Shipt carved space in the market for itself offering delivery convenience, but CEO Kamau Witherspoon sees much more than that for the business.
“We’re no longer going to be just a shopping delivery platform,” Witherspoon said Tuesday in his keynote closing out the National Retail Federation’s Supply Chain 360 conference in Cleveland. “We’ll continue to invest there in the marketplace by doing the things that we talked about, making sure we’ve got great [consumer packaged goods] partners and making sure we’ve got the right retailers. But, in addition to investing in our marketplace and continuing to make that relevant for our customers, I’m really excited about shipping, which is a relatively new product line for us.”
Witherspoon is a little over three months on the job, assuming the top spot at the beginning of March, and said his initial 90 days have mostly focused on listening and learning. Now, he’s looking to diversify.
For Shipt, the business serves three different customer buckets. One is the end consumer ordering off its marketplace. The others are the retailers selling their goods through Shipt and the CPG brands that advertise via the company’s platform.
That first group, the consumers, want value, speed and convenience from platforms like Shipt. With millennials and Gen Z consumers, they’re willing to pay a premium for that convenience, Witherspoon pointed out.
In the race for delivery speed, Shipt won’t compete on ultrafast delivery, such as 15 minutes.
“What our customers have told us loud and clear is that speed for them doesn’t necessarily mean ultrafast,” he said. “What we see our customers tell us what they want is within the first one-hour delivery window or same day. And what they’ve also told us is that the pressure to strive for 15- or 30-minute delivery isn’t necessarily coming from them.”
Witherspoon used the example of retailer Party City, which is available through Shipt. About 80 percent of Party City orders through Shipt are placed at least three days in advance, Witherspoon said.
The CEO said the company will continue to monitor how consumers are using the app and placing orders to keep in lock step with them.
On the retailer offering front, Shipt is also looking to grow revenue streams as retailers’ “needs are changing and evolving as well,” he said.
Witherspoon used the example of parent company Target, which bought Shipt in 2017 for $550 million.
Shipt is one of several carriers Target is tapping for its last-mile sorting facilities aimed at speeding up delivery times there.
Last April Target said it was testing sortation centers to accelerate the last mile. Once an order is placed online, a store employee picks and packs a customer’s items. That order is then taken to a sorting facility, where packages are grouped based on routes that are then delivered by Shipt drivers and other carriers.
“Those orders are much more productive, they’re much more cost effective and so we’re really excited about the growth that we see there,” Witherspoon said.
Target more recently rolled out its last-mile delivery via Shipt to its Atlanta sorting facility with plans to expand that to other locations.
“This provides a fast, efficient, reliable and low-cost delivery option for our business, benefiting both our guests and the P&L,” Target chief operations officer John Mulligan told analysts last month during the retailer’s quarterly call. “While we’re excited about the results these centers are already delivering, this initiative is in the very early stages. And we have plans to continue opening centers and ramping up this new capability for years to come.”
For CPG brands Shipt works with, advertising revenue is expected to be “a really healthy revenue stream for us,” Witherspoon said.
Last year more than one-quarter of Shipt orders contained a CPG promotion, with executives forecasting plenty of runway for growth on that front.
Ultimately, Shipt continues to focus on refining its services for customers, tailoring them to their exact requests.
Said Witherspoon: “What we believe, more specific to our industry, things like fulfillment and delivery are going to have to get even more personal to make sure that you’re bringing something distinctive, very relevant to your customers. And that includes our retail customers as well.”