Target Pays $550 Million To Bring Shoppers Same-Day Delivery

MINNEAPOLIS, MN — Target said it shelled out $550 million in cash to buy the online same-day delivery service provider Shipt in hopes of being able to provide same-day delivery for Target shoppers across the country. Target Corp. announced the purchase on Wednesday.

The store said in a release it hopes to have same-day delivery services for shoppers at roughly half of its stores by early 2018. Most Target stores in all major markets will offer same-day delivery before the 2018 holiday season, the store said.

Target said it expected the deal to be completed before the end of this year.

“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. 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,” said John Mulligan, executive vice president and chief operating officer for Target.

Just in! @Target to acquire @Shipt, bringing same-day delivery to about half our stores beginning early 2018: https://t.co/4Oo8B0UJeH pic.twitter.com/UBOMedR7uK
— Target News (@TargetNews) December 13, 2017

Target is headquartered in Minneapolis. Shipt was founded in 2014 and located in Birmingham, Alabama.

Retailers have been searching for ways to speed up delivery as they try to match the speedy service offered by the online retail giant Amazon. Earlier this year, Target bought a delivery logistics company to offer same-day service to in-store shoppers.

Walmart's announced in October that it bought New York City-based Parcel to provide same-day deliveries.

"This is yet another example of a brick-and-mortar retailer leveraging its physical assets to improve its online offerings," said Moody's retail analyst Charlie O'Shea.

Bill Smith, Shipt’s founder and CEO, said his company is "very excited" to partner with Target. He said the partnership will allow Shipt to further accelerate its growth and bring its service to more people.

"We’ll continue growing our marketplace and membership base, working with a variety of retailers to drive scale and efficiencies," he said. "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."

Shipt will be a wholly owned Target subsidiary, and will continue to run its business independently. The firm said it will continue working with other retailers, including Costco and Meijer. Shipt said it won't share customer data from Target's rivals with its new owner.

Exciting news! Shipt is being acquired by @Target. We’ll be delivering all your favorites from Target very soon. We remain committed to our partners – both current and future. Stay tuned for more details. pic.twitter.com/DKFvbKgaue
— Shipt (@Shipt) December 13, 2017

By JOSEPH PISANI, AP Retail Writer

Photo credit: Nati Harnik/Associated Press