How Target just upped its same-day delivery game

It hopes to roll out same-day deliveries to most stores throughout 2018.

The Essentials

1. Target has acquired Alabama-based, same-day grocery delivery service for $550 million.

2. It says it will start offering same-day grocery deliveries for online orders at half of its stores by early 2018, and the majority of stores by the 2018 holiday season.

3. Target has offered same-day delivery in a handful of markets – including the Twin Cities – via Instacart since September 2015.

The Big Picture

This is a significant move from Target to grab a bigger slice of the online grocery market after similar purchases by its main rivals.

Internet giant Amazon got involved in brick-and-mortar groceries with its purchase of Whole Foods earlier this year, while Walmart bought e-commerce site

The acquisition, according to Target's chief operations officer John Mulligan, will allow the company to "leap several years ahead, significantly accelerating our nationwide same-day delivery service."

Although the future of Target's experiment with Instacart hasn't been determined, Mulligan said the retailer will "have conversations with them about where to go next."

But the purchase of Shipt will allow Target to aggressively accelerate its same-day shipping offer, making use of Shipt's network and tech platform to roll out at stores nationwide.

Initially, Target will offer delivery of groceries, essentials, home and electronics products, but will eventually offer delivery of all its major product categories by the end of 2019.

Shipt employs 20,000 "personal shoppers" who can fulfill orders from retailers and deliver to doorsteps within hours.

"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,” Mulligan said.

Shipt will continue to serve other grocery stores, operating as an independently-run subsidiary of Target.

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