by the year-end - does not change the fact that Target "has a lot more work to do in developing a clear proposition in grocery", he argued. 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.

It looks like Amazon might have some competition when it comes to same-day delivery services.

"We'll continue growing our marketplace and membership base, working with a variety of retailers to drive scale and efficiencies", said Bill Smith, Shipt's founder and CEO, in a press release.

Minneapolis-based Target expects half of its 1,800 stores to offer Shipt's service by next summer.

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