Target Seeks To Find Delivery Sweet Spot With Same-Day Delivery Rollout

Target Corp. TGT unveiled a same-day delivery option on 65,000 online items in the latest chapter of the delivery wars between mega-retailers.

Announced on June 13, Minneapolis-based Target is offering the service through its Shipt delivery unit, which became part of Target after it was acquired in December 2017 for $550 million. Shipt employees will pick orders from Target's stores and deliver them to residences. There is an annual fee of $99 or a $9.99 charge per-transaction. Orders must exceed $35 to qualify for same-day shipping.

Deliveries can be made within one hour depending on the available delivery window, according to Jill Lewis, a Target spokeswoman. Customers can choose delivery windows when they place an order, and they will see the first available window when they get through the checkout process, she said. The service is available in 1,500 stores in 47 states. The company operates 1,849 U.S. stores supported by 39 distribution centers.

Target's announcement comes in the wake of Amazon.com. Inc.'s AMZN move to make eligible items ordered by users of its "Prime" service available for free one-day delivery from the time the order ships, down from two days. Amazon's move covers more than 10 million shipments. Rival Walmart Inc. WMT followed in short order with a new one-day delivery initiative covering 220,000 online items. Walmart said it is taking a more targeted approach in its inventory management for the service, making available those items proven to be strong sellers in certain markets during specific time periods.

Amazon, which controls about half of the e-commerce share in the U.S.m offers same-day delivery on more than 3 million items. Members of the company's "Prime" service get free deliveries for qualifying orders over $35. Prime members can get same-day delivery for orders below that threshold, but there is a $5.99 delivery charge assessed for each item ordered. Same-day delivery is also available without a Prime membership for a $9.98 delivery charge per item ordered. Same-day service is available in 44 major metro areas. Eligible goods ordered before lunchtime will be delivered by 9:00 p.m., Amazon said.

Walmart offers same-day deliveries but only for groceries.

It is unclear what differentiation Target hopes to achieve through the launch. In response to that question, Lewis said the service is responding to customer's need for speed delivery, and the availability of same-day delivery will play a key role in driving the company's sales.

Image sourced from Google