Dive Brief:

• Shipt no longer requires customers across the United States to sign up for a membership to use its delivery services, the company announced Thursday. Customers can now opt to buy passes that allow them to place a single order for $10, three orders for $9 per delivery or five orders for $8 per delivery.
• The delivery service tested offering the pay-per-use concept to non-members earlier this year and found that the number of new customers using the service increased by 25%. Since rolling out the new service nationwide, 80% of new customers to the Shipt platform began with a pay-per-use offer.
• ​Shipt will continue to allow customers to pay $99 for year-long membership that offers unlimited deliveries at no additional cost on orders of $35 or more. 

Dive Insight:

Shipt’s decision to let people use its service without paying a membership fee changes the calculus in the company’s battle to take market share from grocery delivery titan Instacart, which claimed a 57% share of the online grocery space in April and maintains a dominant position.

A key difference between the competitors has long been that Instacart let shoppers pay by the delivery while Target-owned Shipt compelled people looking to try the service to essentially prepay for multiple deliveries even if they weren't sure they would actually have use for them. That upfront requirement helped build a loyal customer base, but it may have stymied overall growth.

Shipt is backing away from its membership-based pricing as it looks to expand its business during the pandemic, which has led to a sustained increase in e-commerce business for grocers. In its announcement, the company suggested it may have put off potential new customers by requiring them to sign up for a membership.

“The challenges consumers have faced during the pandemic further strengthened our resolve to make Shipt as accessible to as many customers as possible,” Shipt CEO Kelly Caruso said in a statement.

This spring, Shipt onboarded thousands of new contract shoppers in an effort to boost delivery availability during the pandemic. In May, the company began offering manufacturer coupons through a partnership with Quotient.

Like Shipt, Instacart offers an annual membership program called Instacart Express that offers unlimited free deliveries on orders of $35 or more as well as reduced service fees and an exemption from surcharges for deliveries made during peak hours. The e-commerce company reduced the cost of its membership option from $149 to $99 in late 2018, when it also reduced delivery charges for individual orders.