Target agreed to purchase grocery-delivery start-up Shipt Inc. for $550 million, stepping up efforts to challenge Amazon.com in e-commerce orders.
Target will use the all-cash acquisition to accelerate its rollout of same-day delivery across the country, the retailer said in a statement Wednesday. The idea is to let customers order groceries and other goods online, and then have the items sent directly to their doors from nearby Target stores.
“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,” John Mulligan, Target’s chief operating officer, said in a statement.
The deal is Target’s latest move to beef up its logistics operations, following the acquisition earlier this year of software company Grand Junction, which manages local and same-day deliveries.
The retailer currently offers same-day delivery in New York City and can send online orders from 1,400 of its stores.
Competition in this space is growing fiercer, though, as rivals Wal-Mart and Best Buy have started offering same-day service, aiming to keep pace with Amazon.
Four out of five shoppers want same-day shipping, according to a survey by fulfillment software maker Temando, but only half of retailers offer it.
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The deal will allow Target to bring same-day delivery to about half its 1,834 stores by next summer and to the majority of stores in time for next year’s holiday season. The service — costing $99 a year for unlimited deliveries — initially will encompass groceries, household essentials and electronics, expanding to all major product groups by the end of 2019.