April 8, 2020

Target's Ecommerce Offering Is Expanding. Here's What You Need to Know

You’ve probably heard a lot of chatter about Amazon, eBay, and Walmart’s marketplace in the past few years. What you may not have heard much about is Target.

In the past year, Target has quietly slipped into the online market space, launching an invite-only marketplace called Target+ or Target Plus back in February 2019. As of February of this year, that marketplace has grown to 109 merchants and over 165,000 products, according to Marketplace Pulse. Their foray into the marketplace space thus far has been a bit tepid, but the question remains: what does the future look like for Target’s retail marketplace and should brands be paying attention to it?

Target’s ecommerce growth

Target has made large strides and big sales over the past few months. One of the greatest boons for the retailer’s sales strategy has been their same-day fulfillment services, which include in-store pickup, drive-up, and same day delivery to customers who purchase items online. According to Target, their Drive Up service had a sales growth of 500% last year and Order Pickup sales grow nearly 50%.

In 2019, the company had over 90% growth in their fourth quarter and same-day fulfillment accounted for over 80% of Target’s ecommerce growth, with approximately $6 billion in ecommerce sales having been made. Over one third of people who placed an order through Target’s same-day fulfillment services last year had never ordered through Target.com previously. The numbers are impressive.

“Target is winning in the marketplace because of our differentiated investment strategy, durable financial model and our team’s incredible work in reinventing the Target run to deliver a shopping experience like nothing else in retail,” Target CEO Brian Cornell said in a press release.

Future of Target+

In the future, Target plans to continue investing in digital fulfillment services. They also plan on testing curated shipments of fresh food and adult beverages through their pick up and drive up services, a move that mimics some of the work Walmart and Amazon have done in that sphere.

But where does that leave Target+?

In many ways, Target+ is similar to Amazon and other marketplaces. The biggest exception is that the company chooses which retailers it wants selling on its site—you won’t get on unless you get an invite. Target is ranked 8th in retail ecommerce sales share, and the company still has ground to make up to be competitive with Amazon and Walmart.

Target Plus ecommerce trends

While marketplaces were historically launched to increase selection for buyers, the market is changing. According to Marketplace Pulse, customers are far more likely to purchase product from a retailer directly than navigate the customer service experience on a brand’s marketplace. That’s one obstacle Target+ faces as a new brick-and-mortar retailer entering the marketplace space.

Another con with Target+ is that it isn’t incredibly competitive at the time being. Most sellers don’t offer two-day or faster shipping on the platform, which makes customers more likely to purchase from Target directly or seek products from other marketplaces that have faster shipment times.

One thing Target’s had to compete with is Amazon Prime, still a dominant force in online retail during the holidays with a growing membership base, one-day shipping, a bigger assortment of products, and promotions that are more aggressive and appealing to customers.

Keep an eye on Target+

At the moment, third-party merchants can’t easily sell on Target+, though the company says they plan on accepting partner applications in the future.

Still, Target seems intent on diversifying the way that customers access their products, and that could mean interesting developments with Target+ as the company’s digital retail offerings grow. The most intriguing thing about Target+ is that, as Marketplace Pulse writes, it may be a great step for sellers to join Target online and offline. It may also be a safe way for Target to draw in small brands and test the demand for what they have to offer under the Target name.

To learn more about growing marketplaces like Target and how you can increase ecommerce, contact Pattern below.