Tag: shipt

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Walmart tops U.S. online grocery market, with 62% more customers than next nearest rival

Walmart is dominating the U.S. online grocery market, according to new research out this week from the analysts at Second Measure. The nationwide retailer today offers grocery pickup and delivery in nearly every U.S. state, and had 62% more customers in June than its next nearest rival. And no, in this case, that rival is not Amazon — it’s Instacart.

Like Walmart, Instacart also operates across the U.S., offering both pickup and delivery services.

The same is true for Amazon Prime Now and Peapod, while other competitors are limited to delivery only — like Target-owned Shipt and FreshDirect. Meanwhile, AmazonFresh offers delivery, plus pickup in Seattle.

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While Walmart has been steadily capitalizing on its existing brick-and-mortar footprint and proximity to its customer base, Amazon’s strategy in the online grocery space appears to be one of confusion. The retailer is competing against itself by offering two services — Amazon Prime Now and AmazonFresh. The latter, an older service operated before Amazon’s Whole Foods acquisition, is actually one of the few online grocery businesses in decline, the report discovered. Founded over a decade ago, AmazonFresh has only grown to 15 U.S. cities and shut down in others.

This June, AmazonFresh sales were down by 19% year-over-year — the worst sales change in the new research report, the analysts noted.

Prime Now, on the other hand, is booming. Year-over-year sales nearly tripled in June. This is not only due to Whole Foods, whose assortment was added in February 2018, and is now a big driver for orders. Consumers also likely opt for Prime Now because it’s offered as part of their annual Amazon Prime subscription, while AmazonFresh is an additional $14.99 per month.

Prime Now has also been expanding to more U.S. markets, and is on track to reach even more as Amazon invests in building additional Whole Foods locations and possibly other non-Whole Foods stores. 

The new research also notes that Target’s Shipt could be doing better than its estimates indicate.

Since Shipt’s acquisition by Target in December 2017, Shipt’s customer base has grown by 69%. While a membership is required to shop the various grocers and stores offered in the app, Target deliveries don’t require a subscription.

In June, Target launched a dedicated online grocery shopping site on Target.com, powered by Shipt. Second Measure says it cannot distinguish any grocery orders that originate in the Target app or website, so Shipt’s customer counts may be higher than it’s able to determine.

Another question the report answers is to what extent Instacart has been impacted by the loss of Whole Foods.

Following its 2017 acquisition by Amazon, Whole Foods ended its relationship with its first and older delivery partner last year. The company recently claimed, however, that Whole Foods was only 5% of sales. Second Measure seems to back this up, finding that Instacart had 23% more customers in June than it had when the partnership ended in December 2018.  

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Meanwhile, one exception to Walmart’s dominance in online grocery is in the unique urban metro that is New York. Here, locally headquartered FreshDirect has 31% of the NYC customer base for online grocery. (Note that Second Measure counts customers at each company they use — so customers who shop from more than one are counted twice.) Walmart only has 2% of the NYC metro, by comparison.

It also has small percentages in several other big metros, including San Francisco (2%), Boston (8%) and Los Angeles (9%). Walmart is huge in both Dallas and Phoenix, on the other hand — but both have been early markets for online grocery.

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The report additionally found there’s strong loyalty among online grocery shoppers. Unlike with meal delivery services, no grocery delivery company shared more than 9% of another company’s customer base in the second quarter of 2019.

The market still has room to grow, as well. Only 12% of U.S. consumers have tried at least one of the grocery services the report analyzed, up from 9% in June 2018.

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Target launches a dedicated shopping site for same-day delivery, powered by Shipt

Target is ramping up its same-day delivery efforts, following news of Amazon’s plans to increase Prime speeds and Walmart’s recent launch of free, next-day delivery in select markets. This morning, Target announced it’s making it easier to shop its same-day selection directly from its website, with the deliveries powered by Shipt.

The retailer acquired grocery delivery service Shipt for $550 million in 2017, in order to accelerate its digital fulfillment efforts. Following the deal, Target has continued to offer same-day delivery through Shipt on grocery items and other day-to-day needs, like household, pet and baby items. While Shipt delivers for other local grocers and stores as well, Target’s prices in Shipt aren’t marked up.

However, until now, Target shoppers would have to go to the Shipt website or download the app to browse the same-day selection from Target. It wasn’t an integrated experience. That changes with today’s launch of a dedicated shopping section on Target.com available at target.com/sameday.

Here, online shoppers can browse the 65,000 items offered for same-day delivery through Target.com, including groceries, household items, pet items, baby needs, and even some apparel. They can also easily reorder items they’ve previously purchased, or search through specific categories for new things to order.

