In a partnership with Instacart, Target announced this morning that it will start testing an on-demand grocery delivery service that would let customers purchase groceries, household goods, baby products like diapers and formula, pet supplies, and more for same-day delivery.
The service will initially only be accessible in certain areas of Minneapolis, where Target is based, but the retailer notes that the two businesses are already discussing future possibilities to extend the service to more regions and markets.
The collaboration is a major victory for venture-backed delivery service Instacart, whose $220 million in capital from Kleiner Perkins Caufield & Byers, Sequoia Capital, Andreessen Horowitz, and others valued the company at $2 billion in its most recent funding round.
Although Instacart already has partnerships with several other major businesses, including Whole Foods, Petco, and Costco, getting its foot in the door with Target is a significant development.
Instacart also disclosed that Minneapolis, its 18th city, has been added to its service expansion, in addition to the Target relationship. Minneapolis had a lot of merchant and customer demands before the debut, in addition to being the home of Target, according to Instacart founder and CEO Apoorva Mehta.
In a statement released this morning, Mehta said, “We received a lot of demand for our service from the community—both to utilize and partner with Instacart.” These elements make Minneapolis an ideal market for Instacart delivery, and we are looking forward to serving the city with the fantastic assortment of retailers we have enlisted as retail partners.
Customers of Target will be able to shop for Target products online at Instacart or through its mobile app as of today in a few neighborhoods of Minneapolis and some of the western suburbs. First Instacart deliveries are free; after that, they cost $3.99 for two-hour deliveries on purchases of $35 or more. The service will be offered every day from 9 AM to 10 PM, barring holidays.
The delivery service’s initial test comes after the company launched a number of measures to simplify shopping by integrating its e-commerce and physical storefronts. The company has expanded its “ship-from-store” service, where stores themselves fulfill and ship online purchases, often in two to three days, and now offers store pickup for online orders.
Target has also been testing curbside pickup in the San Francisco Bay Area as a result of a comparable alliance with the Palo Alto-based Curbside. Additionally, it has been experimenting with beacons in a few stores to reach customers with offers and suggestions via their mobile devices while they are inside the store.
Following the launch in Minneapolis, the two businesses did not specify when they anticipate Instacart will start delivering groceries from Target in other cities. Jason Goldberger, President of Target.com and Mobile, states that Target will instead be assessing the program to see how it performs. “Instacart is a leader in this market, and we anticipate seeing how customers in the Minneapolis area react to the service,” he said.
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