The retail wars are here. Following Amazon’s nearly $14 billion acquisition of Whole Foods and Walmart’s purchase of Jet.com and Parcel, Target just upped the competition with same-day delivery, swiftly leveraging Shipt just six weeks after it bought the grocery delivery company for $550 million.
The big-box retailer announced the move today, and the service will be available for customers in Birmingham, Ala., and South Florida starting Feb. 1. Georgia, North Carolina, South Carolina and Tennessee can access the service later this month. Target plans to expand to half of its 1,834 stores by the end of the first quarter, and to most stores by the end of the 2018 holiday season. It would mark the first time a nationwide retailer has offered same-day delivery in all major markets.
“Same day-delivery was at the top of our list when we were thinking about ways to make shopping at Target even easier,” Target executive vice president and chief operating officer John Mulligan said in a statement. “Shipt’s personalized, customer-focused approach fits perfectly with our commitment to deliver a convenient, exceptional experience, and we’re excited to begin offering same-day service in Florida.”
Initially limited to groceries, essentials, home, electronics and other items, Target intends to extend the service to every product category in 2019. To use Shipt, customers must sign up for an annual membership of $99 for unlimited free deliveries in as little as an hour, with the option of joining for only $49 if they sign up prior to the full roll-out. Deliveries under the $35 threshold have a fee of $7 per order.
Shipt currently has a network of more than 20,000 personal shoppers and is looking to hire another 3,000 in Florida as part of the expansion, which would grow the service from about 70 markets to upward of 160 by the end of the year, according to the press release.
Same-day delivery has become one of the greater challenges for retailers that seek to be the fastest, cheapest and most convenient option for its customers. Amazon, which owns 38 percent of the online shopping market, already offers two-hour delivery to its Prime program members in 32 cities, while Walmart provides two-day shipping as well as same-day delivery for New York City residents.
Target’s venture is expected to significantly disrupt the grocery delivery service market, with costs that are considerably cheaper than AmazonFresh’s $15 monthly subscription fee — a hefty $180 annually — on top of the Prime membership. Analysts are speculating that Amazon might be interested in buying Target this year.
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