Dive Brief:
- Petco and online grocery delivery company Shipt on Wednesday announced they've partnered to offer same-day delivery of food, grooming, health products and other pet supplies from nearly 1,300 Petco stores nationwide.
- As of April 18, Shipt members in more than 200 market areas served by the participating Petco stores — which cater to nearly 70 million households, according to a press release from the companies — could get Petco delivery in as soon as one hour.
- Until then, anyone who signs up for a Shipt membership can get it for $49 instead of the regular $99 annual fee.
Dive Insight:
Founded in 2014, Shipt is expanding swiftly thanks to its Target ownership. The mass merchant acquired the company in 2017 for $550 million in cash and a year later expanded its same-day Shipt deliveries to include all major product categories by this year.
"Shipt to Target is both a key component of its evolving fulfillment ecosystem, as well as an additional revenue stream," E-commerce Analyst Alice Fournier told Retail Dive in an email. "Retailers need to become more creative in deriving new sources of revenue to fund their expensive eCommerce operations. Using Shipt as a third-party logistics providers to other retailers is an innovative way to bring new dollars in."
The last-mile service also recently tied up with CVS stores, allowing the drugstore retailer to bring prescription delivery within hours to some 6,000 stores. That offer makes sense for Target, too, beyond its Shipt operations, because so many Target stores include CVS pharmacies, after it sold its own pharmacy operations to the drugstore in 2015. The partnership with Petco is curious, though, in light of Target's own growing pet supplies sales. But on balance, it's a win for Target, according to Fournier.
"[I]t allows Target, through Shipt, to provide shoppers with a much more extensive portfolio in the pet category — which is a high-demand category online — without having to carry a completely new inventory," she said. "There is very limited risk to Target, as the potential gains from the Petco sales far outweigh the potential loss sales from shoppers shifting from Target to Petco, for their pet supplies."
