Consumer product

Target Buys Grocery Delivery Service Shipt for $550M

Target Corp. decides to buy the delivery start-up Shipt Inc. in hopes of boosting its same-day delivery capability. The acquisition amounted to $550 Million and aims to double efforts in competing against Amazon and Wal-Mart.

Target logo against sky background

The Minneapolis-based chain said on Wednesday that it was willing to pay for the technology company in cash. Also, it would be offering same-day delivery to about half of its 1,800 stores early next year.

Shipt will become a wholly-owned Target subsidiary by the time the acquisition is finalized. The delivery service provider will continue to do and solicit business from other retailers, such as its previous work partners, Kroger and Costco Wholesale. Shipt worked with the retailers by making the specific items needed at any given store available online.

There are plans of incorporating Shipt into Target’s app and website, but either company didn’t say when that will happen.

“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 Target Chief Operating Officer John Mulligan in a statement.

Target stated that it expects the deal to be finalized before the end of this year.

Target shares climbed 2.7 percent to $62.67on Wednesday.

Wal-Mart and Amazon

Amazon and Walmart

The deal announced today provides further proof of the very real threat that Amazon wreaks on its rivals.

The news of acquisition builds on Target’s billion-dollar investment strategy and its longer-term goals of catching up with its rivals Wal-Mart and Amazon. The two has been making sure to leave their marks on the industry all throughout this year.

As Wal-Mart begin to roll-out its grocery pickup in more stores and aims for same-day delivery, Target has no other choice but to pick up the pace. Not to mention Amazon making similar moves with more expected to come.

Target is set to sustain its growth in its online business after it grew 24 percent last quarter.

Target has been focusing on its turnaround efforts and pushing for internal growth. While it strives for such, Wal-Mart was able to buy Jet.com in late 2016 and Amazon acquired Whole Food in August this year to help extend their range.

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