Target buys same-day delivery service

Andrew Cummings
December 13, 2017

Initially, Target will offer same-day delivery of groceries, essentials, home, electronics and other products, and by two years from now, the service will encompass all major product categories at Target. As a result, it plans to offer same-day delivery at about half of its 1,800 stores by summer ahead of a roll-out to almost the entirely fleet by next year's Christmas season.

Target is planning to buy its way to same-day delivery via the acquisition of Shipt for $550 million in cash. Once a customer orders, they send a "shopper" into the store to grab the groceries, and then deliver the items. Rival Wal-Mart (WMT), which reached a deal in October to buy same-day-delivery startup Parcel, added 1%.


Consumers' increasing preference for shopping online, along with Amazon's purchase of upscale grocer Whole Foods and its encroachment into new arenas like apparel, have sent retailers scrambling to improve their online offerings.

"We believe that if you deliver groceries, you can deliver anything", Smith said. Our localized network of more than 20,000 shoppers goes above and beyond to make sure our customers are well served. The retailer now offers same-day delivery in New York City and can send online orders from 1,400 of its stores. They made a decision to pursue an acquisition rather than just a partnership in order to plow Target's resources into expanding Shipt's business, and to maintain its current level of customer experience. But, in a call with reporters, Target Chief Operating Officer John Mulligan said it is too early to offer details on how much Target will charge its customers for the service at that point.


Shipt, which will become a wholly-owned Target subsidiary that will continue to do and solicit business from other retailers, works with chains such as Kroger (kr)and Costco Wholesale (cost) by making the specific items at any given store available online. It has raised about $65 million in venture capital from investment firms, including Greycroft Partners.

Mulligan said the company hasn't yet had discussions with Instacart about their future. It has partnered with several e-commerce companies over the years and considered acquiring some.


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