Report: Target unveils Amazon-style plan to win back customers
Target is reportedly testing a new shipping model, which would deliver products directly to customers' homes from factories. The retailer is looking to expand its range of low-cost products with the service, which would be similar to Chinese e-commerce platforms like Shein and Temu and major rival Amazon. Most online Target orders go through the retailer's warehouses before being delivered to customers.
But by mailing products directly from the manufacturer or supplier to the shopper instead, Target could potentially offer lower prices. This new model would reportedly primarily include apparel, household goods and other non-food items.
The company has not formally announced the test, but a spokesperson revealed that Target regularly explores new methods of product and service deliveries. 'In all cases, we uphold the high quality, responsible sourcing and sustainability standards that Target is known for and that consumers expect from us,' the spokesperson told Bloomberg.
It comes after Target's first quarter sales fell more than expected as it faced boycotts for turning its back on DEI policies and hiking prices as a result of tariffs. Target, which operates nearly 2,000 stores nationwide, issued multiple warnings that it may have to raise prices due to levies implemented by President Donald Trump.
In May, Target announced sales fell 2.8 percent to $23.85 billion in the first quarter of this year. The results were lower than the $24.23 billion Wall Street expected, according to FactSet. The retailer's shares dropped more than six percent following the news and were down 40 percent over the year.
Saunders continued by saying the move was 'made out of desperation' as the pressure from its sales and performance is leading to the company looking for ways to boost business. 'Direct shipping may help a bit, but it's not a new model and it is a very competitive space. It is not entirely clear what Target would do to differentiate themselves,' he said. Target is in the middle of strategic plans aiming to increase its sales to over $15 billion by 2023.
These plans include new collaborations and partnerships, expanding sizes in its Target Plus marketplace, and doubling the size of its in-house media company Roundel. Employees, meanwhile, have become scared about potential layoffs and store closures after select product prices jumped over 90 percent .
Walmart , one of Target's biggest competitors, also warned customers of price hikes last November. The increases became a reality after viral photos of new prices leaked on Reddit . Walmart employees have continued speaking out about the changes , and Target employees have begun posting their own photos on social media .
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