Grocery shopping is an essential aspect of daily life; however, it can often be challenging to manage amidst busy schedules and demanding lifestyles. Online delivery service emerged as a solution that provides convenience and a streamlined online shopping experience while delivering products straight to customers’ doors. That’s where online grocery delivery services like Shipt come in to simplify the process. It is noteworthy to understand how Shipt makes money through its innovative approach to online shopping. This article includes everything you need to know about the working model of an app like Shipt.
Between 2022 and 2027, the market for online grocery delivery services is anticipated to expand at a CAGR of 19.43%. The market is expected to grow by USD 652.45 billion in size.
Technavio
Shipt is a US-based online grocery delivery service founded in 2014 with the goal of providing an easier and more convenient shopping experience. Shipt allows customers to shop for groceries from local stores like Target, Fred Meyer, Meijer, etc., and have them delivered to their doorstep. The company depends on the network of local stores for a wide range of fresh produce, household essentials, pantry staples, etc., for customers to shop from. Meanwhile, customers can use the Shipt app/website to browse products, add them to their shopping carts and make a purchase. On the other hand, Shipt has a network of personal shoppers who pick up and purchase groceries or products on the customer’s behalf and then deliver them to the customers.
Founder | Bill Smith |
Founded on | 2014 |
Headquarter | Alabama, USA |
Total funding raised | $65.2 Million over three rounds |
Valuation | $15 Billion |
Parent company | Acquired by Target since 2017 for $550 Million |
Shipt partners | Target, HEB, LIDL, Meijer, Costco, Winn Dixie, Lowes Foods, ABC Fine Wine & Spirits, Piggly Wiggly, Costco, Petco, and many more. |
Shipt competitors | goPuff, Instacart, Burpy, Rappi, FreshDirect, OurHarvest, Onfleet, Growcer, Mercato, ShopurGrocery, Walmart, and many more. |
Number of Shipt shoppers | More than 300,000 shoppers nationwide |
No more navigating busy aisles or waiting in long lines – Shipt makes grocery shopping a convenient and stress-free experience. Plus, with exclusive discounts and offers, online grocery shopping through Shipt is a smart choice for anyone looking to save time and make their life easier.
When discussing Shipt, it is imperative to consider all relevant information pertaining to its functioning and the acquisition of its customer and shopper base.
HEB | Safeway | Meijer |
LIDL | Target | Winn Dixie |
Costco | Lowes Food | Piggly Wiggly |
ABC Fine Wine | Spirits | CVS |
Office Depot | Petco | Publix |
7 Eleven | Walgreens | Best Buy |
Bed Bath & Beyond | BevMo! | Buy Buy Baby |
Fresh Thyme | Kroger | Sur La Table |
Smart & Final | Total Wine & More | and more.. |
Shipt | Users get to communicate with their shoppers |
Instacart | Offers comprehensive grocery selection |
Amazon Fresh, Pantry | Offers groceries and household deliveries to prime members and whole foods customers |
FreshDirect | For Eastern U.S. customers who wish to support farms |
Postmates | Shopping from local grocery stores |
Walmart | Offers pharmaceutical products along with groceries and conducts repairs. It also delivers when the customer isn’t at home by utilizing a camera that employees wear. |
Stop & Shop | It makes more than 400 locations in the states of Massachusetts, Connecticut, Rhode Island, New York, and New Jersey accessible to customers for online ordering. |
DoorDash | Offers express grocery delivery (in under 30 minutes) along with food delivery from restaurants. |
Shipt ensures top-notch service through a thorough process. To ensure timely, convenient grocery delivery, follow the steps to coordinate with the shopper, store, and yourself. Here’s a guide to how Shipt works.
Shipt operates on a business model that leverages the use of technology to facilitate grocery delivery services. The technology stack employed by the company is a critical aspect to consider for individuals who aspire to launch similar ventures. The following is a list of the technology stack utilized by Shipt for reference purposes.
Application and Data | React, NGINX, CloudFlare, Node.js, PostgreSQL, TypeScript, GraphQL, Rails, Kafka, Go, Storybook, Redis, React Native. |
Utilities | Segment, Stripe. |
DevOps | GitHub, Kubernetes, Docker. |
Business Tools | G Suite, Slack. |
Here are the entities of the Shipt business and revenue model:
Users | Users have a smartphone app that allows them to choose a shop to obtain groceries at a specific time; in exchange for this service, an online payment must be made. |
Shoppers | The shoppers are in charge of accepting orders via the app. Depending on the end-user and the vicinity of the store, the app allocates shoppers to get a certain order. |
Stores | Due to their partnership with Shipt, the retailers can generate more sales and money. Once given an order, the shoppers travel to the store and pick up the requested items. |
Shipt received $65.2 million in total in three rounds of venture capital investment. Investors in it include Greycroft e-Ventures and Harbert Growth Partners. Target Corp purchased the company in December 2017 for $550 million; since then, neither the company’s valuation nor revenue has been updated.
Crunchbase
Key entities | Users, Shoppers, Stores |
Key activities | Delivery services, Local market management, Customer management |
Key resources | Efficient shoppers, Collaboration with local stores, Technical backend support |
Accessible channels | Mobile Application for Android and iOS, Website |
Cost structure | Cost to keep the tech up and running, Management staff, Commissions to the shoppers |
Membership plans | Annual ($99/year), Monthly ($14/month) |
Delivery fee | $7 delivery fee on orders below $35 |
Surge charge | $5 > than that store |
Here are the features to be must be included in an on-demand grocery app like Shipt:
Features Of User Panel | Features Of Admin Panel | Features Of Shopper Panel |
1. Signup/Sign-in | 1. Dashboard | 1. Option to accept/reject the delivery request. |
2. User profile creation | 2. Order allocation | 2. New Delivery Notifications |
3. Customer reviews | 3. Payment Management | 3. Chat Feature |
4. Search Option | 4. Customer Management | 4. In-app calling |
5. Tracking Delivery Status | 5. Shopper Management | 5. Geo-location |
6. Managing Orders | 6. Inventory Management | 6. Delivery confirmation |
7. Payment Options | – | – |
8. Delivery Scheduling | – | – |
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The online grocery sales business will generate $36.3 billion in revenue in 2023, as per IBIS World.
Numerous mobile internet connections and intense rivalry are the main drawbacks for this sector.
Consumers who have an active internet connection on gadgets like tablets and smartphones are represented by the number of mobile internet connections. Americans have more access to online purchasing since there are more mobile internet connections. Online grocery sales will have a chance in 2023 as mobile internet connections increase.
Between 2018 and 2023, the US market size for online grocery sales increased by 15.1% yearly.
In 2023, the market size for the Online Grocery Sales sector is projected to grow by 3.6%.
To create an app, you only need a concept and a group of skilled programmers. But before you start, do some market research to see whether there is a need for your Shipt-like service, whether your target demographic is there, and whether you have a strong, unique value to offer.
Rebecca Lal