- In a crowded delivery landscape, Shipt is using customer relationships to retain both families ordering from the service and the gig workers shopping for them — and ultimately, increasing sales.
- The Target-owned delivery service has also benefited from a pool of workers who sought new or more flexible jobs after being laid off or laid off babysitting during the pandemic.
- Sales in the financial year ended January 30 more than quadrupled as compared to the previous year.
scheduled tribe. Petersburg, Fla. —Jeremy Fetters spends his days shopping for other people as a contract worker for Shipt, Target’s third-party delivery business.
In the early days of the pandemic, the 41-year-old former bartender carried a giant pack of toilet paper in his car. Whenever he did not get a roll to fill the order at the store, he used to give a free roll to the customers. The faters have gone out of their way to hunt down a pack of chicken breasts. When he sees cold or cough medicine in a list of customers, he sometimes buys them a small plant, flower, or “Get Well” balloon.
In a crowded delivery landscape, Shipt is using customer relationships to retain both the families who order from the service and the gig workers who shop for it — and ultimately, to increase sales.
Established in 2014, Shipt has grown significantly during the Covid-19 pandemic, as consumers have sought safe and convenient ways to shop. Same-day service sales in the fiscal year ended January 30 more than quadrupled from the previous year. According to the company, its pool of gig workers, which it calls shoppers, tripled from the start of the pandemic to 300,000 by the end of last year.
“Our buyers matter. … They are our secret sauce,” said Shipt CEO Kelly Caruso. “They are what sets us apart from the competition.”
Since August, customers have the option to request the same buyer who picked up their goods earlier. Shipt has also added a feature that flags customers’ dietary restrictions, such as a gluten-free diet. With time, the shopkeeper also gets to know the preferences of a person. This means that when an item goes out of stock, shoppers can recommend an attractive replacement, reach for a last-minute shopping list enhancement, or even a basket. Can suggest items to add.
Karen Short, equity research analyst at Barclays, said the shift is one reason Target has grabbed excess market share during the pandemic. She describes it as a “sleeping giant”, as it is both a rudimentary growth driver for Target and a formidable competitor in the distribution world.
Ships orders to more than 130 retailers, ranging from regional grocers like HEB and Publix to Petco and CVS Health. This includes about 80% of American households in about 5,000 cities. Yet it has plenty of room to run, Short said, if it can sign on more retailers, attract additional customers and expand into new territories. Instacart, one of Shipt’s best-known competitors, serves over 600 retailers.
Short recently estimated the value of the ship at $15 billion. It’s a sharp jump from the $550 million Target paid to acquire the company in 2017. And Short doesn’t seem to have its own market value of the target’s prices of about $112 billion in the absolute value of the ship. Short has an overweight rating on Target’s stock, with a price target of $280 — more than 20% of where it is currently trading.
The delivery service doesn’t disclose its revenue or subscriber numbers and isn’t profitable yet, but it continues to grow its sales this year, according to Target. Sales through the service grew 86% in the first quarter and nearly 20% in the second quarter, compared to the same period a year ago.
Shipt’s Caruso said hiring a company is looking for delivery people who know how to shop and have strong communication skills and an eye for detail. He said this strategy is different from that of Ship’s rivals. She sees for the first time with her teenage son, who places a fast-food order for DoorDash.
“He’s a young boy who deals a lot,” she said. “He can get Chipotle from point A to point B. What he can’t do is navigate a supermarket on a Saturday morning.”
By shopping in a more personalized way, Shipt can boost sales for its retail partners and itself, Caruso said. It gets a cut in sales, which can vary from company to company. It also makes money from ads, delivery fees, and annual subscriptions.
Caruso said a knowledgeable shipwreck buyer can alert a customer if they see a favorite brand of tea on sale — even if it’s not on the shopping list. Buyers can also suggest adding an item that feels uniquely suited to that customer, such as a new flavor from a favorite brand.
Above all, Caruso said, shoppers can intervene during a common pain point for online grocery orders: out-of-stock. Rather than discarding the item, shoppers are encouraged to call or text the customer and search for alternatives.
“Our buyers know how to substitute, and they save on sales, and that’s meaningful to both our consumers and retailers,” she said.
In a recent Grocery study, consulting firm Bain & Company found that out-of-stock and poor checkout experiences were the two frustrations most likely to scare off customers. On the other hand, the consulting firm found, retailers and distribution companies can win the favor of customers if they seem knowledgeable and can guide them towards an ideal choice.
