Eye on Retail: Shipt delivers pay-per-order option

A Target-owned online grocery service is no longer requiring customers to commit to an annual membership.

Shipt, which provides home delivery from local retailers offering groceries, household essentials and medications, now offers customers the opportunity to pay per order. Shoppers can purchase Shipt passes for one, three or five orders for $10, $9 or $8 per delivery, respectively. The company also offers an annual membership program with free deliveries on orders of $35 or more for a fee of $99.

Earlier this year, Shipt tested offering non-members the option to try Shipt with one-, three- or five-time passes. The early results showed consumers responded positively to the pay-per-order single-use passes and packs. During the test, those passes quickly accounted for the majority of how new users began shopping with Shipt.

The company saw a 25% increase in new customers as a result of the pay-per-order offering. Customers have the option to move from a pay-per-order to a subscription model at any time. While the membership model still accounts for the majority of Shipt customers, since rolling out passes nationwide, the company says nearly 80% of new users first begin shopping on the platform via the single- or multi-use offerings.

Shipt has seen elevated consumer demand since the COVID-19 outbreak in March. The company has added thousands of temporary shoppers in stores across the country in response.

"Ever since Shipt first launched with our subscription membership model, our customers have responded positively. And up until now, all of our customers had an ongoing membership with us," said Kelly Caruso, CEO of Shipt. "However, we knew that we had an opportunity to introduce even more people to Shipt by allowing them to shop with us in ways that best suit their needs. The challenges consumers have faced during the pandemic further strengthened our resolve to make Shipt as accessible to as many customers as possible."

Shipt is an independently operated, wholly-owned subsidiary of Target Corp. Founded and headquartered in Birmingham, Ala., Shipt also maintains an office in San Francisco and is available to 70% of households in more than 5,000 U.S. cities.