2020 had plenty of downsides, but it was an incredible year for ecommerce. According to Digital Commerce 360, consumers spent a massive $861.12 billion online with U.S. merchants—that’s a 44% growth year-over-year! It’s the highest annual U.S. ecommerce growth in at least two decades, Digital Commerce reports.
Ecommerce growth was unsurprisingly dominated by Amazon and Walmart (the latter overtook eBay to snag the number two marketplace spot last year), but one marketplace that got noticeably ahead in the pack is newcomer Target.
Though it’s been slower to unroll it’s marketplace offerings, Target is making waves in the omnichannel sphere, and brands and retail competitors may want to take note, because the implications for its Target Plus platform are exciting.
Target’s digital sales numbers for 2020 aren’t just good—they’re historic. The evidence is in the stats.
Target’s ecommerce sales jumped 163% to $10.37 billion in the first three quarters of 2020. To give you a sense of scale, that number is up from $3.94 billion during the same period in 2019.
Q2 was especially profitable for Target. Ecommerce sales grew 195% year-over-year, and Target picked up over 10 million new digital customers. John Mulligan, Target’s Chief Operating Officer, said new shoppers are coming back to buy more and at a faster rate than Target’s existing shoppers.
“It appears they are much more engaged with us,” he said.
Target announced in August that their Q2 comparable-store revenue, including online, grew 24.3%—the highest amount the company has ever reported—with digital sales accounting for 13.4% of Target’s comparable sales growth and physical store comp sales increasing 10.9 percentage points. Those numbers have outpaced Walmart’s, as Target is starting from a much smaller base.
An October report from eMarketer shows that Target made $13.82 billion in sales in 2020, a 104% year-over-year change from 2019, and 1.7% of those total sales came through ecommerce. That was before the holiday season even got started.
Cyber Week 2020 was Target’s biggest ever, the company reports, with record-high digital orders, site traffic, and orders fulfilled via their curbside pickup service, Drive Up. In December alone, Target reports that guests purchased 150 million items using Drive Up and their Order Pickup services. While the global pandemic may have boosted demand for the Drive Up program, only time will tell if the convenience affects consumer behavior going forward.
Target’s sales were enough to push it to seventh place on the list of Top Marketplaces in the United States, ranking it above Costco, Wayfair, and Macey’s and just behind Home Depot. Target didn’t rank within the top ten in 2019, showing just how impressive their 2020 growth has been.
Target has been investing heavily in their omnichannel since launching Target Plus. They implemented same-day shipping and curbside options—their Drive Up, Order Pickup, and Shipt services—before the Covid-19 pandemic began, and those same-day services are driving much of their digital growth.
Similar to Walmart Marketplace’s returns system, Target customers can purchase goods online and have them delivered quickly via Target’s network of stores, which act like mini distribution centers. If customers decide to place a return, they can also return the product to a Target location sans the boxing and shipping. These services have made the shopping experience easy for customers, and they’ve paid Target back in full.
Target reported in January 2021 that their same-day services grew a combined 193% during the holiday season, with millions of guests trying these services for the first time. The value of web orders fulfilled through Target same-day shipping services also grew 273% during its second quarter, accounting for approximately 6 percentage points of its total comparable sales growth. Mulligan said the value of the orders shipped from stores has grown more than $1.6 billion
Another thing we mentioned previously that’s driving a surprising amount of growth for Target is Drive Up. According to the transcript of a Target investor call held in November, nearly $700 million of Target’s growth came from their Drive Up service alone, which increased 500% year-over-year from 2019. That’s faster than any of their other same-day services (sales fulfilled through Target’s delivery service Shipt grew 300%). That growth, wildly, didn’t slow down in-store pick up—in-store pickup also increased more than 50%.
“We’ve seen continued strong sales trends in the new year, and as we turn to our 2021 plans, our team is focused on continuing to build on the guest engagement and significant market share we gained throughout 2020,” Brian Cornell, Target CEO, said.
Long story short, Target’s omnichannel strategy has played a critical role in boosting the brand’s growth by meeting consumers where they are and providing continued convenience.
Target is a massive 2020 success story, but updates have been fairly quiet on the Target Plus front.
Last April, we reported that Target planned on testing curated shipments of fresh food and adult beverages through their pickup and drive up services, similar to what Walmart and Amazon are already doing. In February 2021, Shipt announced a partnership with GNC to offer same-day delivery service for GNC health and wellness products, expanding the company’s grocery delivery options further.
