Target to buy delivery platform Shipt for $550M

Minneapolis-based Target Corp. is significantly stepping up its grocery-delivery capabilities with the planed acquisition of Shipt, a leading competitor to Instacart in the same-day delivery business.

Target on Wednesday said it has agreed to acquire Birmingham, Ala.-based Shipt for $550 million in cash and expects to roll out same-day delivery services to about half of its stores by early 2018.

Like Instacart, Shipt leverages a proprietary technology platform and a network of independent shoppers who pick from stores and deliver products to customers. Shipt currently has 20,000 shoppers serving 72 markets around the country, picking from supermarket chains that include H-E-B, Harris Teeter, Meijer and others.

Shipt customers pay an annual membership fee of $99 for unlimited deliveries, vs. $149 at Instacart, which also offers a pay-per-delivery option. Amazon Prime also costs $99 and offers same-day delivery on certain items.

Walmart, meanwhile, recently acquired Parcel, which offers same-day-delivery in New York City.

Target said Shipt would continue to run its business independently and pursue additional retailers to partner with for delivery. Shipt CEO Bill Smith will remain in his current role, and will report to John Mulligan, Target’s chief operating officer.

“With Shipt's network of local shoppers and their current market penetration, we will … dramatically accelerate our ability to bring affordable same-day delivery to guests across the country," said Mulligan in a statement. “By the 2018 holiday season, we will be servicing every major market across the country with same-day delivery.”

According to a report on technology website Recode, at least some of Shipt’s current grocery partners were pleased with the acquisition, as Target will likely invest resources into Shipt and drive more volume through the service.

The transaction is expected to close by the end of this year.