Target is buying Shipt for $550 million to beef up same-day delivery

Target Corp. plans to boost its same-day delivery capability by paying $550 million for Shipt Inc., its latest move to try to catch up with Amazon.com Inc.

Shipt delivers groceries to members who pay $99 a year. Target said Wednesday that it would add more products to the service next year, such as home goods and electronics, and that most of its in-store products will be available via Shipt by 2019. To get same-day delivery, Target shoppers will have to place orders through Shipt’s app or website and pay the annual fee.

There are plans to incorporate Shipt into Target’s app and website, but the companies did not say when that would happen.

Retailers have been looking for ways to speed up delivery as they try to match the fast service offered by Amazon. Earlier this year, Target bought delivery logistics company Grand Junction to offer same-day service to in-store shoppers.

Minneapolis-based Target expects half of its 1,800 stores to offer Shipt’s service by next summer. It’ll be available to most of its stores by the 2018 holiday shopping season, the company said.

Shipt, founded in 2014, is to operate separately from Target and remain in its headquarters in Birmingham, Ala. Shipt said it would keep working with other retailers, such as Costco and Meijer, and that it won’t share customer data from Target’s rivals with its new owner.

Target said it expected the deal to be completed before the end of this year.

Target shares rose 2.7% on Wednesday to $62.67.

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UPDATES:

2:15 p.m.: This article was updated with Target’s stock movement.

This article was originally published at 9:15 a.m.