Target-Grand Junction deal
Last week, Target announced they were acquiring Grand Junction. Why would a retailer be buying a logistics technology company? In a word: Amazon. This move gives Target an important capability with which to compete with Amazon in last-mile logistics.
To take a closer look, let’s start with Grand Junction. Who are they, and what to do they do? Grand Junction is an ecommerce solution for last-mile logistics. They were founded in 2014, and have grown to the point where they handle 6 million local deliveries a month. In addition, their network includes more than 700 carriers.
Target cares tremendously about the last-mile. Like Amazon, Target is expanding in the grocery sector. Amazon acquired Whole Foods. Amazon also can leverage its Amazon Prime service to give members in 30 cities a solution that can be as quick as an hour.
Target, meanwhile, generates 20% of its revenue from groceries. One important question is how to boost Target’s ability to fulfill direct-to-consumer for grocery purchases. Target’s ecommerce is growing rapidly. They expanded by 22% last quarter. Still, this is a far cry from the size and scale of Amazon. How will they get there?
Grand Junction can be a part of the solution. With its ecommerce technology, Target can provide a faster, better fulfillment capability. Target provides same-day delivery in New York, and is planning to roll out across the country in the coming year. Can Target compete with Amazon Prime, using Grand Junction technology? We will see.
Full disclosure, Cambridge Capital invested in Grand Junction.