Online grocery order fulfillment is poised for dramatic growth in the coming years. Packaged Facts predicts more than a tripling of eCommerce grocery sales by 2022 to $42B. In December Forbes reported that fully half of online grocery orders are fulfilled via click and collect, with rural and suburban consumers predominant over the home delivery preference shown in urban centers.
Most stores seem to be taking this grocery trend in stride as they currently use their stores for order fulfillment – as opposed to more remote corporate distribution centers. But as in-house click and collect offerings coupled with delivery service shoppers from the likes of Instacart or Shipt begin crowding the store aisles, experts predict a strain on the grocery store model. And they see this occurring as the online segment reaches about 10% of store sales. Layouts are not optimized for such picking and packing which will surely begin to erode the shopping experience.
While WalMart is working on added capacity for curbside pickup and increased home delivery, and Amazon is expanding its Amazon Fresh and Amazon Pantry items via the recent acquisition of Whole Foods, the Grand Junction software deal (to manage local and same-day deliveries), combined with the acquisition of Shipt, proves that Target is also committed to opening the door soon to same day delivery of anything in the store.
In late 2017 Target purchased Shipt for $550M, a startup company specializing in grocery delivery that will operate as a wholly-owned subsidiary – separate and with no data sharing from other retailers. The partnership promises same day delivery of groceries, essentials, home, and electronics in half of Target’s 1800 stores by Summer 2018. They plan to extend access to this service to most of their stores by the 2018 holiday shopping season. Shipt relies on professional shoppers to pick the items for each order, and then personally deliver them to a customer’s doorstep, and for this, Target will charge a $99 annual fee.
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