Target has a new $550 million weapon to defeat Walmart and Amazon

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Target is buying Shipt, a platform that enables same-day delivery.
The acquisition will allow Target to deliver groceries, furniture, and other products the same day that customers order it.
Shipt will continue to work with other retailers for now.

Target has announced it is acquiring the delivery platform Shipt, drastically increasing the retailer's ability to make same-day deliveries across the US.

With a price of $550 million, it's one of the largest acquisitions in Target's history, the retailer said.

Shipt will supercharge Target's same-day delivery efforts, enabling same-day delivery at half of Target stores by early next year. Target's plan is to have a same-day delivery offering in almost all stores and all major cities across the US by the 2018 holiday season.

For now, same-day delivery will be limited to "groceries, essentials, home, electronics and other products," but it will expand to every product category in 2019.

Though Shipt will be a wholly owned Target subsidiary, it will still operate like a retail partner. Its employees will shop at Target stores — not warehouses — for delivery purposes, just like it does it for other retailers.

Shipt requires a $99-a-year membership for unlimited free deliveries. The current minimum for Shipt orders is $35, but Target may remove that for orders from its own stores.

Shipt is currently in 72 cities in the US, but it will expand rapidly with Target's help.

Same-day delivery is increasingly becoming the battlefield for retailers fighting to be more convenient for customers. Walmart has ramped up its same-day delivery prowess with its acquisition of New York City-based Parcel. Best Buy also expanded its same-day delivery program, and reduced its cost. Amazon, for its part, offers same-day delivery through its Prime Now program.

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