Target announced today that it has agreed to acquire Shipt Inc., a same-day delivery platform, for $550 million in cash. The development puts Target head-to-head with its competitors in the online space as they all fight to match the convenience of main rival Amazon—which has its own news related to deliveries.
The transaction will allow Target to combine its store fleet and Shipt’s proprietary technology and personal shopper network to provide immediate gratification to online shoppers. Target anticipates offering same-day deliveries from half of it stores by early 2018 and most of the balance of its locations by the holidays next year.
“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.
Shipt, which was founded in 2014, has amassed a network of more than 20,000 shoppers in 72 markets who fulfill e-commerce orders from various retailers. Under the new deal, Shipt plans to continue to grow its members and retailer bases.
“We’ll continue growing our marketplace and membership base, working with a variety of retailers to drive scale and efficiencies,” said Bill Smith, Shipt’s founder and CEO. “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, run independently. Chief Executive Officer Bill Smith will remain in his current role, and will report to Target COO John Mulligan.
Target also plans to integrate Shipt’s activities with its newly acquired transportation tech company, Grand Junction.
The transaction is expected to close by the end of the year, and it’s expected to be modestly accretive in 2018.
Target’s latest acquisition underscores the importance of instant gratification in today’s online shopping wars. Not to be outdone, Amazon also announced that it has expanded its same-day and one-day service to more cities. The online giant had been offering those options to Prime members in 5,000 cities in the U.S., and now that number has increased to 8,000. The expansion moves the quick ship options beyond major metros to towns in states like New York, Virginia, California, Florida and Arizona.
Also, holiday procrastinators can issue a sigh of relief. Prime Now is available in 30 cities, fulfilling deliveries up to 11:59 pm on Christmas Eve.
“We are continually investing in Prime, adding more selection and making delivery faster and more convenient,” said Greg Greeley, vice president of Amazon Prime, in a statement. “In fact, in 2016, the last Prime Free Same-Day order from Amazon.com delivered in time for Christmas was ordered at 10:23 a.m. on Christmas Eve.”