With a market value of US$102.57 billion, Target will launch exclusive logistics for the platform

Target is testing a new logistics method . The new method has been tested in Minneapolis , and it will start with employees picking and packing orders in stores , transferring goods from the back of the store to the sorting center several times a day . Then, it will use new technology to combine the packages to reach the community in the most efficient way.

Target's new strategy can help the platform compete with larger competitors such as Amazon and Walmart. This will not only effectively reduce the dependence on third-party logistics of United Parcel Service and FedEx , but also alleviate the cost pressures brought about by the surge in fees and package restrictions on platform sellers due to the epidemic .

Mulligan said that after the new plan is launched, Target will be able to better handle the packages that pile up throughout the day and curb the rise in stockpiling . The plan will also give the company more control over the customer experience and make e-commerce orders more profitable.

Mulligan expects the process to expand over time. Target plans to open five more sorting centers this fiscal year and use Shipt to make deliveries near them . The locations will be in densely populated urban areas where multiple packages can be delivered to the same neighborhood.

The surge in online orders comes as Target's online sales surged 145% in its most recent fiscal year, which ended Jan. 30, compared with the same period last year .

The stock price has also risen, and since the beginning of the year, the stock has risen by more than 16%, with a market value of $102.57 billion . In early April, it reached a 52-week high of $207.38 .

Target is not the first platform to plan to have an exclusive logistics channel. Amazon has Flex and Walmart has Spark . Target believes that having exclusive logistics is a manifestation of the platform's rise to a greater level.

Over the past few years, Target has made its e-commerce strategy more about stores than logistics . Its goal is to bring the economics of online sales more in line with those of physical stores , where the company made about 95% of its sales last year .

But after 2020, Target realized the importance of logistics.

That's in addition to the company 's same-day delivery options, Drive Up and Order Pickup, which let customers pick up their online orders in a parking lot or inside a store for a fee. Target also offers free two-day shipping on online purchases of $35 or more.

Mr Mulligan said orders through these click-and-collect services were 90 per cent cheaper than shipping from a fulfilment centre , and it was 40 per cent cheaper to deliver packages from stores rather than fulfilment centres .

"We started in a unique economic environment, and this is just a way to continue to increase speed, continue to improve costs, and create great value for our guests," said the head .

Target

Exclusive logistics