"We're in the midst of an exciting evolution to a multi-vertical, multi-retailer delivery service and are thrilled to have GNC as part of the Shipt family," said Rina Hurst, Chief Business Officer at Shipt, in a February press release.
Much of Target’s focus has been on their same-day shipping services.
Target’s invite-only marketplace was launched back in February of 2019, and the platform has been slowly growing its number of third-party merchants and products. Starting with 30 sellers in February 2019, Target+ has grown to 272 sellers, according to Marketplace Pulse.
Target is differentiating itself from Amazon and Walmart with a more exclusive selling model on Target Plus. Unlike Amazon, not just anybody can sell on Target Plus, and not every product can be sold there, either—quality goods and vendors are hand-curated by the brand to ensure an excellent customer experience.
Target has been onboarding a limited number of strategic partners per category, according to Feedonomics, and their requirements are pretty stringent: sellers must have a business and bank presence in the U.S., they have to price their products on Target Plus at parity with their other sales channels, and orders must be shipped out within 24 hours.
One interesting feature of Target Plus is that it does not allow multiple merchants to list the same UPC. While that cuts down multiple distributors on a product, it also means that brands that are on the site early can secure market share.
Kevin Lamb, Marketplace Manager at Pattern, said he expects Target’s 1P growth will “vastly outpace” the growth of 3P offerings on their site.
“This is partly because their 1P offering is such a good customer experience, with curbside pickup, same day delivery and BOPUS (buy online pick up in store). It's also partly due to their current strategy with 3P sellers,” Lamb said. “They want fewer sellers and fewer brands, focusing on quality over quantity, so that their marketplace doesn't become cluttered like Amazon, eBay, or to a lesser extent, Walmart.com.”
Pattern is about to launch our first few brands on Target Plus, and we can’t wait to share our findings. It’s an exciting next step for our brand partners, and with Target expanding its digital services and presence, who knows what the future of the platform may hold?
To learn more about Target Plus and how Pattern can help you with your omnichannel ecommerce strategy, contact our experts today.
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Peak season is almost upon us and with all signs pointing to it starting earlier than ever, with Christmas gifting searches now ramping up in August and September, it’s time to start preparing for peak. In this article, we’re sharing our top five tips for planning and preparing for peak season with Google Ads and the strategies required to get your Paid Search ready so you can drive success over this crucial period.
In 2021, gifting search terms started increasing in popularity in August. The general trend is that people are looking, researching and weighing their options early, so it’s best to start your Paid activity early to ensure that you’re capturing that early research traffic. This will help drive revenue alongside aiding those consumers who are in their research phase.
From 2020 to 2021, spend during Cyber Week actually only rose 2% but in the weeks leading up to it, it increased by 16%. However, Cyber Week is still the biggest period during the latter half of the year, accounting for 23% of all online spend by consumers over peak. Being prepared and starting early will help you to maximise your time during this period.
According to Google, 48% of global consumers have stopped buying or using a service due to privacy concerns. Privacy is front of mind when consumers are shopping online and we know that Google is phasing out 3rd party cookies in 2023. This is going to make it much harder to track users online and it’s something that brands need to think about this now – waiting isn’t an option.
From a Google Ads point of view, you want to ensure you have set up the Google Ads tag across your site and have enabled ‘Enhanced Conversions’, which ensures all conversions are tracked and allows you to monitor other actions such as ‘Add to Cart.’ This is relatively easy to set up, especially if you use ‘Google Tag Manager’.
It’s also vitally important that you build up your first-party data during this time as this is data you own and it can be used when targeting consumers that have provided your brand with their email address. Pattern’s own experience shows that by segmenting and using first-party data, you can see a 10% improvement in revenue and ROI.
A full-funnel approach is now more important than ever as consumers become more discerning and have more choices than ever of where to shop.
Pattern has seen success with Google Ads’ ‘Discovery Campaigns’ (image-based ads that appear on Google platforms such as Gmail and the Google app), which have driven success both from a traffic and revenue perspective.
The performance of these campaigns is significantly enhanced by adopting a segmented and nuanced approach to first-party data and incorporating these into your campaigns. Other options for a full-funnel approach include YouTube and testing bidding on keywords that are more representative of the research phase. (e.g. ‘best baby clothes’ for a baby clothes brand)
Earlier this year, Google announced that they were moving away from Smart Shopping and launched Performance Max. This is a new campaign type that incorporates features and placements from Smart Shopping but expands them onto other platforms such as Gmail but also alternative creative options, such as images and videos.
