Target just announced some astonishing quarterly results, but the numbers themselves weren’t even the most impressive part. Sure, if you’re an investor, the fact that the company raced past expectations is great, especially considering the stock jumped 12 percent on the news that same-store sales were up 4.5 percent. And you’re probably thrilled that the increase was largely due to a 31 percent jump in online sales.
But there’s a bigger story, and it’s the reason behind why Target’s strategy to beat its larger competitors is working so well. Let’s face it, Target is still a relatively small player compared to Amazon, which accounts for almost half of all online sales. But Target has one thing the ecommerce giant doesn’t. Actually it has 1,800 things: its stores.
Those stores have driven Target’s success already this holiday season, serving as virtual distribution centers for its in-store pickup and drive-up services, as well as Shipt same-day delivery. In fact, Target says that 80 percent of its growth in online sales falls into one of those three same-day services.
One of the reasons this is such a big deal for Target is that instead of incurring expenses related to shipping all of those online orders, Target is able to leverage its network of stores, which it says lowers the cost of fulfilling those orders by 90 percent. Compare that to Amazon which is investing billions of dollars to build out its own delivery network in order to offer one-day shipping to Prime members.
Here’s the thing: Target has made huge investments in both its stores and its team, and both of those are paying off big time as it heads into the most important shopping season of the year.