Target Tests New Approach for Faster Deliveries

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Target wants to get online purchases to customers’ doors even faster by enlisting the help of its own team of delivery people in combination with other services.

The new approach will be supported by three companies that the retailer acquired: Grand Junction, Deliv and Shipt. Employees will pack orders at stores, then transport them to a sortation center multiple times each day. Next it will use technology it acquired from two companies, Grand Junction and Deliv, to group items for the most efficient routes to neighborhoods. Shipt will deliver packages to customers who live in the same parts of town in addition to traditional carriers.

Target’s online orders grew 145% in 2020 and this new system is expected to help Target compete with larger e-commerce rivals like Walmart and Amazon.

“Shipping is the majority of the cost for getting a product to a guest. Shipping is the big number,” Target’s chief operating officer, John Mulligan, said in an interview with CNBC. “We continue to work on picking better and optimizing our pick and optimizing the batches [of packages] for the team … but the key to the whole game from our perspective is to improve that ship cost.”