Costco Wholesale (COST) is ramping up its home grocery delivery.
The bulk retailer is teaming up with Shipt, a startup delivery service, to make runs to Costco stores and bring orders back to customers’ homes, moving further into one of most complex and costly fronts in the e-commerce wars while also building on Costco’s delivery to business clients.
Shipt said in a press release on Tuesday that it was launching the service for Costco customers in Tampa. The company overall plans to move into 50 markets and more than 30 million households by the end of 2017.
Grocers are scrambling to find ways to offer home delivery as a way to win customers, despite a threat to already razor-thin margins. Delivery services like Instacart (which is doing a test with Costco), AmazonFresh, Google Express, and FreshDirect have proliferated, while some major chains like Kroger (KR) and Walmart (WMT) have teamed up with services like Uber and Lyft on a test basis. Costco rival Sam’s Club has focused its efforts on ramping up drive-by pick up at its stores.
Shipt members pay an annual $99 annual fee for unlimited grocery delivery.
The venture capital-backed company, founded in 2014, has previously worked with grocers like Whole Foods and Harris Teeter, part of Kroger. Last year, Shipt raised more than $20 million in a new funding round with a group of investors that included Greycroft Partners, Harbert Growth Partners, and e.ventures. The startup, founded in Birmingham, Ala., says it already offers delivery in 35 cities.
