Target Is Attempting To Dominate Online Holiday Sales, Here’s How

Target Stores and Online Shopping order shipping

While Target shoppers were preparing to enter stores on Thanksgiving day, thousands of workers at nearly 25% of its U.S.-based stores were attempting to leave.

Those workers had packed up online orders that were placed through Target.com earlier in the day.

The Minneapolis-based retailer enlisted small teams of workers to browse the store quickly to find and mail items to customers who placed online orders hours before the store opened for its Black Friday sales, which started on Thursday.

The new strategy from Target follows a Deloitte LLP survey which found shoppers expect to spend 59% of their money online for the four days starting Thursday, compared with 36% in stores. The remaining 5% is spent on catalogs.

Company’s like Target realize that in order to compete with Amazon and other e-tailers, they must quickly find and pack orders for online buyers.

Target CEO Brian Cornell decided to employ the direct from store model as a means to save on building dozens of additional online-shipping centers, which would take time and be costly for the company.

The new process, known as omnichannel, allows brick-and-mortar retailers to take advantage of already in stock inventory. They use an algorithm to determine if it would be cheaper to ship certain items from a store instead of a shipping or distribution center. In other cases customers may choose a site-to-store option for easy pickup at their own convenience.

The National Retail Federation says nearly one-third of retailers are working on shipping products from stores.

While more stores are turning to the omnichannel model, they are moving slowly and that is on purpose. Messing up the model can become costly. Shipping can increase by 150% during busy holiday shopping times, and the process of picking items from store shelves can become expensive. If they get the model right, it could spell big profits, if they get it wrong, it could be a financial disaster on a massive level.

While shipping costs have increased Best Buy and Target have eliminated shipping charges on all orders for the holidays. Wal-Mart stops charging for shipping if you spend at least $50.

While moving product is great for traditional brick-and-mortar stores, they also face the very real possibility that customers visiting their physical locations will not find the items they are looking for because those items were purchased by online shoppers.

For now omnichannel distribution at brick-and-mortar stores is a careful balancing act that Target has fully embraced for one-fourth of its stores.