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One of Target's buyers is targeting an online grocery order.
Source: Shipt
Target offers the general public its same-day delivery option, marking the last step in a fierce war around deliveries between big box retailer Walmart and Amazon.
TARGET announced Thursday that buyers from 47 states across the country would now be able to receive items from online orders delivered the same day by paying a lump sum of $ 9.99 per order. To do this, Shipt, a same-day membership-based platform acquired for $ 550 million, was acquired.
Until now, Target customers could have orders delivered the same day by being a member of Shipt, which costs $ 99 a year. This option is always available for everyone, said Target, but the company makes it easy to choose the same-day delivery service order-by-order, as opposed to signing up for an annual subscription.
The TARGET announcement comes as online retailers were brimming with activity so that their customers could place their orders as quickly as possible. Walmart and Amazon have recently announced overnight delivery options, with a promise to reach about 75% of US consumers with faster shipping by the end of 2019.
Amazon currently offers its premium members, who pay an annual fee of $ 119, a same-day free delivery for over 3 million items and orders over $ 35. Non-principal members may have this option by paying an additional $ 9.98 per item, according to their website. And this only concerns the "selected areas" in the United States, explains Amazon.
At the same time, Walmart is on track to deliver same-day grocery delivery on a network of 1,600 stores by the end of the year, double what it was in January. The fees for this option vary depending on the location. And this fall, Walmart plans to start delivering home grocery orders directly to its customers' refrigerators in a few markets. He still has not revealed how much this service would cost customers.
Now, with the extension of the same day delivery of Target, 65,000 items on Target.com will have the option of being delivered within one hour, the company says. Buyers will be able to use their Target credit card to pay, which will give them a 5% discount. And he added that this same day delivery option should be integrated with the Target mobile application before the holidays. It is currently live on desktop and mobile web browsers.
"With same-day delivery now available directly in the Target.com experience, we have made it easier for our customers to shop at Target," said Dawn Block, Target's Senior Vice President of Digital Operations. , in a blog.
Membership in Shipt has doubled
Since acquiring Shipt, Target has indicated that the number of service members has doubled and the number of retailers in the Shipt network has doubled. In addition to Target, Shipt still serves companies such as CVS, H-E-B and Meijer. During the holidays, she employed about 80,000 Shipt buyers, who help pick, pack and deliver orders from these retailers. He recently said that this number has grown to more than 100,000 people.
Target was already offering other same day pickup options for its online orders in its stores. This includes a free pick-up option at nearly 1,400 stores, and a free in-store pick-up option at the 1,850 target stores in the United States. Both options promise that orders are ready in one hour.
In the first quarter of this year, Target stated that Shipt, in-store curbside recycling and in-store collection accounted for more than half of its 42% growth in online sales and 25% of its online sales growth. comparable stores. Sales in stores opened at least one year rose 4.8% in the quarter.
The financial benefit of all this for Target is that when customers pick up their items in the stores, the retailer is 90% cheaper than when it has to ship something from a warehouse, the company said.
By testing the same day delivery with a $ 9.99 fee in nine markets prior to Thursday's announcement, Target said the size of the baskets had increased by about 10% to 15% on Target. com, while buyers had to visit Shipt's website to get the same day. delivery.
Fifty-three percent of consumers said they plan to place more online orders in 2019 with the intention of retrieving these items from physical stores, according to an Internet Retailer survey of 1,100 consumers just after 2018. holiday season. About 23% of respondents said they plan to place more orders for same-day delivery.
But with Amazon, Walmart, Target and others all seeking to win customers with faster services, skepticism persists about the fact that all the buzz around the same day, next day and home delivery is there to stay.
"This is not sustainable"
"We have distorted the expectations of our customers and it costs the customer nothing," said Sucharita Kodali, a retail badyst at Forrester Research, in a recent interview. "From other companies … someone bears the cost."
In the end, she said, "I do not think the customer experience is sustainable.We must accept a little less.That means: something like a delivery the next day is an explosion of excitement in the short term … an economic micro-war, at the macro level it is not sustainable ".
Amazon, for example, said it would spend $ 800 million during its second fiscal quarter this year to switch to one-day delivery for Premium members. Target did not disclose a cost for the same-day delivery extension, but said more and more customers were opting for selective and in-store collection instead of delivery. And as more people do, Target's running costs decrease.
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