In an effort to ramp up its fulfillment and delivery capabilities, Target Corp. (NYSE: TGT) has agreed to purchase Shipt Inc. for approximately $550 million in cash. The deal announced Wednesday brings same-day delivery services to customers across the U.S.
The Shipt deal comes at an interesting-yet-expected time, as grocery store chains and retailers are hoping to fulfill customer orders faster and more efficiently. Amazon’s recent acquisition of Whole Foods, valued at $13.7 billion, adds an overwhelming amount of pressure to retail giants such as Target to remain competitive. The growing interest and simplicity of online shopping has converted traditional brick-and-mortar shoppers to one-click buyers. To date, the growth in online customer traffic has retail giants shifting its digital strategy and seeking to deliver groceries and retail items in under an hour.
Founded in 2014, Shipt was created as an Internet-based grocery and retail delivery service with a network of more than 20,000 personal shoppers. The Birmingham, Alabama-based target offers scheduled and same-day delivery services from your local store direct to a customer’s door whether at home, the office, on vacation, or to friends and family. The target’s service will enhance Target’s digital fulfillment capabilities, bringing its delivery service to nearly half of Target stores by early 2018. For majority of Target stores and all major markets, the service will be available before the 2018 holiday season.
“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, whether it’s ordering online and picking up in one of our stores, driving up to pick up an order, or taking advantage of services like our new Restock program,” states Target chief operating officer John Mulligan. “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.”
As part of the deal, Shipt will operate as a subsidiary of Target and continue to run its business independently. Target, based in Minneapolis owns approximately 1,834 store fronts and Target.com. The all-cash acquisition of Shipt is expected to close by year’s end of 2017.