• We tested Target’s Drive Up service with 10 separate orders.
• The most important metric, park-to-depart, average time was an impressive 1:18 seconds.
• This delightful service that will gain traction, and something that Amazon can’t offer today.
• This does not change how we feel about a Target/Amazon combination long term.

Conclusion. We had a positive initial experience with Target’s Drive Up service, so we decided to put it to the test. We completed 10 total purchases at 2 different Minneapolis stores (5 at each store), paying attention to the overall experience as well as putting them on the clock. Target is leveraging its brick and mortar DNA to create an experience Amazon can’t today.

What does Drive Up mean for an Amazon + Target Combo? We are believers that Amazon will eventually buy Target, given Amazon’s interest in Target’s store count, and their shared customer demographic. Plus, long-term, brick and mortar will account for 45% of global retail sales – and Amazon knows it. Amazon is attacking traditional retail through Prime Now, Whole Foods, and Amazon Go (more on Amazon Go’s Trojan horse strategy in retail here). We believe those initiatives will yield market share gains in brick and mortar, but not get them a footprint that can only be achieved by acquiring an established retailer. Target’s Drive Up service – leveraging assets that only brick and mortar can offer – is a good example of the innovation necessary to compete in retail, which makes Target more appealing to Amazon.

A word on Shipt. In Dec. Target announced plans to acquire Shipt for $550m. We think it’s the right move for Target to try to compete with Amazon Prime Now; ultimately, though, Target will struggle to integrate Shipt. Why? Because Shipt is outside of Target’s sweet spot (both strategically and geographically). Counterintuitively, we see the Shipt acquisition as another reason why Amazon will eventually acquire Target.

What we learned about Drive Up. We were delighted with how fast and convenient the service was as a whole. There were some outliers, one order (body wash) took over an hour to be ready for pickup, while the ready for pick up average was 21 minutes and removing the one outlier dropped it to 16 minutes. On average it took 35 seconds from the time we parked to the employee reaching the car with the order. From there, it was an average of 43 seconds to scan the phone’s barcode and get the items into the car before being able to driveway. In total, for the most important metric, park-to-depart, the average time was 1:18. From the Loup team’s perspective, half of our future Target runs will use Drive Up. Detail below.

• Ready for pickup: Time from order completion to items being available for pickup
• Park-to-Departure: Total time from being parked to leaving the parking lot with the items

Disclaimer: We actively write about the themes in which we invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we will write about companies that are in our portfolio.  Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.