In challenge to Amazon, Target acquires Shipt for $550 million

Given Amazon’s strong commitment to same-day delivery service, that benefit is becoming a must-have for retailers like Wal-Mart Stores and Target.

On Wednesday (Dec. 14), on the heels of Wal-Mart’s acquisition of Parcel, Target announced the acquisition of same-day delivery platform Shipt in an all-cash deal worth $550 million..

Target plans to offer the same-day delivery option in a majority of its stores by late next year. Early on, customers will be able to purchase groceries, electronics, home good and other products for same-day delivery. Target said other products and categories will be added over time. To get the service, customers will need to pay a $99 annual fee, the retailer said.

“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, chief operating officer at Target.

Shipt will be a wholly-owned subsidiary of Target while continuing to operate independently. The company uses 20,000 personal shoppers to fulfill orders for same-day delivery for a variety of retailers in more than 72 markets around the U.S. Working with Target will enable Shipt to achieve the scale needed to further expand across the country.

“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.”