Target has bought US online same-day delivery platform Shipt for $550 million, as it steps up its challenge to rivals Walmart and Amazon.
The US discount retailer said the move will “significantly accelerate” its fulfilment efforts, bringing same-day delivery services to customers at around half of its 1,834 stores by early 2018. A majority of shops will have access to the service by next year’s holiday season.
When it is launched, Target will offer same-day delivery of groceries, essentials, home electronics and other products, while expanding the offering over time.
Founded in 2014 and located in Birmingham, Alabama, Shipt is a rapidly growing membership-based grocery marketplace and same-day delivery platform.
The service – which costs $99 a year for unlimited deliveries – uses an extensive network of over 20,000 personal shoppers to fulfil orders from various retailers and deliver within hours.
Target said that through Shipt’s app “members are connected to local, reliable shoppers who help facilitate a quality delivery experience that is personalised, efficient and convenient”.
The retailer saw its online business grow by 24% in the last quarter and it now aims to keep pace with Walmart, which already offers a same-day delivery service, as consumers show an increasing preference for shopping online.
Amazon’s expansion in the grocery sector with the $13.4 billion purchase of Whole Foods earlier this year has seen traditional retailers partner with start-ups like Shipt to retain customers.
Target CEO Brian Cornell and Shipt CEO Bill Smith.
Target COO John Milligan said the company aims to offer consumers a range of convenient ways to shop.
“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,” he said.
“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.”
Shipt founder and CEO Bill Smith added: “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.
“We’ll continue growing our marketplace and membership base, working with a variety of retailers to drive scale and efficiencies. We look forward to introducing Target guests to the convenience of our same-day delivery services, with the level of personal attention only Shipt can provide.”
Following completion of the deal, Shipt will be a wholly-owned Target subsidiary, and will continue to run its business independently. It will also expand partnerships with other retailers seeking same-day, last-mile capabilities.
All current Shipt employees will continue to be employed by Shipt and will work from their current offices in Birmingham and San Francisco.
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