Retail

Shipt COO: Why Success Requires More Than Just Great Tech

For some companies, the digital shift has been more seismic than subtle. Shipt is one of those companies. Owned by Target, the shopping and delivery service has seen a business spike in numbers that are massive even in the context of the current crisis. Among them: a 278 percent revenue bounce in Q1 2020 versus 2019.

In fact, Shipt is four or five years ahead of plan, as Chief Operating Officer Bridget Fruit told PYMNTS CEO Karen Webster. Pre-pandemic, the company projected that online grocery delivery would hit around $20 billion around 2025. According to Fruit, the industry is close to seeing those numbers now. She pointed to other data to support that growth, including last year’s estimate of 13 percent of all shoppers trying online grocery. Now, projections from Bricks Meets Click put that number at 35 percent.

The pandemic-fueled digital shift is certainly the driving force in that growth — but Fruit believes the personal touch Shipt builds into its business model is also important.

“We see Shipt as a service that gives time back to households that are busy and need to spend their time elsewhere,” Fruit said. “Our whole strategy revolves around how we take technology and human connections to create an amazing experience. We believe that this human connection point, these authentic relationships, help make every individual feel that their needs count. And so for us, personal interaction is very important.”

Shipt is different than most grocery or home delivery services, Fruit noted. From the company’s end, it’s curated. The retailers it chooses to work with (currently numbered at around 100) are vetted by the company before being added to the roster. In addition to parent company Target, that current roster includes H-E-B, Meijer, Petco, CVS, Costco and, most recently, natural foods market Fresh Thyme.

One of the advantages of being a Shipt partner is data. Fruit is very clear with retail partners that anonymous customer data will be shared with that retailer only. As she pointed out, this creates a stronger bond with the retailers and enables both them and Shipt to optimize their pick-up and delivery options. For example, some customers would rather have a shopper purchase their items and then set up for curbside pickup. Shipt also has retail partners that maintain their own curbside pickup arrangements, but contract with Shipt for delivery services. The key is flexibility between Shipt and the retailer.

The next differentiator is with the shoppers. The company doesn’t merely hire delivery people — it hires shoppers who interact via phone and text with their clients. The original business model also called for subscriptions to the service, but during the pandemic that was adjusted to let users pay a fee for individual shopping and delivery services.

The company currently has 200,000 shoppers, double the number it had at the beginning of the pandemic.

“I think we were able to accelerate our hiring faster than we typically would have because we were at a place where people were looking for work,” Fruit explained. “These are independent contractors. They can pick their own schedules, and they have flexibility. We were able to apply our typical process pretty quickly to make sure we were getting shoppers who were the right fit for our strategy and what we’re trying to do for our customer.”

Shipt has done more than deliver revenue and services for its parent company. Fruit noted that Shipt is very much a part of Target’s strategic roadmap as it works to meet the Digital 3.0 customer. And the goods being delivered go beyond grocery, which plays well into Target’s model — as well as the model of its retail partners, like Petco. What else are they ordering? Fruit has seen a complete bathroom makeover cross her inbox, as well as a family that wanted to throw a properly distanced COVID-era birthday party. The company has also recently started to deliver beer and wine in states where regulations allow it.

In some ways, Fruit defines Shipt by what it’s not rather than just what it is.

“We’ve focused on not becoming the retailer, not being the restaurant delivery, not trying to play across all areas,” she said. “We’re serving as an extension of the retailer, and we supplement the in-store experience. At the heart of our personal connections and authentic relationships is our shoppers. They are part of our family, and truly our differentiators.

“We will continue to focus on being an extension or brand ambassador for the retailer, providing that wonderful experience that makes us different than the others,” Fruit added. “I can’t speak for the other companies in this space, but for us, we’re trying to maintain that personal connection.”

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New PYMNTS Report: The CFO’s Guide To Digitizing B2B Payments – August 2020 

The CFO’s Guide To Digitizing B2B Payments, a PYMNTS and Comdata collaboration, examines how companies are updating their AP approaches to protect their cash flows, support their vendors and enable their financial departments to operate remotely.

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