Since Google has already started automatically upgrading Smart Shopping campaigns to Performance Max, expect to see some fluctuations in the first 2 weeks following the switch over but results generally seem positive. We recommend upgrading sooner rather than later to limit any potential impact to peak period.
Peak period will be even more competitive than in 2021 and you’ll need your budgets to support this period, we recommend boosting budgets in October to start capturing that early peak traffic. As we enter November and the Cyber Period, start early and make sure you are capturing those consumers looking for early bargains, ensuring you are being nimble in your optimisations and reacting to the data that you are seeing.
Overall, peak period is vital to help drive your sales and by preparing early, you will see strong results and drive success for your brand. If you want to discuss how your brand can navigate this next peak period, contact us to discuss your options with our performance team now.
Entering the ecommerce landscape is a huge undertaking for any brand—it usually requires a large investment in resources and expertise to really be successful. Any brand can quickly get in over their heads trying to navigate the nuances of SEO, fulfillment and logistics, distribution control, listing optimization, and meeting the numerous other requirements and administrative tasks to show up well on marketplaces.
Unfortunately, because it’s so easy for third party, gray market, and unauthorized sellers to obtain and sell products online, many brands find themselves pressured to execute an ecommerce plan without the right resources to succeed on marketplaces and their other channels.
So, for brands looking to enter the ecommerce space or improve their current and future performance, it makes sense to partner with an ecommerce consultant.
Pattern’s global presence and proven success with hundreds of brands has allowed us to develop highly effective ecommerce consulting services. We can guide your brand to navigate issues both large and small in marketplaces worldwide. To maximize your ecommerce efforts, you’ll need to understand what an ecommerce consultant does and how to select one who drives the right value for your brand and products.
An ecommerce consultant is a specialist in the ecommerce space who can give you personalized guidance on how to market your products and grow their presence on digital marketplaces.
An ecommerce consultant should be able to analyze your brand, audience, category, opportunity, and current roadblocks and help you understand how to utilize your resources (or what resources are missing) to be most effective in capturing your opportunities in the ecommerce space.
Not sure how to evaluate a consultant? Here are 4 key attributes to look for as you make your choice.
At Pattern, we prioritize brand obsession for a reason—we know that a brand-centered mindset makes a crucial difference in the outcomes and results our partners achieve. So in our experience, when you begin your search for an ecommerce consultant, it’s important to look for a partner who is specialized in ecommerce, invested in the product, and passionate about helping brands build and improve their strategies. Typically, this means finding someone that consults exclusively for ecommerce marketplaces, rather than choosing a consultant who offers many different services.
It’s also important to avoid choosing a consulting partner who can’t deliver the right experience for your brand. The best indication of whether your potential consultant can do that is to review their history, data, and results with other brands. Ask if they’ve helped others in your selling category, if they’ve solved specific issues your brand is facing, and why they feel you are a good fit. The key is to leave the conversation feeling confident that you understand your consultants’ capabilities and whether or not they match up with your needs.
It’s best to pick a consultant who knows how to guide a brand onto and through multiple marketplaces worldwide. You’ll want to take a look at your long-term strategy and think about the regions and platforms you’re currently on and where you might want to take your brand in the future. If your consultant is truly great at what they do, they’ll be able to help you perform well enough with your current product roadmap that it’ll be a no-brainer to expand your presence at the right time.
The most effective partnership with an ecommerce consultant will be able to give you both recommendations and point you to solutions for making those changes in your planning, processes, and execution. Your time and money is valuable, so you want to make sure that you’re spending it as efficiently as possible as you follow your consultant’s advice. So, before you commit to an ecommerce consultant, ask about the resources and concrete solutions they typically recommend to the brands they work with.
Finding an ecommerce consultant that checks the boxes can be a difficult task. At Pattern, our entire focus and drive centers around giving brands the tools and resources they need to succeed on domestic and international ecommerce marketplaces.
With over 100 global ecommerce consultants across 10 global offices, we have the right tools to partner with brands across the world to achieve better ecommerce success. We give specialized advice, then make sure our partners have all the adequate SEO, social media, CRM, Amazon multi-channel fulfillment services, and ecommerce outsourcing services they need.
Interested in ecommerce consulting services? Set up a call here to learn what Pattern can do for your brand on global marketplaces.