Target announced this morning it would begin testing an on-demand grocery delivery service, in partnership with Instacart, that will allow Target shoppers to order groceries, household items, baby products like diapers and formula, pet items, and more, for same-day delivery.
Initially, the service will only be available in parts of Minneapolis, where Target is headquartered, but the retailer notes that the two companies are already exploring plans to expand the service into additional areas and markets in the future.
The partnership is a big win for Instacart, the venture-backed delivery startup whose last round of funding – $220 million from Kleiner Perkins Caufield & Byers, Sequoia Capital, Andreessen Horowitz, and others – valued its business at $2 billion. Instacart already has relationships with other large retailers, including Whole Foods, Petco, and Costco, for example, but getting its foot in the door with Target is a notable step.
Along with the Target partnership, Instacart also announced that it had expanded its service to Minneapolis, its 18th city. In addition to being Target’s hometown, Instacart founder and CEO Apoorva Mehta noted that there was a high volume of customer and retailer requests in Minneapolis, ahead of the launch.
“We received a lot of interest for our service from the community–both to use and partner with Instacart,” said Mehta, in a statement released this morning. “Those factors lead to an ideal market for Instacart delivery, and we look forward to servicing Minneapolis with the great mix of stores we have signed on as retail partners.”
Starting today, Target customers in select Minneapolis neighborhoods and some of the western suburbs will be able to go online to Instacart’s website or download its mobile app in order to shop Target products. Delivery is free for the first Instacart order, then subsequent deliveries will cost $3.99 for a two-hour delivery on orders of $35 or more. The service will be available from 9 AM to 10 PM daily, excluding holiday closings.
The pilot test of the delivery service comes on the heels of several initiatives at the retailer to make shopping easier by merging its e-commerce operations with its brick-and-mortar stores. The company is now offering store pickup for online orders and has expanded its “ship-from-store” program where stores themselves fulfill and ship online orders, typically in two to three days.
In addition, Target has been piloting curbside pickup in the San Francisco Bay Area thanks to a similar partnership with Palo Alto-based Curbside. And it’s been testing beacons in select stores as a way of reaching customers with offers and recommendations by way of their mobile phones while in-store.
The two companies didn’t announce when they expect Instacart to offer Target grocery delivery in other markets, following this Minneapolis launch. Instead, notes Jason Goldberger, President of Target.com and Mobile, Target will be evaluating the program to see its results. “Instacart is a leading player in this space and we look forward to seeing how guests in the Minneapolis area respond to the service,” he said.