RIS News – Under pressure from e-commerce giants Amazon and Walmart, Target is testing a next-day home delivery service called Target Restock. Amazon, which offers rapid delivery services like Prime Now and Amazon Pantry, recently said it cut the threshold for free shipping to $25 from $35. Walmart previously dropped its free-shipping minimum to $35 from $49.
Target plans to pilot the new service with shoppers this summer in the Minneapolis area. Once the pilot is live, Minneapolis area shoppers that have a REDcard will be eligible to access thousands of household essentials online. They will be able to fill a box with multiple items and have their orders shipped to their homes for a low, flat fee, although there are no reports yet on what that fee will be. Target said it will be able to fulfill orders placed before 1:30 pm by the next business day.
“Today’s consumers expect everything right now!” Ken Morris, Principal, Boston Retail Partners (BRP) told RIS News. “Amazon and Walmart are raising the bar by continuing to offer faster delivery options – even same day. This move by Target to offer next day delivery is a direct response to competitors’ offerings – they need to do it. Target will also need to add fresh, refrigerated or frozen foods categories to next day delivery to be on par with Amazon and Walmart.
Target said the items for Target Restock orders will be packaged at a nearby store, essentially turning local stores into omnichannel warehouses.
“Target seems to be playing catch-up instead of leap-frogging the competition,” said Morris. “Perhaps moving to same day within a reasonable proximity of their store locations and adding auto-replenishment services for products that are purchased regularly might be a better strategy. Another good strategy would be to offer an enhanced loyalty program, similar to Amazon Prime, that offers compelling benefits like free delivery and premium benefits that increase customer loyalty for products they can purchase from many other sources.
“While this is a good move for Target, competitors are upping the game which will continue to put pressure on Target and others to find ways to offer faster delivery services and other conveniences that make shopping and buying easier,” said Morris. “Retailers selling commodity items have a challenging road ahead.”
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