How Shipt Is Leaning Into Personalized Same-Day Delivery Trends With New Partnerships From Sephora to Small Businesses

Why it matters:

• The pandemic made same-day delivery a must-have perk for merchants, and it has become the preferred way to shop for a growing number of consumers.
• The size of the same-day-delivery market is expected to grow by over $9 billion by 2025, with an annual growth rate of more than 20%.
• Leaning into consumers’ increasing appetite for both same-day delivery and patronizing local businesses, Shipt is deploying a growing network of over 300,000 personal shoppers that covers 80% of U.S. households.

As competition for same-day delivery heats up, Shipt, a pioneer in the space, is betting on personalization, both for its customers and its retail partners, to help it win the race.

Shipt, the delivery startup purchased by Target in 2017, has a significant head start on much of the competition. Over the past month, its market-share lead widened via new partnerships with Walgreens, 7-Eleven and specialty beauty retailer Sephora.

Those additions have expanded the footprint of stores Shipt delivers from by more than 40%. They reflect Shipt’s goal to move beyond grocery shopping to be able to deliver from almost any place Americans want to shop.

It's a strategy that includes beloved local stores as well as national retailers, Shipt’s chief business officer Rina Hurst told CO—.

“My team is out there looking for the right retailers to add to help them grow and help them achieve their e-commerce goals,” Hurst said. “We’re thinking about it on a market-to-market basis. Do I have the right local grocer, the right set of drug, pharmacy, pet, alcohol, apparel, footwear, beauty [merchants] – all the places that consumers are shopping?”

Sephora partnership fosters product discovery, taps influencer sway

With Sephora, Shipt has made its first partnership with a prestige beauty retailer. While Shipt customers in the past could order mass-market beauty products found in grocery stores and drugstores, the partnership now gives them access to premium beauty brands, delivered in as little as one hour.

Shipt wanted to make the experience of shopping for Sephora products on its app foster the sense of discovery that takes place in a Sephora store, Hurst said.

For example, when she placed an order to buy something she needed – concealer – she also purchased a new product she wanted – a retinol stick. “I discovered something new through our site because of the way we had merchandised and told stories together,” she said.

Shipt is customizing its experience for Sephora by offering a curated list of spring beauty products recommended by beauty influencer and television personality Jonathan Van Ness.

Shipt also added a link to Sephora’s loyalty rewards program so that its customers can earn rewards while shopping via the app.

[Read: How Hot Startups Pacaso, Shipt and Thumbtack Capitalized on Two Key Pandemic Trends to Fuel Growth]

Tapping the human touch to drive loyalty and sales: ‘My personal shopper knows the milk my son drinks’

For consumers, Shipt has added several personalization features in recent years. Its preferred shopper feature lets a customer designate a Shipt personal shopper as a favorite, making it more likely that shopper will be paired with the customer when a delivery order is placed.

That allows customers and personal shoppers to form a repeat relationship that lets the shopper get to know customer preferences and do a better job buying for them.

“My personal shopper Ethan knows the milk my son drinks, he knows the eggs my husband wants and he knows what substitutions are allowed and not allowed in my house because he’s shopped for me so many times,” Hurst said.

Shipt customers also can specify in their profile that they are vegetarians, or follow a particular diet, allowing them to be matched with shoppers who have similar profiles and are thereby more knowledgeable about available products.

Shipt, which was founded in Alabama in 2014, has always been designed to feel like a friend is picking up something for you at the store. Shipt shoppers text back and forth with customers, and send pictures from stores if they see a product they need to substitute for something that is out of stock.

Customers pay through the Shipt app and its personal shoppers have a Shipt card they use to make purchases at stores. Shipt customers can either pay a monthly or annual membership fee for free deliveries or pay a one-time fee per order.

Retailers handle their share of the Shipt costs differently, Hurst said. Some absorb part or all the cost as a way to woo customers, while others pass the cost on to the customer.

Catering to post-COVID, same-day delivery expectations: ‘It’s a habit now’

Shipt saw a tremendous surge in demand for same-day delivery during the pandemic, and that demand has continued, Hurst said.

“It’s a habit now,” she said. “People have gone from it being a luxury to a core part of how they operate, because of the time savings, the convenience and the quality.”

A recent MicKinsey & Company report noted that one in three consumers now expect same-day-delivery, a shopping shift that has retailers scrambling to keep up.

Office Depot, for example, a Shipt partner, announced in March that it was also partnering with Shipt competitor Instacart to offer same-day delivery of office and school supplies.

Target, which acquired Shipt as it was building a same-day delivery solution for its stores, reported in March that its same-day delivery and pick-up services surged 45% in 2021.

One of the key areas where Shipt hopes to add retail partners, Hurst said, is specialty food retailers such as ethnic supermarkets. In the Pacific Northwest, a popular food coop recently became a Shipt partner, an example of how Shipt is seeking out the places in each market where consumers want to shop.

Shipt also hopes to expand in categories such as party supply, electronics, apparel and footwear.

Just as Target has a reputation for being the upscale, or “Tar-zhay,” of mass merchants, Shipt is viewed as offering more of a premium service, she said.

That gives it an edge in landing retail partners, Hurst said.

“Retailers are very interested in finding same-day delivery partners that best represent their brand,” she said. “And that often comes down to quality as a key factor.”

Brands are asking “who has the same values and qualities that we care about” when looking for a delivery partner,” Hurst said. “Shipt really rises to the top there.”

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