Target Buys Grocery Delivery Company Shipt For $550M
MINNEAPOLIS (WCCO) -- Target announced Wednesday that it's spending big money to quickly deliver its products to homes.
The Minnesota-based company paid $550 million for a grocery delivery service called Shipt. The goal is same-day delivery of most of its products nationwide.
Target thinks this big move will pay off down the road, and executives say the company has been working all year long to make shopping easier and more convenient for its customers.
"We've enhanced our order online and pick up store services," Target vice president of communications Katie Boylan said. "We've rolled out a new service called 'drive-up,' where you can literally have Target team members bring your order right up to the car."
Now with the acquisition of Shipt, Target can offer same-day delivery services. Boylan says it's as easy as going onto Shipts app.
"They'll choose Target as their retailer of choice and a team of person-shoppers will actually take that order, fill the order in one of our stores and then deliver it within a couple of hours directly to that customer's home," she said.
The service will be offered to at least half of Target stores beginning in the spring of 2018. The company hopes the acquisition will accelerate digital and total sales growth.
"The parts of the business that are growing are online ordering delivery to the home," University of Minnesota marketing professor George John said. "All of these things have elements of e-commerce attached to it, so you can see Target is doubling down its stakes on those parts of the business that they think are important and growing into the future."
John believes Target is making sure it enters the home delivery arena on its own terms by acquiring Shipt.
"I think of this more of as a recognition that, 'We need to be in the areas that are growing, and we need to do it ourselves to make sure it's done right,'" John said.
Shipt operated in 72 markets and has about 20,000 personal shoppers. Target Customers will pay $99 a year for the service.
By this time next year, Target hopes to have same day delivery in all of its major stores.
