Target buys online grocery platform Shipt in US$550m deal

14 Dec 2017 --- Traditional brick and mortar retailer Target is to acquire the platform Shipt, Inc. in a US$550 million deal which will see same-day delivery services offered at approximately half its stores by early 2018.

Target will leverage its network of stores and Shipt’s proprietary technology platform and community of shoppers to quickly and efficiently bring same-day delivery to consumers across the US.

The acquisition significantly accelerates Target’s digital fulfillment efforts and seriously improves its online position. The company says it plans to ramp up same-day delivery services which will be offered from the majority of Target stores, and in all major markets, before the 2018 holiday season.

At launch, Target will offer same-day delivery of groceries, essentials, home, electronics and other products, while expanding the products offered over time. By the end of 2019, same-day delivery will include all major product categories.

“We laid out an ambitious strategic agenda in early 2017, which included a focus on giving our guests a number of convenient ways to shop with Target, whether it’s ordering online and picking up in one of our stores, driving up to pick up an order, or taking advantage of services like our new Restock program,” said John Mulligan, executive vice president and chief operating officer for Target.

“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.”

“By the 2018 holiday season, we will be servicing every major market across the country with same-day delivery and Shipt’s service-oriented approach aligns well with Target’s commitment to delivering an exceptional shopping experience for our guests.”

Leveraging personal shoppers
Founded in 2014 and located in Birmingham, Alabama, Shipt is a rapidly growing membership-based grocery marketplace and same-day delivery platform. 

The service leverages an extensive network of more than 20,000 personal shoppers to fulfill orders from various retailers and deliver within hours in more than 72 markets. 

Shipt values a personalized, customer-first delivery experience that simplifies life and saves time for members and through Shipt’s app, members are connected to local, reliable shoppers who help facilitate a quality delivery experience that is personalized, efficient and convenient.

“We are very excited to partner with Target, one of the most loved retailers in the country with a reputation for supporting local communities,” adds Bill Smith, Shipt’s founder and CEO.

“Partnering with Target and the national scale they provide allows Shipt to further accelerate our growth, bringing our service to more people, in more markets across the country.”

“We’ll continue growing our marketplace and membership base, working with a variety of retailers to drive scale and efficiencies. 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 and will continue to run its business independently. It also plans to expand partnerships with other retailers seeking same-day, last-mile capabilities. 

All current Shipt employees will continue to be employed by Shipt and will work from their current offices in Birmingham and San Francisco. CEO Bill Smith will remain in his current role and will report to Target Chief Operating Officer, John Mulligan.

In addition to same-day delivery capabilities, Target will also leverage Shipt’s expertise as the company enhances and strengthens its supply chain, including integration with the recently acquired transportation technology company, Grand Junction.

The transaction is subject to customary closing conditions and is expected to close prior to the end 2017. 

This all-cash acquisition will be immaterial to Target’s near-term financial results, according to the company. It is expected to be modestly accretive to the company’s earnings per share in 2018 while accelerating digital and total sales growth over the medium term.