Same-Day Delivery Services Drove Target’s Digital Sales

Target’s (TGT) digital sales continued to grow at a brisk pace driven by the expansion of its e-commerce platform. During the reported quarter, Target’s comparable digital sales jumped 42% on a YoY basis, gaining significantly from its same-day delivery services.

Target is leveraging its stores base to fulfill online orders quickly and reduce costs. During the reported quarter, Target fulfilled nearly 80% of its digital orders through its stores, which helped in reducing the delivery time as well as costs.

The company is matching the services of rivals and has impressed with e-commerce sales growth in the past several quarters. Target’s e-commerce sales have risen by more than 25% in the past five years.

Target’s robust digital sales growth is driven primarily by its ability to offer fast delivery services. Target offers its drive-up, or online order pickup, services across 1,250 stores. Meanwhile, 95% of the online orders are ready for in-store pickup within one hour. Moreover, Target offers same-day delivery though Shipt in 1,500 stores.

We expect Target’s fast and efficient delivery mechanism and competitive pricing combined with new and exclusive merchandise to drive its digital sales in the coming quarters. The retailer’s same-day delivery services, in particular, are expected to drive most of the growth in its digital business and contribute significantly to the comps growth rate.