Target’s $550M Purchase of Shipt, Summed Up in a Single Word: Amazon

target sign on store exterior
Mike Mozart under Creative Commons

Target is gearing up for the next round of grocery wars.

The retailer announced Wednesday that it would buy grocery delivery service Shipt for $550 million.

Same-day delivery through Shipt will be available in half of Target’s more than 1,800 stores in early 2018. And by the 2018 holiday season, Target delivery will be an option at the majority of the company’s stores and in all major markets, a statement said.

Shipt works with a variety of regional grocery chains to provide delivery to customers who pay $99 per year or $14 per month for the convenience. The more than 20,000 Shipt shoppers, who are independent contractors, retrieve items from stores in 72 cities and deliver them to customers’ homes in as little as one hour.

Shipt will operate independently of Target, despite the buyout. An email to Shipt subscribers from founder and CEO Bill Smith said that Shipt will continue to add other retailers to its delivery service.

What Expanded Target Delivery Means in Grocery Wars

Target has been fine-tuning its grocery options since long before Amazon bought Whole Foods. In August, it acquired transportation company Grand Junction, through which it tested same-day delivery for customers in New York City.

The retailer also announced in September that it lowered prices on grocery and household items, and simplified its in-store pricing signage.

The same month, it expanded the Restock program, which offers $4.99 one-day shipping on more than 15,000 household essentials.

And while Amazon seems to be the grocery retailer to beat, as Sarah Halzack of Bloomberg recently wrote, there’s still time for other services to lure in shoppers since the online grocery ordering concept is still so new.

Lisa Rowan is a senior writer and producer at The Penny Hoarder.