With the $550 million cash acquisition of Shipt, Target has leaped into the same-day delivery battle that has so far been dominated by Amazon and Walmart. After onboarding the Shipt platform and its community of shoppers, Target plans to bring same-day delivery to approximately half of its stores by early 2018.
At launch, Target plans to offer a limited number of items for same-day delivery, including groceries, essentials, home and electronics, with the goal of expanding to all product categories by the end of 2019.
“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,” said John Mulligan, EVP and COO at Target in a statement. “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. By the 2018 holiday season, we will be servicing every major market across the country with same-day delivery.”
Founded in 2014, Shipt leverages a network of more than 20,000 personal shoppers to fulfill orders from various retailers and deliver them within hours in 72+ markets. Shipt has delivery deals in place with retailers including the Meijer supermarket chain. Shipt will function as a wholly owned Target subsidiary and will continue to run its business independently. The company also plans to expand its partnerships with other retailers. CEO Bill Smith will remain in his current role and will report to Mulligan.
In addition to the same-day delivery capabilities, Target also plans to leverage Shipt’s expertise as the retailer enhances its supply chain, including integration with the recently acquired Grand Junction transportation technology company.
The transaction is subject to customary closing conditions and is expected to be completed before the end of calendar 2017. According to Target, the acquisition will be immaterial to the company’s near-term financial results, but will be mildly accretive to its earnings per share in 2018 while accelerating digital and total sales growth over the medium term.