Home Finance Target’s online delivery service Shipt gears up for Q4 shopping boom

Target’s online delivery service Shipt gears up for Q4 shopping boom

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Shipt on display in Miami Beach, Florida.

Gustavo Caballero | Getty Images

Shipt CEO Kelly Caruso said customers will stick with the same-day delivery service because they have discovered the hours they can gain back as they skip trips to stores during the global health crisis.

In an interview at the CNBC Evolve Summit on Tuesday, the leader of the Target-owned company said she can relate as a working mom. Before she became the company’s CEO, she said she was a Shipt member who could spend more time with her kids thanks to groceries and other purchases getting dropped off at her door.

She said she has “heard from our customers that one of the benefits coming out of the pandemic was this sense of slowing down and spending more time with family, cooking meals, eating together, playing games together.”

“They don’t want to lose that even after we’ve gotten through the pandemic,” she said.

Shipt has grown since it was acquired by Target 2017 for $550 million in cash. It offers same-day deliveries from over 100 retailers, including Target. Similar to gig economy companies like Uber and Lyft, Shipt relies on contract employees to fulfill orders. It competes with third-party delivery companies like Instacart and some of retailers’ own delivery offerings.

The company has traditionally relied on a membership model. But in August, Caruso said the company tried a new way to reach more customers without a long-term commitment.

Now, customers pay an annual fee of $99 per year for unlimited same-day delivery of $35 or more. They can also pay a fee of $9.99 for a single delivery or buy a pack of deliveries at a discount.

That change led to a 25% jump in new customers that month, she said.

As the holidays approach, Shipt plans to add 100,000 more shoppers. That will bring its total shoppers to more than 300,000 across the country — about triple the number since the beginning of the year.

During the pandemic, Shipt has been one of the businesses that has bolstered Target’s sales. Target sales fulfilled by Shipt grew more than 350% in the second quarter year-over-year.

Caruso said Shipt will keep adding more retailers so it will have an even broader range of products, from pet and baby supplies to household cleaners.

For more on iconic global companies and executives who are embracing change and transforming for the future, register for the CNBC Evolve Summit on November 10, 2020. CEOs from IBM, Visa, Ocean Spray, Bayer North America, Shipt, Honeywell and more will share strategies on how businesses and brands can evolve and win in an age of disruption.

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