Tech Acquisition: Target Is Buying Same-Day Delivery Service Shipt For $550M

The retail store Target is using $550 million to buy the startup Shipt, an Alabama-based delivery service.

The move is another example of how American stores are preparing to compete with Amazon’s powerful delivery service. Amazon has grown its domain with the purchase of Whole Foods, and has made moves to expand and improve traditional retail as well as e-commerce.

As a two-year-old company, Shipt had raised more than $60 million from investors, which included Greycroft Partners, e.ventures, and Harbert Management Corp, its seed investor.

To get the benefits of the service, customers must still sign up for Shipt. Once an order is placed, the Shipt shoppers connect with the customer via text to confirm updates, changes, and other information.

Shipt will now function as a wholly owned subsidiary of Target. It will run its business independently, a statement reported. The company wants to expand its partnerships with other retailers looking for same day, last-mile delivery, according to executives from both companies.

That plan to continue growth indicates that Shipt will build a bigger delivery business while growing as a challenger to Instacart in the future, which is also partnered with Target.