Need groceries, now? Target tests delivery service in Twin Cities

Updated 4:45 p.m. | Posted 8:21 a.m.

Target is testing the online grocery delivery waters.

The Minneapolis-based discounter has teamed with Instacart, the online grocery delivery service that started in 2012, to let shoppers in the Minneapolis area order fruits and other perishables, as well as household, pet and baby products, and have them delivered to their homes in as little as an hour.

The service starts Tuesday. Target says it's exploring plans to expand to other markets.

Target's move comes as the discounter aims to bolster its online business under CEO Brian Cornell, who came on board in August 2014 and is reshaping its business.

The launch also comes as the online grocery delivery market is heating up.

Online retail king Amazon.com Inc. began testing Amazon Fresh grocery delivery in Seattle in 2007 and has since expanded that service to Los Angeles, San Francisco, Philadelphia and parts of New York.

Meanwhile, Walmart, the nation's largest food retailer, is testing online grocery delivery and pickup in five markets. However, a national rollout for both retailers is still elusive.

San Francisco-based Instacart, which works with other retailers including Whole Foods Market, Costco and Petco, said that Minneapolis is its 18th market.

Here's how it works: Customers go online to www.instacart.com or open the Instacart mobile app on their iPhone or Android device, click on the city and store, add items to their cart and then chose a delivery window. Shoppers can choose a one- or two- hour window, or some scheduled time in the future.

The first delivery is free and future orders cost $3.99 for a two-hour delivery or $5.99 for a one-hour delivery for orders over $35.

Target said it will be watching which grocery items shoppers put in their virtual cart.

"There is certainly growth opportunity for this type of business, and we want to learn more about it," Target Corp. spokesman Eddie Baeb said.

Cub Foods, Whole Foods and other grocers already rely on Instacart for deliveries in the Twin Cities.

But how does Instacart make money charging such low delivery fees? Spokesperson Andrea Saul Saul indicated retailers cough up some cash.

"We have true partnerships with the retail stores that we deliver from. I don't disclose what those financials look like. But this is a business model that works," she said.

Some shoppers at the Edina SuperTarget like the home delivery idea.

Melissa Ecker of Chanhassen gives it a thumbs-up.

"I would absolutely do that. To not bring two small kids to the grocery store, I would do that absolutely," she said.

Andrea Brogel of Bloomington, though, plans to keep shopping herself.

I think it's great idea," she said, adding, "It doesn't appeal to me. I really like to cook. so, I like to pick out my own food."

Target's partnership with Instacart gives it a proven partner in the grocery delivery business, said Amy Koo, an analyst who follows Target for the firm Kantar Retail.

"This is a great partnership for Target because they can rely on somebody who is known for their logistics and managing this sort of delivery service, while just making sure they're providing ... enough merchandise for the stores," Koo said, noting Target's problems keeping stores stocked with essential items.

Supermarket consultant David Livingston says grocer interest in home delivery has gone up and down over the years.

"There are times when a lot of people are getting into it. And then they don't make any money and then they pull out," he said. "I think they will slowly catch on. But right now, they're still pretty much in the infant stages, even though we've had Internet for 20 years."