Target to Buy Grocery Delivery Startup Shipt for $550 Million
December 13 2017 - 11:47AM
Dow Jones News
By Khadeeja Safdar
Target Corp. is paying $550 million to acquire grocery delivery
startup Shipt Inc., moving to match services that have been rolled
out by rivals Amazon.com Inc. and Wal-Mart Stores Inc.
Shipt, like rival Instacart, uses thousands of contractors to
buy products at retail stores and deliver them to customers. It
charges a $99 membership fee and its shoppers buys products from
local stores, including grocers like Kroger Co. and Costco
Wholesale Corp. Shipt typically sells items at a slight premium to
the in-store price, and charges delivery fees for orders less than
$35.
For Target, the deal helps the company quickly expand its
delivery services, an area where rivals have been aggressively
expanding. Wal-Mart, which sells far more groceries, has expanded
curbside grocery pickup this year. Amazon has upended the grocery
market with its acquisition of Whole Foods and rapid expansion of
its Pantry and Fresh delivery services.
Concentrated in cities and surrounding suburbs, grocery delivery
is still a small business, accounting for less than 2% of last
year's $715 billion in food-retail sales, according to research
firm Technomic Inc. Amazon already makes up more than half of
online food orders through its Fresh, Prime and Prime Now
services.
Target said the acquisition would allow it to offer same-day
delivery services in about half of its Target stores by early 2018.
It plans to have the service in all major markets before next
year's holiday season. Currently, the retailer has used a
partnership with Instacart to deliver groceries in three
markets.
Shipt, which was founded in 2014 in Birmingham, Ala, currently
offers its service in more than 70 cities through 20,000 shoppers.
The startup, which has about 275 employees, has raised more than
$60 million in venture capital, from backers including Greycroft
Partners and Harbert Venture Partners.
Write to Khadeeja Safdar at khadeeja.safdar@wsj.com
(END) Dow Jones Newswires
December 13, 2017 11:32 ET (16:32 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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