Photo: Vivien Killilea/Getty Images

Target on Wednesday announced that it will acquire Shipt, an Alabama-based same-day delivery startup, for $550 million in cash.

Bottom line: This is about playing defense against Amazon.

Target says that it expects to offer same-day delivery services at around half of its stores by early 2018 and at a majority of its stores by the 2018 holiday season. Full deployment across all major product categories would come by the end of 2019.

Shipt had raised around $65 million in venture capital funding from firms like Greycroft Partners, e.ventures, and Harbert Venture Partners. The Birmingham, Ala.-based company currently has a network of more than 20,000 personal shoppers in 72 markets, and will continue to run independently.

Some additional color from Ian Sigalow, a Greycroft partner and Shipt director:

  • Target CEO Brian Cornell flew down to Birmingham and did a test drive with a Shipt delivery person.
  • Expect Target to particularly leverage Shipt when it comes to fresh food offerings, as Shipt currently focuses on grocery.
  • The original conversations between Target and Shipt were about a business partnership.

[Note: Greycroft Partners is an investor in Axios]

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