Target Says Shifting Order Fulfillment to Slower Stores Speeds Delivery and Reduces Costs

Target is reportedly testing new ways to provide next-day delivery.

The new models the retailer is testing include shifting fulfillment from busy stores to ones that are less busy, opening a new facility focused on overnight deliveries, and having gig workers handle some deliveries, the Wall Street Journal reported Thursday (Dec. 4).

When Target began having stores that were less busy handle the fulfillment of next-day orders in Chicago, it found that the change sped up delivery and reduced costs, Gretchen McCarthy, chief supply chain and logistics officer at Target, told the WSJ.

Its new facility in Cleveland is a sortation center that is operated by Ryder System, according to the report. Stores pick and pack the orders and send them to the sortation center, and the center then batches the orders by neighborhood for delivery.

In various markets, the retailer has some or all of its deliveries done by drivers with Shipt, the delivery service it acquired in 2017, per the report.

The company aims to offer customers several ways to get their orders, McCarthy told the WSJ. “We believe there’s a use case for same-day delivery, there’s a use case for drive-up, there’s a use case for ship-to-home brown box, and, of course, the bread and butter of our business, there is a use case for people coming into our stores,” McCarthy said.

Target is increasingly using its stores to fulfill online orders, as that streamlines inventory and cuts shipping costs, according to the report.

Rival retailers Amazon and Walmart have also been working to store goods closer to customers, with Amazon shifting inventory closer to customers and Walmart using its stores and freelance drivers to enable same-day delivery, the report said.

PYMNTS reported Thursday that Amazon, Walmart and other retail giants are increasingly looking to build delivery networks in-house and own those networks themselves. They are doing so because control of the flow between click and doorstep is the defining retail battle of this center, the report said.

Target said in 2023 that its sortation centers had enabled a 150% increase in the number of orders delivered to guests the next day.