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]