Target buys service for same-day delivery plans

The traditional brick-and-mortar retailer announced a $550 million purchase of Shipt

This Friday, Oct. 21, 2016, photo shows a Target store in Philadelphia. New York's attorney general is announcing that 47 states and the District of Columbia have reached an $18.5 million settlement with Target Corp. to resolve the states' probe into the discounter's massive pre-Christmas data breach in 2013. (AP Photo/Matt Rourke)
AP image

(CNN) – The traditional brick-and-mortar retailer announced a $550 million purchase of Shipt, which it said will bring same-day delivery to about half of its stores by early 2018.

By next year’s holiday shopping season, Target expects to offer same-day delivery from a majority of its stores and in all major markets.

Shipt uses a network of over 20,000 personal shoppers to fulfill orders from various retailers, delivering them within hours in more than 72 markets.

Until now, the company has been focused on delivering online grocery purchases, competing with Instacart, which offers shopping services from a variety of grocery chains.

Shipt will continue to serve the retailers it already works with, some of which compete with Target’s grocery business.

With Target, Shipt will expand into a broader range of products.

At launch, Target says it will offer same-day delivery of groceries, essentials, home, electronics and other products. But by the end of 2019 Target expects to offer same-day delivery in all major product categories.

Target and other traditional store-based retailers have traditionally had one advantage over online retailers in that they can immediately meet a shopper’s needs. But Amazon (AMZN), with an expanded network of fulfillment warehouses, is making a push into same-day delivery in major markets.

Walmart is also experimenting with a same-day delivery for online purchases.

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