They'll be smaller than Target's average store and closer to customers, he said. With technology from Deliv, Mulligan said the company will test sort centers in areas where there's a high density of packages.
#Target online drivers
The "last mile" is one of the biggest cost drivers for digital sales. The company specializes in the "last mile," the distance an online purchase travels from a fulfillment center or store to its ultimate destination - such as a customer's home. It recently acquired technology and talent from same-day delivery startup, Deliv. Target Chief Operating Officer John Mulligan said the retailer will soon test another tool: Sort centers for packages. It also allows customers to get same-day online orders by walking into a store or driving up - options that reduce the retailer's transportation costs. The company said its stores fulfilled nearly 80% of its first-quarter digital sales. To drive down costs, Target has used its nearly 1,900 stores across the country into fulfillment centers.
Retailers have had to manage inventory of items quickly cleared from shelves, coordinate complex supply chains and take on more work as employees pick, pack and ship items - or at least have them bagged and ready for store pickup. The sudden change in purchasing patterns has caused whiplash, too. As more customers shop online instead of at stores, many retailers have had to absorb higher costs. The company's profits were also squeezed as the retailer wrote off apparel that didn't sell and sold more low-margin items, such as groceries, instead of higher-margin ones like home decor. So we have seen an acceleration for what we would expected to take three years that has now happened in a matter of weeks."īut that's come at a cost. Fiddelke said digital fulfillment and supply chain costs were one of the top three drivers that pressured the company's margins for the quarter. "We just thought it would be three years from now. "We have been investing and planning the capability to support this volume," said Target Chief Financial Officer Michael Fiddelke said. And in the three-month period, its stores provided more purchased items through its curbside delivery service than in all of 2019. On average days in April, the retailer fulfilled more orders than last year's Cyber Monday. Its digital sales grew by 141% in the quarter. On Wednesday, the big-box retailer reported its first-quarter earnings and said that nearly all of its first-quarter sales growth came from online.
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