Target is a retail chain that offers a wide range of products, from electronics to home goods. They also have exclusive designer collections and clothing. E-commerce is one of the ways they help keep customers coming in, but it is not the only way.
E-commerce drives just shy of 20% of Target’s sales
The e-commerce department at Target has been a force to be reckoned with over the last five years. During that time the company has built five hubs, added a few gig workers, and invested in software that has improved its delivery capabilities. It also has launched its own private label brand, Cat & Jack, which blew the doors off the competition. In the first year of operations, the Cat & Jack private label became the $2 billion brand it is today.
With over 800 stores across the country, it’s no wonder Target is the go-to retailer for shoppers in search of a deal on the latest in electronics, furniture, clothing, and other household essentials. A big part of the company’s success is its ability to provide customers with a one stop shopping experience. Increasing its omnichannel footprint is a must for retailers in any industry, and it’s the best way for the e-commerce department to ensure it stays afloat in the face of increasing consumer expectations.
Several major retailers have been experiencing record highs in the e-commerce department for the last several quarters. Walmart reported 10 percent online sales growth in the third quarter. Meanwhile, Target’s e-commerce department racked up triple-digit growth in the first three months of the year. Despite the rapid growth, the e-commerce department’s operating margin has dipped by more than 10 percentage points in the last few months. To help address its mounting woes, the company is introducing new technologies, such as Shipt, to improve its delivery capabilities.
To keep up with competitors like Amazon, Target has been experimenting with its own delivery center concepts. By the middle of next year, it plans to launch the first of three such facilities in Minneapolis. Similarly, it is testing the concept outside of Minnesota, with plans to add three more in the coming months. As Target continues to evolve and expand, e-commerce will continue to be a key component of its broader business. Currently, only about 20 percent of the retail giant’s sales are generated online. This is expected to increase over the next few years.
Sortation centers
Sortation centers are a key part of Target’s stores-as-hubs strategy. They are designed to speed delivery to customers and lower costs. The center helps teams work more efficiently, which in turn increases the number of orders they can fulfill.
Target’s current sortation facility in Minneapolis currently handles two-thirds of all digital orders in the Twin Cities region. It uses a technology developed by startup Deliv and Grand Junction to streamline the delivery process.
Previously, packages were packed in backrooms of Target stores, and store associates picked and sorted them. Now, Target has moved the process to a dedicated facility. This frees up space in stores to fulfill more orders.
In addition to the Minneapolis sortation center, Target has six other locations in five different markets. These include a new center in Houston and three in Dallas. Another one is planned in the greater Chicago area and the Denver metro area.
As Target’s online business grows, the company is exploring new delivery options. One of these is the “Drive Up” option. Customers can pick up their orders in the vehicle, and it’s even possible to give friends and family members the ability to pick up an order.
Target also plans to improve its technologies so customers can more easily place their orders in the vehicle. This will give them a more personalized experience.
In the first quarter of the year, Target’s six existing sortation facilities handled 4.5 million packages. During the year, the company expects to see the number of packages increase significantly. However, it hasn’t provided a timetable.
In the future, Target wants to build more sortation centers in new markets. Target also says it plans to invest $4 billion per year in its capabilities, including expanding the range of fresh and frozen food pickup options in 800 more stores.
Target has also been working with Shipt on pilot programs for large-capacity delivery vehicles in Minneapolis. These vehicles are capable of holding eight times more packages on a route than traditional delivery trucks.
The Target delivery system is another key part of the company’s efforts to cut labor and transportation costs. This will help boost profits.
Same-day delivery service
Target is ramping up its same-day delivery service to help it compete with Amazon and Walmart. While it has been offering free in-store pickup and delivery services for a number of years, Target’s new service is powered by a technology company called Shipt.
The new same-day service is being rolled out to 47 states, and customers can choose from more than 65,000 products. Some locations will offer same-day delivery within 60 minutes. Customers can select an item online, pick it up at a Target store, and have it delivered to their home or office the same day.
The company will also increase its investments in local sortation centers. These centers will receive and sort already-boxed orders twice a day. They will then load the packages into a personal vehicle for delivery. This is a major part of the process and helps ease the final mile.
Meanwhile, a new mobile app offers more features for Target’s same-day service. For example, the app has a “Forgot something?” button that lets customers know if they’ve left a purchase at a Target store. It will also let customers add backup grocery items.
And finally, there is a shopping partner feature that allows consumers to designate a friend to pick up their order. The app will also allow customers to find out the hours of nearby stores.
As the holiday season approaches, Target plans to enhance its same-day offerings. The company will add more in-store pickup options, and will expand same-day deliveries to 65 percent of households in 180 markets. It will also add returns capabilities and will renovate 200 existing stores.
Although Target’s same-day delivery service has not been as effective as competitors such as Amazon, it may be ready for the challenge. While the retailer does not operate a large marketplace like Amazon, it can leverage its vast array of stores to offer a better selection of products. In addition, the company can leverage its fulfillment network to cut costs.
One key benefit of Target’s new same-day service is that it’s allowing more customers to use curbside pickup. A recent PYMNTS survey found that more than one-third of connected consumers in the United States prefer to buy online, and pick up their purchases at a store instead of waiting for delivery.
Mobile payment app
Target, one of the largest retailers in the US, has plans to launch a mobile payment app this year. Similar to Walmart’s Pay, the new service will enable customers to make purchases using their smartphones at Target’s stores. The app will include a feature called Target Wallet, which allows users to scan barcodes and pay with their phones.
Target’s payment app will be available in the Android and iOS versions of the app. Like Walmart’s Pay, the app will support any network-branded card.
Users can also upload a REDCard or use their REDcard to pay for things in the Target app. When users buy something, the app generates a digital receipt and sends money to their bank account.
According to Target’s website, this new service will be rolled out to REDcard holders this week. While there are no details on when the service will be available for all shoppers, the company has promised more information in the near future.
Users can take advantage of Cartwheel digital coupons and savings by scanning a barcode at checkout. For instance, Target customers can save up to 5% on purchases if they combine their Target discounts with Cartwheel offers.
Apple Pay has become one of the most popular mobile payment apps in the United States. It uses NFC technology to send digital payments to merchants’ card readers. However, this service isn’t used in stores much.
In addition, Target will not accept third-party mobile payment solutions, such as Samsung Pay and Google Pay, in its stores. Instead, the company will only accept its own branded credit card.
Mobile fraud is on the rise. Although some banks are more lenient, it’s still important to use fully-featured security software. These products have payment protections and can prevent malicious activities from affecting the mobile app.
In addition to Apple Pay, Walmart is also planning to introduce its own mobile payment app this year. Kohl’s will follow suit.
If you are considering developing a mobile-commerce application, you may wish to consider how quickly your page loads. A long loading time can deter customers from returning.
