By December 2017, Shipt orders had surged 60 percent from that June, Bloomberg reported, and the company was expecting to hit $1 billion in revenue in 2018.
At the time Shipt launched in 2014, other same-day delivery start-ups were also cropping up. Instacart, another same-day delivery grocery service based in San Francisco, had been in operation since 2012 and was serving up customers in major metro areas like San Francisco, New York and Los Angeles. Amazon Fresh, launched in Seattle in 2007, was also expanding its reach at the time.
But Smith believes Shipt being based in the South played an integral role in its success.
"When we started Shipt, we were really focused on what I call mainstream American families. We started in the South [and] we focused on really a lot of secondary type cities," Smith says, like Birmingham, as well as Tampa and Orlando, Florida.
"We were the first ones to bring the service [there], so people viewed us as the ones creating the market," he adds.
Now, the rivals operate in overlapping markets: Instacart serves shoppers in many smaller areas and Shipt has expanded to larger metro areas, like Chicago and Dallas. Since acquiring Whole Foods, Amazon has pulled the plug on some AmazonFresh delivery areas but is still available in cities including New York, Philadelphia and D.C. And there are of course new competitors. For example, Walmart announced plans to expand its grocery delivery service to 100 metro areas by the end of 2018.
Instacart, despite courting some controversy, continues to be financially successful — the company recently partnered with six of the top seven grocers in North America and raised a new round of funding, which values the company at $4.2 billion.
But Smith says there's something that still makes Shipt stand out.
"The fact that [the shoppers] go above and beyond is really the key to this," Smith says. "For example, a member will order a children's cough syrup, or some item that indicates the customer has a sick child at home, and our shopper will pick up a balloon for their child and deliver it with the order."
The future of Shipt
While Smith says he had been actively pursuing Target as a partner retailer since Shipt's inception, it wasn't until the summer of 2017 that a Target team member reached out.
"The conversations moved from partnership to a potential investment, to all-out acquisition," says Smith. "I met with some of their senior leaders and it was clear they were very supportive of what we were doing. And they would be a really great match."
In December, Target acquired Shipt for more than half a billion dollars.
"Same-day delivery is a service that our guests are asking for more and more often. By acquiring Shipt, we'll be able to take advantage of our network of stores and Shipt's technology platform and shopper community to quickly offer same-day delivery to millions of our guests," John Mulligan, Target's chief operating officer, recently said in a Q&A in December.
Since then, Target has begun rapidly rolling out the service, offering same-day delivery of groceries and other products on Shipt's platform in a slew of locations in Florida. Along with the latest roll out in Target stores in Washington, D.C. and Baltimore, Shipt is expected to be available in the majority of Target locations by the end of 2018.
Shipt will remain a wholly owned Target subsidiary, run its business independently, will still offer its services at other retailers and will continue to operate its businesses from its current offices in Birmingham and San Francisco.
For Smith, that's important, because he says Shipt's success is rooted in a simple concept: treating people (both his employees and customers) well. That, he says, can make all the difference.
"I think that's a really simple way to be successful in just about anything," Smith says. "And a lot of people miss it."