Target Corp.’s recent announcement that it plans to buy courier service-aggregator Grand Junction is the latest in a string of acquisitions by retail giants. The move is the quickest means by which Target can scale its same-day delivery offering, with its press release detailing an expansion into major markets in 2018.
With Amazon.com Inc. acquiring Whole Foods Market Inc. and Wal-Mart Stores Inc. acquiring Jet.com (along with many others), the hottest trend in retail is acquisition and it’s easy to see why: Retailers need to quickly offer what their fiercest competitors have.
A rapid rush to convenience
The battle to become the default retailer for consumers will be won with a superior customer experience—that means offering choice and convenience and, at the same time, doing it all quickly.
Taking an omnichannel approach, such as diversifying with both physical and e-commerce retail, allows retailers to keep inventory closer to consumers. Not only does that give shoppers options, but it makes rapid delivery—the hours-long delivery that the majority of consumers are beginning to expect—feasible.
Retailers have been in a mad rush to fill in the gaps of this well-rounded customer experience.
Take Walmart, for example. Their incumbent status as the country’s default retailer was largely built on its more than 5,000 store locations. With consumer preference shifting to shopping online from the comfort of their living rooms, it was an existential issue for Walmart to offer a compelling digital experience at scale. Tapping into Marc Lore’s digital knowledge and adopting Jet.com’s e-commerce experience was the quickest way to do that.
The e-commerce overhaul has been paying off ever since, with Walmart reporting in March a 63% increase in digital sales. The retailer’s recent announcement to plug into Google Express marketplace proves an even deeper level of commitment to competing on all digital fronts.
With the omnichannel aspect worked out, Walmart can now get creative with making delivering goods easier. Borrowing Jet’s creative bundling of products, it has begun experimenting with parking lot kiosks and its budding same-day delivery offering has begun bridging the gap of their shopping experience from online sales all the way to customers’ doors.
Amazon, on the other hand, needed to move from digital to the physical world. While largely responsible for consumers’ expectations for rapid delivery, their offering was still limited by having to ship from their warehouses—no matter how strategically they may be placed. To get product within a reasonable distance of consumers and offer a competitive omnichannel experience, Amazon made a $13 billion entrance to bricks-and-mortar retail with their purchase of Whole Foods. The 470 storefronts allowed Amazon to flip a switch and have a physical presence in virtually every major metropolitan area overnight.
You may be recognizing a trend here: haste.
Keeping pace with customer expectation
If we can take anything away anything from these acquisitions—and Target’s, in particular—it is that the need to offer a heightened customer experience does not allow retailers the luxury of time. Consumers have their expectations, and retailers need to be meeting them—and they need to be doing it now.
Traditionally, retailers have been able to sit back on their haunches and deliver with standard shipping through UPS, but the rapidly increasing demand for not only delivery, but faster delivery has made that far less feasible of an option.
A recent report published by Temando, found that 80% of shoppers surveyed want same-day shipping, while 61% want their packages even faster—within 1-3 hours of placing an order, making a strong case that retailers need a fast, reliable delivery option.
With UPS pacing their growth with the GDP rate, however, their bandwidth to deliver goods is quickly becoming eclipsed by the demand for delivery. For instance, UPS will introduce surcharges this holiday season, asking retailers to help subsidize the increased costs of delivering the anticipated 30 million packages a day during this holiday season.
With e-commerce sales rapidly increasing and delivery time decreasing, retailers are forced to source and acquire alternative forms of getting products to consumers quickly and affordably.
How retailers are adapting
Amazon, having already created auxiliary networks to complement UPS and FedEx, has decided to invest in their own full service delivery network. With a few years and a couple billion dollars head start to offering 2-day and same day delivery at scale, competing retailers have had to adopt alternative forms of delivery.
Target’s bet on Grand Junction is a perfect example of this. Acquiring a technology platform that allows them to plug into thousands of courier services across the country allows them to quickly offer delivery options at scale.
This is Target’s latest effort to offer a superior customer experience and compete in a retail industry that has been largely dominated by Walmart and Amazon. The latter duo have already addressed their last mile delivery issues with either an in-house network (Amazon) or a large acquisition (Walmart/Jet).
Target’s acquisition is a sign to all retailers that adopting to the evolving retail landscape is the only chance of remaining a viable business.
Shoppers have made their preferences clear, and these recent moves by retailers indicate that their demands will be met: choice, convenience and speed. The way the market is shaping up, it looks like consumers won’t have to wait anymore.
Daphne Carmelli is CEO of Deliv, a same-day delivery service that operates in 1,400 U.S. cities and towns in 33 markets.