Target Shakes Up Fulfillment with Shipt Acquisition

Source: Danielle Dolinsky, Kevin Holmsten, Friday, Dec 15, 2017

Target announced it has agreed to acquire Shipt for USD550 million. Target will roll-out the Shipt service to half of its locations by summer 2018 and to most of its remaining locations by the 2018 holiday season. For a USD99 annual fee, Shipt members will be able order same-day delivery of a broad assortment of items from Target including fresh grocery, pantry, consumer electronics, and home goods. Going forward, Shipt will continue to operate as an independent operator and offer same-day grocery delivery for other retailers, including H-E-B and Publix.

Target has recently been investing in its digital & ecommerce ecosystem, running a second tech accelerators program, relaunching curbside pickup, acquiring the transportation technology company Grand Junction, and merging its Cartwheel loyalty and the Target Mobile app into a single app. The acquisition of Shipt now adds a new dynamic into Target’s competition with Walmart and Amazon, as Target’s grocery fulfillment options were comparatively underdeveloped.

Shipt, which launched in 2014, has expanded from 30 US metros to 70 over 2017, and now has a retail partner with a presence in most metros it has yet to reach. Previously, Shipt had primarily operated in southern and Midwestern markets in partnership with Kroger, Publix, H-E-B, and Meijer. The investment from Target will enable Shipt’s platform to gain scale faster and reach a sustainable volume of consumers to compete with Instacart and other grocery delivery service providers.