Target Corporation is expanding next-day delivery to 20 additional metropolitan areas, bringing the total number of cities where customers can quickly receive online orders to more than 50.
The nation’s eight largest retailers by revenue announced during their fourth-quarter earnings presentation on Tuesday that it is starting next-day delivery to more locations in the spring, as it continues to remodel stores as smaller fulfillment centers. The expanded map will deliver the next day to 60% of the US population.
The express delivery service comes to places like Birmingham, Alabama; Santa Barbara, California; Fort Myers, Florida; and Honolulu, according to the Target fact sheet. Target currently offers next-day delivery in about 35 major markets. The expansion is part of an incremental investment of $2 billion through 2026 for stores and operations.
Target (NYSE: TGT) says two-thirds of digital sales are fulfilled on the same day, via drive-up, in-store or same-day delivery for Target’s 360 circle members.
“Our same-day services generated more than $14 billion in sales last year, accounting for two-thirds of our total digital sales. And we’re investing to make these services even faster and more efficient,” said Chief Financial Officer James Lee. “We’re already fast. We’re cost competitive, and we continue to be more efficient, and we have all the core elements of our digital fulfillment,” which is driving the bottom line.
Target reported more than 30% growth for Target Plus, its third-party marketplace.
Next-day delivery is free on orders over $35 or with no minimum order amount if one is a Target Circle 360 member or uses a Target credit card to make the purchase. Most items eligible for shipping are eligible for next-day delivery, including 85% of items sold in physical stores,
Under Target’s logistics model, stores serve as fulfillment centers, which the company says increases efficiency and lowers costs. Depending on location, Target receives packages from local stores and brings them to one of 11 sorting centers to be sorted, packaged and routed for delivery to local neighborhoods by Shipt, its delivery subsidiary, or third-party carriers. About 30 to 40 local stores feed each order center based on the market. Orders are assigned to stores based on inventory, staffing levels, backroom size and cost to serve.
Target says that removing the sorting and packing process from a dedicated store backroom saves valuable time and space for store teams to fulfill additional orders and serve customers. Also, because sorting center technology recommends and organizes packages for easy pickup, it reduces processing time for delivery partners.
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