The deal will allow Target to offer same-day delivery to customers at about half of its stores by early next year, and a majority of stores before the 2018 holiday season. 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.
It’s another example of big retailers across the country investing in tech-fueled fast delivery services as they bolster their e-commerce businesses and fend off Amazon.
Founded in 2014, Shipt operates in 72 markets and uses 20,000 personal shoppers to help retailers deliver products to customers. 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. It charges users a $99 yearly or $14 per month membership.
“While it will not affect Target’s capability this Holiday season, the fact that Target will have this service in place during 2018 will significantly improve its online competitive position as the service is integrated and rolled out to customers,” Moody‘s Lead Retail Analyst Charlie O’Shea said in a statement. “This is yet another example of a brick-and-mortar retailer leveraging its physical assets to improve its online offerings.”
Recode noted that it’s unclear how much Target will charge for same-day delivery; its customers will need to create an account on Shipt to get the service. Target, which recently began testing its own curbside pickup service, saw comparable sales rise 1 percent in the most recent quarter. Its stock started the year at $77 per share but has fallen to $62; it is up more than 1 percent today.
Amazon, meanwhile, today announced that its same-day and one-day shipping service for Prime members is now available in more than 8,000 cities. Amazon is also investing in ways to deliver grocery store items, as demonstrated by its $13.7 billion acquisition of Whole Foods earlier this year and the company’s decade-long work with AmazonFresh.
The Whole Foods deal sent shares of brick-and-mortar retailers down and has caused grocers like Albertsons to partner with delivery companies like Instacart.
“When Amazon bought Whole Foods, what they did was they sent the signal to the entire grocery/retail landscape that Amazon was coming,” Instacart CEO Apoorva Mehta said at the GeekWire Summit. “Now, for every single grocery retailer at this point in time, whether they believed it or not before, now they needed an e-commerce strategy. They needed to have same day delivery.”
Walmart is also investing heavily in delivery and e-commerce infrastructure; it bought Bonobos, ModCloth, MooseJaw, and Parcel in the past year, which came after its $3 billion acquisition of Jet.com.