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Target’s investment in same-day pickup and delivery options is paying off. The company, which today offers same-day in-store pickup, drive-up, and same-day delivery through its acquisition of Shipt, said this week that these services combined have more than doubled their sales in the last year. In addition, they accounted for more than a third of Target’s digital sales, up from about 20% last year.
“These options offer speed, convenience and reliability and as a result, they are quickly becoming the preferred fulfillment choices for our guests,” said Target CEO Brian Cornell, speaking to investors about Target’s Q2 earnings. “And most importantly, because these options leverage our store infrastructure, technology, and teams, same-day fulfillment delivers outstanding financial performance as well,” he added.
Sales - Guests - Target - Orders - Retailer
What’s notable about the same-day sales is that they’re bringing in guests to Target, who had never before placed digital orders with the retailer.
Roughly 1 in 5 customers placing a same-day order in the second quarter were placing an order with Target for the first time.
Target - Customers - Process - Order - Q2
And once Target customers become familiar with the process, they seem to return in short order. During Q2, more than three-quarters of the same-day orders were placed by guests who had used same-day fulfillment in the past three months.
Target’s ability to grow its same-day sales in this fashion was the result of investment in infrastructure, technology, and even its brick-and-mortar stores themselves.
Technology - Front - Target - Pickup - Delivery
On the technology front, Target says its pickup and delivery services benefitted from increased order picking efficiency. Instead of using a first-in, first-out (FIFO) system, new algorithms are being used to prioritize the sequence of order picking that helps direct store employees on which work to do first as well as the best box size for packing orders.
The technology also helps to optimize the path for order picking to minimize the number of steps...
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