Target’s 1,850 stores are the “secret sauce” that’s helping the retailer rapidly grow its ecommerce channel. That’s because the retailer’s stores serve as micro-fulfillment centers that enable the retailer to offer shoppers several ways to get their online orders the same day they placed their orders.
Consider the multiple same-day fulfillment options Target offers shoppers:
• In-store pickup at all of its stores, with most orders ready within an hour.
• Drive Up curbside delivery at roughly 1,750 stores.
• Same-Day Delivery via Shipt—the same-day delivery service Target acquired in 2017—from roughly 1,500 stores in about 250 markets.
• Delivery from stores for a $7 flat fee from 25 stores in five markets.
Beyond same-day fulfillment, Target offers several other fulfillment options, including Restock, which is next-day delivery of household items for $2.99 a box (the service is free for consumers who purchase with a Target RedCard debit or credit card), and free two-day shipping for RedCard holders (other shoppers’ orders need to hit a $35 threshold for free two-day delivery).
“We’re using our stores as hubs to offer guests a broad suite of fulfillment services that meet a wide range of guest needs,” says Dawn Block, Target’s senior vice president, digital, noting that shoppers have rapidly embraced the retailer’s various same-day fulfillment options. “Once guests try our same-day services, they love them. Intar fact, we’re seeing many guests choose pickup instead of shipping, and we expect demand for these services to continue growing the fastest.”
The data backs up Block’s claim; more than 33% of the retailer’s online sales in the second quarter were fulfilled via one of Target’s same-day services. That share was up 13 percentage points from a year earlier. And Target’s combined sales for in-store pickup, Drive Up and Shipt have more than doubled over the last year as they accounted for roughly three-quarters of Target’s 34% online growth in the second quarter. Put another way, nearly 1.5 percentage points of the retailer’s overall comparable sales growth was driven by its same-day services during the quarter.
Target’s ability to bridge its online and offline operations has increased the value of both channels and driven analysts such as Oliver Chen, a Cowen Equity Research analyst, to refer to Target as a “best-in-class merchant.” Target is giving shoppers options—they can receive their order at the front of the store, in the parking lot or at home—and that translates into convenience. That’s why Chen believes that Target’s strategy is helping the retailer stand out amid a competitive retail landscape and enabling it to gain market share.
Target’s same-day delivery services grew out of a broad three-year, multibillion dollar initiative the retail chain mapped out in 2017. The plan put stores at the center of its effort to adapt…
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