Target Bulks Up Its Delivery Muscle

Purchase of software firm aims at meeting demand for speedy delivery

Author: Andria Cheng

August 14, 2017

In the heated retail market-share battle, meeting the increased demands of consumers who want to get their purchases right away has become a must-have for major retailers from Amazon to Walmart. The latest evidence: Target is buying a startup whose technology services same-day delivery needs.

Company Data

Target

Revenue and ecommerce data, store productivity information, real estate breakdowns and more

Target on Monday agreed to buy San Francisco-based Grand Junction, which offers a marketplace that connects retailers, distributors and third-party logistics providers with a network of more than 700 carriers. Grand Junction claimed on its website that it’s the only platform for managing and offering both same-day and local delivery in every North American market.

Target and Grand Junction weren’t just walking into the marriage cold. Target has used Grand Junction’s technology to help it introduce a same-day delivery pilot service in June in its store in New York's Tribeca neighborhood where in-store purchases could be delivered on the same day for a fee.

Customers, whether shopping online or in store, “expect to get products quickly and on their terms,” said Arthur Valdez, Target’s executive vice president, chief supply chain and logistics officer and a former Amazon executive, said in a Target blog post. This acquisition “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.”

Grand Junction CEO Rob Howard said in the blog post that its technology allows retailers to “determine the fastest, most efficient method for local deliveries” as well as gives them “visibility of deliveries" and allows them to “track carrier performance.”

For now, Grand Junction’s technology is an in-store play. Target will use Grand Junction’s platform to expand its same-day delivery pilot to a few more New York-area stores this fall before expanding the service to more major cities next year. 

Target eventually also will look at using Grand Junction’s know-how to service same-day delivery needs for online orders, spokesman Eddie Baeb said in an interview. Grand Junction's technology, currently used by other retailers including CVS and Office Depot, will become exclusive to Target even though the company plans to fulfill its contractual obligations to all of its existing customers, Baeb said.

Target’s purchase of Grand Junction highlights the trend in retail to increasingly seek or outright acquire startup know-how to get access not only to the talent but also to help retailers fuel growth or fill a certain gap to help them drive growth both online and in-store.

Target in 2014 tested a same-day delivery service before eventually folding that. Having Grand Junction to help meet customers’ increased same-day delivery needs is a growing imperative as Target had reported fourth straight quarter of same-store sales drops. While its Q1 online sales rose 22%, the growth still lagged that at both Walmart and Amazon. Target reports Q2 results Wednesday.

Still, while Grand Junction could help Target level the playing field against Amazon on the delivery front, the No. 2 US discounter still has plenty of catch-up to do. It currently partners with delivery startup Instacart for grocery deliveries, which can be as quick as an hour, but the service is only available in the Chicago, Minneapolis, and San Francisco markets.

Related Links

Speed Sells

Think ultrafast delivery is only for emergencies? Think again.

Amazon, for its part, has AmazonFresh for either same-day or next day delivery. It has also expanded its Prime Now service, free for Prime members with two-hour delivery and $7.99 for one-hour delivery, to over 45 cities in seven countries since its December launch in 2014, Stephenie Landry, Amazon’s vice president of Prime Now, said at a conference in March.

Walmart, meanwhile, is testing having its store employees deliver orders. It’s also aggressively seeking to turn its store fleet into advantage. The company has expanded same day order for in-store or curbside pickup and has even tried to cut the costly so-called “last-mile” delivery expense by this year’s introduction of Pickup Discount, where customers get a discount when choosing to have some of their online orders picked up in stores. 


Popular

Retail 2017 TrendPack

eMarketer’s Retail 2017 TrendPack gives you everything you need to leverage the latest data and analysis for retail ecommerce.

Learn More »