#TARGET ONLINE SHOPPING FREE#
Target also has free two-day shipping to homes for online purchases that are $35 or more. It has also promoted same-day options, called Drive Up and Order Pickup, that defray costs by having the customer retrieve their own online orders in parking lots or inside stores. About 95% of its sales last year were fulfilled at stores. It has aimed to bring the economics of online sales more in line with those that take place at stores. Over the past few years, Target has put stores - instead of giant fulfillment facilities - at the center of its e-commerce strategy. Ideas include opening local fulfillment centers to reduce the distance a purchase needs to travel or using data and analytics to make deliveries in groups rather than as one-offs. To cope, companies are tinkering with their supply chain, he said. People with Prime are now used to same day." Where three days was acceptable, two days now is barely acceptable. "What we're seeing is consumers are increasingly expecting more," he said. Amazon has Flex and Walmart has Spark, networks of contract workers who use their own cars to make package deliveries.Īndre Pharand, a managing partner and a consultant for the postal and parcel industry at Accenture, said nearly every retailer is juggling higher costs and with ever-higher customer demands. Target is not the first to use contract workers for deliveries. In early April, it hit a 52-week high of $207.38 and the shares aren't too far below that level - even as the big-box retailer faces challenging comparisons in the year ahead. Since the start of the year, the stock is up more than 16% to a market value of $102.57 billion. Digital sales grew 145% in the most recent fiscal year, ended Jan. It comes at a time when Target's online orders are soaring. For customers, it will look and cost no different than a delivery made by UPS or the post office. Now, some of those same contract workers will drop off boxes in the Minneapolis area, too. Shipt has roughly 300,000 contractor workers who already drop off bagged groceries and other items hand-picked for a customer who pays $99 a year or $9.99 per order. He declined to share the locations, but said the sites will be in dense, urban areas where multiple packages can be delivered to the same neighborhood. Target plans to open five more sortation centers this fiscal year and use Shipt to make deliveries around them, too. Mulligan expects the process will scale up over time. It began testing deliveries with Shipt from that facility at the end of March. Target opened its first sortation center in the fall, and it will support all stores in the Minneapolis-St. He said it will also give the company more control over the customer experience and make e-commerce orders more profitable. With the new model, Mulligan said Target will be able to better handle the rising number of packages that pile up in its stores throughout the day. "We continue to work on picking better and optimizing our pick and optimizing the batches for the team - all of that is really important - but the key to the whole game from our perspective is to improve that ship cost." Shipping is the big number," Target's chief operating officer, John Mulligan, said in an interview. "Shipping is the majority of the cost for getting a product to a guest. And it is an alternative to relying solely on carriers like United Parcel Service and FedEx, which have dealt with a spike in demand during the coronavirus pandemic and responded in some cases by hiking fees or limiting parcels. It is an answer to customers' expectations for speed, as they use on-demand services from Uber to DoorDash. Target's strategy could help it compete with larger and sometimes faster e-commerce rivals like Amazon and Walmart.
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