The Target.com same-day assortment is largely similar to what’s available through the Shipt app, we understand, with the exception of adult beverages which are only available through Shipt in select markets.

The same-day shopping experience on Target.com offers a different look-and-feel from Shipt’s website — it’s not just a Target-branded wrapper around the Shipt website.

Target’s site offers clickable categories at the top of the page, like “Grocery,” “Household Essentials,” “Pets,” “Baby,” and more, each with a colorful icon. Individual product pages also look like any other product page on Target.com with various options for pickup or delivery, as well as features for subscribing to regular purchases for a discount, or adding the item to a list or registry.

The key difference is that the delivery option is now “Same Day,” which wasn’t offered before. (A button to ship it through Target Restock, a next-day service, is also available if the order isn’t as urgent.)

At checkout, shoppers can choose to pay a flat $9.99 per delivery fee for same-day service or can instead opt for a four-week trial of a Shipt annual membership. If you choose the latter, the trial converts to a $99 per year membership after the free period ends, unless you cancel.

A Shipt membership additionally includes the option to shop from other local and national retailers. The app supports over 60 retailers, but members only see those that are nearby.

The launch of the dedicated same-day selection on Target.com represents the first time Target shoppers without a Shipt membership could take advantage of same-day delivery for a fee. The option joins several other ways that Target lets people shop its site, including same-day store pickup, Drive Up (a curbside pickup service), next-day shipping through Target Restock, as well as traditional shipping.

For Target REDcard holders, there’s another perk with using the new same-day website, too. They’ll now be able to pay with REDcard to save 5% on purchases.

Plus, Target’s online shoppers can take advantage of weekly ad promotions, like “buy 3 items for a $5 Target GiftCard,” for example, which wasn’t possible in Shipt.

As on Shipt, Target.com’s same-day shoppers can edit or add items to their order up to an hour before their delivery, and save multiple addresses associated with their account.

“With same-day delivery now available directly within the Target.com experience, we’ve made it even easier for our guests to shop at Target – while still getting the great value, curated product assortment and helpful guest service they’ve come to expect,” said Dawn Block, Target Senior Vice President, Digital, in a statement.

 

 

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Target’s same-day delivery service Shipt will include ‘all major product categories’ in 2019

Target has grand plans for Shipt, the same-day grocery delivery service it bought a year ago for $550 million. While generally known today as something of an Instacart competitor – essentially Target’s answer to Walmart and Amazon’s grocery delivery businesses – Shipt has expanded to include more of Target’s assortment over the past year. By 2019, the company says Shipt will offer same-day delivery of “all major product categories.”

Today, Shipt offers same-day delivery on more than 55,000 groceries and other essentials, as well as select electronics, toys and other products.

Next year, the delivery service will expand to include all major product categories, Shipt tells TechCrunch.

That means categories like apparel, towels, and more will become available for same-day delivery. The retailer declined to share specific details, like how many additional SKUs would be involved, or when in 2019 this category expansion would begin.

The move could be a potential game-changer for Target, however, which has been revamping its business to better accommodate all the ways people want to shop, both online and off. It has been remodeling its stores to add parking spaces for Drive Up customers – meaning, those who place orders online for same-day pickup from the store. It has updated stores’ layouts so online Order Pickup, self-checkout and grab-and-go grocery essentials are near the front as you walk in.

But one of the challenges Target still faces is that it can be difficult to figure out which merchandise is available via which delivery or pickup method. Even when you search and filter for “in-store” merchandise in Target’s mobile app, you’ll be shown out-of-stock items as well as those you can only order online for shipping to your home.

Meanwhile, a lot of Target’s merchandise – like cold grocery items and clothing – are not available through same-day services like Drive Up or Shipt.

The end result is that you can’t do a full “Target run” that includes all types of merchandise, unless you go into the store. It also likely causes customer confusion, since Drive Up and Shipt offer access to a different assortment of products. Why shouldn’t same-day items be available for both pickup or delivery?

But if Shipt will grow to include all major product categories in 2019, it could become Target customers’ preferred same-day service.

In 2018, Shipt saw massive expansion, following Target’s promise that it – along with Drive Up – would be available nationwide by the 2018 holidays.

The retailer noted in a corporate blog post about Shipt’s one-year anniversary that the delivery service now reaches over 200 million U.S. markets across 46 states – up from the 70 markets where it was live at the time of acquisition. Shipt has also seen its membership numbers triple since joining Target, the retailer says, and it’s hired more than 375 new employees across its Birmingham, Alabama and San Francisco offices.

Shipt will continue expand geographically in 2019, and will expand its Birmingham headquarters’ headcount by the “hundreds,” Target said.