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Target improves and expands its delivery options (TGT)
BI Intelligence
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Target has acquired Grand Junction, which provides a software platform that connects retailers and distributors to a network of more than 700 local carriers, allowing them to find the fastest and most efficient delivery option, Retail Dive reports.
The retailer hopes the acquisition will allow it to improve its speed of delivery and offer new services like same-day delivery, according to Arthur Valdez, Target's chief supply chain and logistics officer.
The retailer is likely hoping to improve its ship-from-store capabilities. Ship-from-store options have been a big part of Target’s fulfillment efforts, and Grand Junction could help make the process more efficient by supplying its carrier network to lower last-mile delivery costs. This would likely make it easier for Target to turn its physical locations into local fulfillment centers, while building a stronger reputation for speedy delivery. In fact, Target has already started working with the San Francisco-based company at its Tribeca location in New York City to test a same-day delivery program. Ship-from-store is the most complicated omnichannel system to implement, but if Target can improve its efficiency with Grand Junction, it could help deliver a successful same-day delivery service.
Target also announced that it is expanding Target Restock, its next-day delivery service,according to TechCrunch. Target Restock allows shoppers to fill a virtual box from a selection of thousands of products to be delivered the following day for a flat fee. The program was piloted in Minneapolis in June, and it's now being rolled out in Denver and Dallas-Fort Worth. The new version of the program will offer thousands more products, Saturday deliveries, and will be available to all Target shoppers. (Previously, it was only open to Target's REDcard card owners.) While Target hasn't provided specific details on how it will integrate Restock with its plans for Grand Junction, the company could potentially leverage the same-day fulfillment network it's building with the tech company to improve its next-day offering as well.
Successful same- and next-day delivery options will be critical for Target in staving off its competition. Target needs to offer these quick delivery options to compete with the likes of Amazon, which has not only built a reputation for speedy delivery, but made it the industry norm. By implementing a ship-from-store scheme, the company can leverage its massive brick-and-mortar footprint to drastically cut delivery times, thereby providing the same- and next-day delivery shoppers now expect. This will help it better satisfy customers who demand speedy fulfillment, and perhaps put up a better fight against the e-commerce giant.
Brick-and-mortar retailers are caught on the wrong side of the digital shift in retail, with many stuck in a dangerous cycle of falling foot traffic, declining comparable-store sales, and increasing store closures. Over 8,600 retail stores could close this year in the US — more than the previous two years combined, brokerage firm Credit Suisse said in a recent report. Meanwhile, e-commerce pureplays are riding the rise of digital commerce to success — none more so than Amazon, which accounted for 53% of online sales growth in the US last year, according to Slice Intelligence.
In response, many brick-and-mortar retailers have started to use omnichannel fulfillment methods that leverage their store locations and in-store inventory in order to better compete in e-commerce. These omnichannel services, including ship-from-store and click-and-collect, can help retailers manage the transition to digital by:
Increasing online sales by offering cheaper, more convenient delivery options for online shoppers.
Limiting the growth of shipping costs as online sales volumes increase by leveraging store networks for delivery.
Keeping stores relevant by turning them into fulfillment centers that pull customers in to pick up online orders.
However, few retailers have mastered these new fulfillment services. While these companies have spent years optimizing their supply chain and logistics networks for delivering goods to their stores or directly to customers’ doorsteps, most have yet to figure out how to profitably bring their store locations into the e-commerce delivery process.
Jonathan Camhi, research analyst for BI Intelligence, Business Insider's premium research service, has laid out the case for why retailers must transition to an omnichannel fulfillment model, and the challenges complicating that transition for most companies. This omnichannel fulfillment report also detail the benefits and difficulties involved with specific omnichannel fulfillment services like click-and-collect, ship-to-store, and ship-from-store, providing examples of retailers that have experienced success and struggles with these methods. Lastly, it walks through the steps retailers need to take to optimize omnichannel fulfillment for lower costs and faster delivery times.
Here are some of the key takeaways from the report:
Brick-and-mortar retailers must cut delivery times and costs to meet online shoppers’ expectations of free and fast shipping.
Omnichannel fulfillment services can help retailers achieve that goal while also keeping their stores relevant.
However, few retailers have mastered these services, which has led to increasing shipping costs eating into their profit margins.
In order to optimize costs and realize the full benefits of these omnichannel services, retailers must undertake costly and time-consuming transformations of their logistics, inventory, and store systems and operations.
In full, the report:
Details the benefits of omnichannel services like click-and-collect and ship-from-store, including lowering delivery times and costs, and driving in-store traffic and sales.
Provides examples of the successes and struggles various retailers have experienced with omnichannel delivery.
Explains why retailers are having trouble managing costs with their omnichannel fulfillment efforts, which are eating into their profits.
Lays out what steps retailers need to take to optimize costs for their omnichannel operations by placing inventory where it best meets customer demand.
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