When compared with competitors, Bain found, Shipt had one of the highest customer satisfaction ratings in how it selects replacements for out-of-stock items.
Linda Nelson, a shipwreck shopper, teaches that kind of critical thinking. She is a Metro Consultant for the Tampa, Florida, area, a role that earns her extra income and gives her the opportunity to mentor.
When the pandemic began, Nelson noticed a wave of new shoppers joined the area’s Facebook group for Shipt and posted a “newbie question.” They included former restaurant workers, displaced hotel workers and parents who suddenly became part-time teachers for the virtual school and were required to leave their previous jobs. She started teaching Zoom classes about picking bananas, checking expiry dates and looking for cracked eggs.
Nelson, a former PTA mom, joined Shipt in 2015. He has learned the dietary preferences of his regular clients. And she uses techniques to encourage them to pick up again, such as placing fragile items on one side of a shopping cart, examining fruits closely for any injuries, and placing cold items in an insulated bag. .
She said that about 70% of her customers are people she has shopped for before, which helps her pick up groceries and also know if they would prefer paper or plastic bags.
“I shop like I’m shopping for my family,” she said. “The shoppers who do well at it are perfectionists who please people.”
The pandemic has prompted so many job changes and departures that the trend has acquired its name: the “great resignation.” The most recent US monthly jobs report fell far short of expectations, outlining the challenges of getting Americans back into the labor force, even as some companies raise wages and sweeten perks.
Many job seekers need flexibility, according to a survey of nearly 1,500 full-time employees in late July and early August by professional services firm Grant Thornton. Nearly 80% of survey respondents said they want flexibility in when and where they work. A little over half – 51% – said they would forgo a pay increase for more flexibility, 40% said they would look for another job if forced to return to the office full time. And a third of the employees surveyed said they were looking for a new job.
If this trend continues, the gig economy is poised to attract more people who conduct market research about how companies can attract, engage and retain employees, said Tim Glova, a principal at Grant Thornton. Huh.
“We have seen gig workers increase by 15% to 20% in a year before the pandemic,” he said. “If we look at employees wanting to be empowered to take control of their own careers, we’re going to see more.”
Caruso said the flexibility of gig work could allow Shipt to attract buyers and motivate them to fill orders. She said some shoppers work only in certain seasons, such as teachers shopping in the summer months and parents earning extra money during the holidays.
To motivate shoppers who haven’t taken orders in a while, it gives bonuses. For example, it sent an email to less active shoppers in the Northeast around Labor Day asking them to pay $150 in additional pay to those who completed 10 orders between that Thursday and Tuesday.
According to the company’s survey, nearly 75% of ship buyers are women, most of whom are between the ages of 25 and 54. On average, Shipt said shoppers earn more than $21 per store, including base salary, promo pay, and tips.
Barclays’ Short said delivery companies have to create the right culture to keep contractors engaged. She said Shipt can do this by encouraging shoppers to form bonds with regular customers.
“It’s more empowering for shoppers because you feel the need,” she said.
Some gig economy companies have been criticized for using contract workers to avoid paying stable wages and fair benefits, and for tampering with algorithms that lead to lower wages. Policymakers have drawn even more attention to the issue during the pandemic as delivery workers take on additional risks. New York City recently passed bills aimed at improving working conditions and paying for gig economy workers.
Before the global health crisis, Fetters said he couldn’t imagine doing anything other than pouring the drink. He worked as a bartender for 15 years. But in mid-March 2020, the nightclub where he worked suddenly closed. Fetters applied for Shipt and started placing orders. That said, every week, he fulfills about 45 to 50 orders and makes almost as much money as a bartender—but without the late night shifts and weekend hours.
The pandemic and his father’s eventual death from Covid changed his outlook.
“With the loss of my father, I didn’t spend as much time with him as I should have, whether it was work or vacations or he wanted me to come upstairs,” he said. “It was like, ‘Oh, I’m done’ or ‘We’ll do it next year’ or ‘We’ll have more time then. But we didn’t get that time.”
Now, Fetters said, he can take time off for vacation and relax on the weekends with his husband. He said he has become close to some customers. They have picked up groceries for elderly customers and dropped food items that pregnant customers wanted. Once, he sat beside a customer on his porch to console him after his dog died.
“This [the pandemic] Gave people time to think ‘Is this really what I want to do? am i really happy? Do I go to work everyday and want to go to work? Am I done?'” he said. “When you ask yourself, ‘Am I excited or motivated to wake up every day to go to work?’ I think a lot of people would say no.”