Target (TGT) has bought itself a big new weapon to compete in the intensifying same-day and local delivery wars.
The discount retailer said on Monday it is buying Grand Junction, a San Francisco-based startup that connects retailers and other distributors to a network of more than 700 carriers across North America, a move to better go toe-to-toe with rivals Amazon.com (AMZN) and Walmart (WMT) among others that have vastly increased their fast delivery capabilities.
The deal “will accelerate the work we’re doing to improve our speed of delivery. It will also boost our ability to offer new services – like same-day delivery, and even assembly and installation,” Arthur Valdez, Target’s chief supply chain and logistics officer and a former Amazon executive, said in a blog post. Grand Junction already takes care of the same-day delivery Target is piloting at its Tribeca store in Manhattan.
Target is betting that Grand Junction’s tech, combined with its 1,800 physical stores, will help it speed up delivery at a time consumers are starting to expect it as a basic service. Target is planning to expand its same-day delivery to other New York City stores by October and to additional U.S. cities early next year, Valdez told Bloomberg News. Of course, Target has its work cut out for it: Amazon’s Prime subscription service give members in some 30 cities receive orders as quickly as in one hour, a tough capability to match. Walmart has focused its efforts on in-store pickup of online deliveries as well as curbside retrieval of groceries.
Target’s e-commerce grew 22% last quarter, a solid pace to be sure, but below the growth enjoyed by Walmart and Amazon. (Target will report second quarter results on Wednesday.) Financial terms of the Grand Junction deal were not disclosed. The deal is Target’s second e-commerce investment in 2017: in May it took a $75 million stake in online mattress seller Casper Sleep Inc. (Walmart has been making many deals of its own in the last year, snapping up jet.com, Bonobos and ModCloth among others.)
This isn’t Target’s first stab at same-day delivery: a few years ago, it tested the service in a few cities, and it has worked with Instacart for same-day grocery delivery in some markets. It recently launched a next-day delivery of household items, called Target Restock in its home market of Minneapolis. The Grand Junction deal comes at a time major deals in the