In the continuing game of one-upmanship involving retail’s biggest players, Target has fired a shot of its own by offering same-day delivery for more than 65,000 products. Although Target has offered same-day shipping in the past, the retailer required shoppers to be Shipt members. Now, instead of paying a $99 per year or $14 per month membership fee, shoppers can get orders delivered in as quickly as an hour, as long as they pay a fee of $9.99 per order.
The same-day delivery expansion comes after Amazon announced that it was investing $800 million to make free next-day delivery the default standard for Prime members. Walmart shortly after revealed plans to implement free next-day shipping for 220,000 items without requiring a membership fee.
“There is no doubt that Target and Walmart are responding to every new delivery concept introduced by Amazon,” said Richard George, Professor of Food Marketing at Saint Joseph’s University in a RetailWire discussion. “However, this fast follower approach with individualized tweaks seem to add little in the way of differential advantage. If a shopper is someone who needs it now, the $99 annual subscription or $14 per month subscription (pays for itself in less than two Deliveries), would be the preferred subscription options. The delivery wars will continue, however, this latest move by Target is more a tactical versus strategic move.”
In testing same-day delivery with a $9.99 fee in nine markets prior to the nationwide launch, Target said basket sizes grew approximately 10% to 15% on Target.com, compared with instances when shoppers had to go through Shipt’s web site to get same-day delivery.
The eligible items all are located in a dedicated area on Target.com. While the same-day delivery option is currently live on desktop and mobile web browsers, it will be incorporated in the mobile app before the holiday season. Target REDcard members can get a 5% discount by using their cards.
Since Target acquired Shipt for $550 million in December 2017, both the service’s membership base and its number of in-network retailers has doubled. Shipt still serves retailers including CVS, H-E-B and Meijer.Target is offering a free four-week trial for customers who want to try out Shipt.
In addition to its Shipt service, Target also offers same-day pickup of online orders in all its 1,850 stores, while same-day curbside pickup is available at 1,400 locations. During Q1, Target said Shipt, curbside and in-store pickup drove more than half of its 42% e-Commerce sales growth and 25% of its same-store sales growth.