(Staff and Bloomberg)—Target Corp.’s investments to compete with Amazon.com Inc. are taking a toll.

For the first quarter, Target’s online sales grew 28% over 21% in the first quarter of 2017, said Target CEO Brian Cornell in a SeekingAlpha transcript.

Target—No. 17 in the just-released Internet Retailer 2018 Top 1000—reported earnings of $1.32 a share in the period ended May 5, short of the average analyst estimate of $1.39. Initiatives to drive online sales have squeezed profit margins, which narrowed in part because of the costs involved in fulfilling online orders, the retailer said Wednesday.

Cornell has made e-commerce a key part of his $7 billion turnaround plan, and earlier this month slashed some next-day delivery fees nearly in half to lure customers away from Amazon (No. 1) and Walmart Inc. (No. 3).

Earlier this year, Target also announced free two-day shipping on hundreds of thousands of orders on Target.com—many of which are shipped from stores, the retailer says. Target also is rapidly expanding same-day delivery of groceries and other products through its acquisition of Shipt. The retailer’s also adding voice-activated shopping through Google’s home assistant and bringing same-day delivery to most major U.S. markets in time for holiday shopping.

“With Shipt, we’re now in over 70 markets, and the guest reaction has been superb,” says Cornell. “And our ability to deliver goods to their homes in now minutes is being very well-received. So, we want to make sure we provide a great experience no matter how the guest wants to shop.”

As with other retailers like Walmart, though, the cost of that expansion has crimped Target’s profitability.

“The problem is that all these investments don’t end—it’s the cost of doing business in retail today,” Brian Yarbrough, an analyst at Edwards Jones, said by phone. “Their initiatives are taking hold and sales look good. But at what expense to profitability?”

Target’s operating profit margin was 6.2% for the quarter, almost a full percentage-point decline from the same quarter last year. Still, the online push did result in a 28% gain in digital revenue in the period. That contributed to a 3% lift in same-store sales, beating analysts’ average prediction, according to Consensus Metrix.