Target has a new $550 million weapon to defeat Walmart and Amazon

Dennis Green

  • Target is buying Shipt, a platform that enables same-day delivery.

  • The acquisition will allow Target to deliver groceries, furniture, and other products the same day that customers order it.

  • Shipt will continue to work with other retailers for now.

Target has announced it is acquiring the delivery platform Shipt, drastically increasing the retailer's ability to make same-day deliveries across the US.

With a price of $550 million, it's one of the largest acquisitions in Target's history, the retailer said.

Shipt will supercharge Target's same-day delivery efforts, enabling same-day delivery at half of Target stores by early next year. Target's plan is to have a same-day delivery offering in almost all stores and all major cities across the US by the 2018 holiday season.

For now, same-day delivery will be limited to "groceries, essentials, home, electronics and other products," but it will expand to every product category in 2019.

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Though Shipt will be a wholly owned Target subsidiary, it will still operate like a retail partner. Its employees will shop at Target stores — not warehouses — for delivery purposes, just like it does it for other retailers.

Shipt requires a $99-a-year membership for unlimited free deliveries. The current minimum for Shipt orders is $35, but Target may remove that for orders from its own stores.

Shipt is currently in 72 cities in the US, but it will expand rapidly with Target's help.

Same-day delivery is increasingly becoming the battlefield for retailers fighting to be more convenient for customers. Walmart has ramped up its same-day delivery prowess with its acquisition of New York City-based Parcel. Best Buy also expanded its same-day delivery program, and reduced its cost. Amazon, for its part, offers same-day delivery through its Prime Now program.

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