A Shipt employee wearing a mask looks through the frozen food section of a partnering grocery store for requested food items, which will be placed in the large green bag hanging from the shopper's shoulder.
Shipt's delivery personnel go through a rigorhous screening process before being hired. The key qualities Shipt looks for are strong communication skills and attention to detail. — Shipt

Consumer products delivery service Shipt, a wholly-owned subsidiary of cheap-chic discounter Target Corp., has seen its growth rocket to new levels during the pandemic as consumers ramped up their use of e-commerce across a range of product categories.

In order to meet the rising demand, the company had to quickly scale up its network of drivers who shop and deliver orders to customers via the Shipt platform, from 100,000 to 200,000. That alone would be a daunting task for any business, but Shipt sees its carefully screened delivery personnel, who it refers to as “personal shoppers,” as key differentiators against its rivals, such as Instacart, because of the customer service they can provide.

Customers, who the company refers to as “members,” pay $99 per year for unlimited free deliveries on orders of $35 or more.

“With all of those new [personal shoppers], the one thing that really held true is that we did not lower our standards,” said Kelly Caruso, CEO of Shipt.

The company has a rigorous process for screening its personal shoppers—in fact, only about three out of 10 applicants are accepted, she said.

The most important qualities Shipt personal shoppers must have include strong communication skills and an unwavering attention to detail, Caruso said.

Third-party delivery companies such as Shipt and Instacart have accelerated changes that are reshaping the retail landscape amid growing consumer demand for e-commerce. These companies and others have enabled retailers to quickly roll out same-day and contactless delivery without having to invest in the infrastructure needed to fulfill the “last mile” of e-commerce orders.

As the massive scope of consumer demand became readily apparent in March during the first few days of the pandemic, Shipt focused on implementing added safety measures, both for the consumers who use the delivery service and for its personal shoppers in general. To help protect consumers, Shipt rolled out new features such as contactless delivery, and to protect the health of its personal shoppers, the company quickly made efforts to ensure that they had protective equipment and offered 14 days of financial assistance to personal shoppers who were diagnosed with COVID or were asked to quarantine. In addition, Shipt paid spot bonuses to those who “went above and beyond” in performing their jobs, said Caruso.

“It was about making sure that our [personal shoppers] felt safe and valued doing this incredibly important work,” she said.

With all of those new [personal shoppers], the one thing that really held true is that we did not lower our standards.

Kelly Caruso, CEO, Shipt

Tapping talent from the hospitality sector

The company found a ready pool of available talent among those workers who had lost their jobs in the hospitality industry, along with gig drivers from car services such as Uber and Lyft. The experience helped prepare Shipt for this year’s holiday season, when the company nearly doubled its roster of personal shoppers again.

“We've really learned a lot about how to scale up quickly,” said Caruso. So when the holiday season approached and the company needed to scale from 200,000 to 350,000 personal shoppers, it was able to tap into that same talent pool again.

Pay-per-order delivery model targets cash-strapped consumers

In addition to expanding its network of personal shoppers, the company also grew its coverage of the United States from about 75% to 80%, and added a “significant” number of new customers, Caruso said.

In order to increase its accessibility to cash-strapped consumers, Shipt launched a pay-per-order model during the pandemic. Customers can purchase passes for one, three or five deliveries for $10, $9 or $8 per delivery, respectively.

A previous test of the pay-per-order model saw a 25% increase in new customers, the company said.

“That is a great example of our teams working quickly together and demonstrating agility and flexibility to bring a new product feature to market as quickly as possible,” said Caruso, adding that Shipt has been “really pleased” with the results.

In addition to its consumer-driven platform, through which customers can peruse the full inventories of a range of retailers, Shipt also offers a same-day delivery-only service, called Shipt Driven, that retailers can bolt on to their existing offerings to provide the last mile of their e-commerce offering.

Shipt has also continued to expand its retailer partnerships beyond groceries and household essentials to include other categories such as pet supplies, office supplies, electronics, toys and more. In doing so, Shipt has become much more of a “one-stop-shop” for its members, Caruso said.

Among the retailers Shipt added to its network of retail stores in 2020 were Office Depot and Bed, Bath & Beyond, joining such chains as Meijer, H-E-B, Costco, Sur La Table, CVS and of course, Target, among others. Shipt, which operates out of headquarters in Birmingham, Alabama, and also has offices in San Francisco, operates largely independently from Target.

 A Shipt driver unloads groceries in green Shipt bags from the trunk of a blue car.
The recent booms in both e-commerce and contactless delivery have given Shipt the opportunity to expand its customer base. — Shipt

The e-commerce boom that’s pushing delivery players into the spotlight

Demand for e-commerce spiked sharply during the pandemic, rising by more than 30%, according to some estimates. Research firm eMarketer projects that U.S. e-commerce sales will reach $794.5 billion this year, up 32.4% from 2019 levels.

“We’ve seen e-commerce accelerate in ways that didn’t seem possible last spring, given the extent of the economic crisis,” said Andrew Lipsman, eMarketer principal analyst at Insider Intelligence, in a recent eMarketer report. “While much of the shift has been led by essential categories like grocery, there has been surprising strength in discretionary categories like consumer electronics and home furnishings that benefited from pandemic-driven lifestyle needs.”

In addition to expanding its retail alliances into new categories, Shipt recently launched a unique partnership with Midtown Global Market in Minneapolis, offering consumers delivery from a range of local vendors from the area where George Floyd’s murder sparked a wave of national protests.

“While this is something that we are not as of yet doing on a big scale, it's allowing us to, number one, learn, but even more importantly, to give back into the communities in which we operate,” said Caruso.

Shipt also focused in the past year on growing its back-office team, including those dedicated to rolling out initiatives that meet evolving retailer and member needs.

“We had come into 2020 with very strong plans to not only grow our business, but grow our team that supports our business to make sure that we could unlock that capacity to do what needed to get done,” said Caruso. “The pandemic just put more pressure for us to move faster on that. So, across both our Birmingham and our San Francisco offices, we have been aggressively hiring, and that will not stop as we go into 2021.”

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Published January 04, 2021