Target races to obtain upcoming-day packages for clients who do not stay nearby

June 23, 2023: Target has a recent way to speed up packages to customers living in the farther-out suburbs and neighborhoods of major cities as it tries to jolt its e-commerce business.

On Wednesday, the big-box retailer said it is testing an extension facility that helps it get online orders to more shoppers the day after they click “buy.” It opened the first one last month in Smyrna, Georgia, about 16 miles northwest of Atlanta, and may open them in other cities.

Drivers from Target-owned delivery service Shipt pick up packages from the extension facility and deliver them to customers’ doorsteps. The drivers are independent contractors, similar to those who provide for Uber.

The extension facility is part of Target’s effort to offer next-day delivery to more customers. Early this year, it said it would spend $100 million over the next three years to build a more extensive network of supply chain hubs to support the effort.

More than 96% of the company’s online orders are fulfilled at stores. The retailer has opened supply chain facilities called “sortation centers” that help group those boxes into denser, more efficient delivery routes. It has opened nine facilities and plans to have at least 15 by the end of January 2026.

The extension facility adds to that model and expands the radius for faster deliveries.

Target did not disclose the price of the extension center, but a spokesperson said it is not part of the planned $100 million supply chain investments. Target said the extension facility would bring next-day delivery to 500,000 more customers near Atlanta. It can now provide next-day delivery to three million people in Atlanta.

Target’s push to deliver online orders faster and more profitably comes as its e-commerce sales shrink and shoppers pull back on discretionary purchases. In the most recent quarter, which ended April 29, Target’s digital sales declined 3.4% yearly, mirroring the downward trend seen by Costco, Best Buy, Kohl’s, and others. One of its rivals, Walmart, bucked the trend as online sales jumped 27% year over year in the U.S. in the fiscal first quarter.

In recent weeks, several analysts have downgraded Target’s stock, saying its sales may have peaked during the Covid-19 pandemic. They cited a more challenging backdrop for selling apparel and other items that aren’t food or necessities. Those challenges added to the blowback Target has faced for including and then later removing some LGBTQ+ merchandise from its Pride Collection.

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Target races to obtain upcoming-day packages for clients who do not stay nearby