Target to Acquire Same-Day Delivery Platform Shipt
Target, which recently formed a partnership with Bark—the parent company of subscription-based BarkBox—is launching a same-day delivery service in 2018, following its purchase of Shipt for $550 million in cash.
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 guests across the country. The acquisition significantly accelerates Target's digital fulfillment efforts, bringing same-day delivery services to guests at approximately half of Target stores by early 2018. The service 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 at Target.
"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. 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, which is headquartered in Minneapolis. "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."
Founded in 2014 and located in Birmingham, Ala., Shipt is a rapidly growing membership-based grocery marketplace and same-day delivery platform. The service leverages an extensive network of over 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. Through Shipt's app, members are connected to local, reliable shoppers who help facilitate a quality delivery experience that is personalized, efficient and convenient.
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. Smith will remain in his current role, and will report to Target COO, 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 of calendar year 2017. This all-cash acquisition will be immaterial to Target's near-term financial results. 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.