Look Out Walmart and Amazon — Target Has Entered the Delivery Market

Good businesses are proactive, not reactive. They stay up with current trends and strive to be first to market with their own innovative concepts or technologies.

While you may not associate big box stores with innovation (after all, they’re supposed to be carrying and selling the products you’re pining for), retail wars are nothing new. And one of the ways that various big box retailers have attempted to create a competitive advantage and compete with online giants such as Amazon.com are various initiatives to make it easier to purchase the things that customers are looking for.

Things like online ordering for in-store pickup and online purchases for delivery are things that the traditional brick-and-mortar big box stores have rolled out in recent years. But today’s consumer needs more incentive if they’re going to be pulled away from the convenience of Amazon.com and its free two-day shipping offer for Prime members. And that’s what has likely spurred Target’s recent offering – free same-day delivery with online purchases. It has already launched in select cities, and Target plans to gradually roll out this service through 2018, with the goal of having it fully implemented at all of its stores by Christmas.

Target’s New Offering

You might have heard of a company called “Shipt.” It’s an online grocery delivery service that Target actually bought at the end of 2017. Using the Shipt app, consumers can select products to purchase. When an order is placed, the app will send it to a nearby personal shopper, who will enter the store, select the purchased items and then deliver it to that individual consumer. Shipt costs $99 per year for membership, which we should note is about $20 cheaper than what Prime will soon annually cost when the price hike goes into effect.

The significant impact of Target’s offering is that it’ll offer delivery of groceries and different categories of products, as the same-day delivery guarantee ensures that even cold products will stay fresh from the time a personal shopper pulls it off the store shelf to the time it takes to get to your home. Although Amazon has its Amazon Fresh grocery delivery service, it’s not available in many areas of the country. Target stores, on the other hand, are seemingly everywhere – and they’re a favorite among many consumers.

What Target’s Initiative Means

Target’s purchase of Shipt for $550 million in December 2017 was a warning shot to Amazon. But now this more recent announcement is more of a statement to the online-only retailer – as well as other big box retailers like Walmart that have made significant investments in customer convenience initiatives – that they’re not going to be intimidated.

Presently, Amazon owns about 40 percent of the online market share. Target is clearly looking to cut into that with this new offering. It’s probably a safe bet to assume that Amazon will have some sort of a response with what it offers going forward, but you can’t say that Target’s service isn’t enticing. It’s less expensive than a Prime membership, for example, and comes with same-day (not two-day) shipping.

The only downside we can think of is that Target shoppers using Shipt won’t be able to browse all of the great products that the retailer offers in the physical store, something that the retailer has become associated with (you don’t pick up the nickname “Tar-get me one of everything” randomly).

In order to survive as a business, you often have to diversify – not just in the products you offer or carry, but in how your customers can attain them. Walmart has invested heavily to completely revamp its website to make online shopping more convenient, Amazon has made strategic acquisitions to boost its product portfolio and service, and now Target has joined the club with its offering of same-day delivery. Again, while it’s only available in select locations right now, Target’s goal is to have it rolled out nationally in time for the holiday shopping season.

Retail wars are nothing new, as everyone competes to maintain and improve market share – but these days, they’re getting really interesting. Stay tuned for more!

Regards,

Ethan Warrick
Editor
Wealth Authority


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