Target on Thursday announced plans to roll out its first Shipt-powered deliveries to 57 stores in Birmingham, AL and South Florida beginning Feb. 1, ahead of a promise to launch the program this springtime.
The mass merchant bought the same-day fulfillment and delivery platform last month for $550 million in cash, one of the largest acquisitions in company history.
Four months before, Target also acquired Grand Junction, a San Francisco-based transportation technology company, for an undisclosed amount, to improve and expand delivery capabilities.
Target teams moved quickly to get the company up and running on Shipt's platform in less than eight weeks, Target chief operating officer John Mulligan said in the blog post.
"And we’re not stopping there — we’ll keep expanding, with plans to offer Shipt’s services at nearly half our stores by the end of first quarter, and the majority of stores by the 2018 holiday season, making Target the first retailer to be able to offer same-day delivery in all major markets across the country," he said.
The two companies faced a tall order in getting "hundreds of thousands of individual products in Target’s aisles" uploaded to Shipt’s app, the company said. Those items included some 50,000 products, including fresh foods, that weren’t even already listed on Target.com. "To do it, teams leveraged existing data, and members of both Target’s and Shipt’s teams visited some stores to gather additional info and check that items are listed accurately," the company said.
Shipt's model essentially takes a retailer's brick-and-mortar touch-and-see advantage and turns it into an online service, enlisting a network of more than 20,000 "shoppers," who pick out customers’ orders. The same person shopping also makes the delivery, and when a match works well (based on Shipt’s rating system allowing customers to give feedback in real-time) the same shopper and customer are likely to paired again.
Founded in 2014, headquartered in Birmingham, AL, and operating in more than 72 U.S. markets, Shipt is a membership-based grocery marketplace and same-day delivery platform that allows customers (who pay $99 per year) to place online orders for fresh food and household essentials like cleaning supplies from nearby stores. Shipt is now a wholly owned Target subsidiary, but its offices will remain in Birmingham and San Francisco, and will operate independently.
The tie-up is buying Target time, technology and talent in the same-day delivery space and is also helping Shipt scale.
Running the Shipt service from its stores will ultimately strengthen the operational performance of Target's physical assets, GlobalData Retail Managing Director Neil Saunders told Retail Dive in an email. "While we do have concerns that the service might cannibalize some existing store sales, we believe that it will ultimately result in higher overall sales," he said.