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Target’s been developing an option that enables customers to consolidate their e-commerce orders of multiple products into fewer packages, Internet Retailer reports.
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When checking out, shoppers can choose to ship their items in fewer boxes, and they’ll be offered a $1 incentive to do so. It may, however, cause orders to arrive later than originally expected, and they may still come in several boxes.
Here’s what it means: Target’s consolidated shipping option is a strategic offering that incentivizes shoppers to use it and can help the retailer streamline fulfillment.
- Reducing the number of packages shipped will help Target lower fulfillment costs. If customers opt for consolidated shipping, Target gets the benefit of not having to ship as quickly and being able to ship fewer parcels overall. These factors will help Target reduce its fulfillment costs and could also help improve organization in stores and fulfillment centers. This is similar to the benefits Amazon gets from the Amazon Day option it began rolling out in November, which allows customers to pick a day of the week to receive all their Amazon orders for the week.
- The credit given to customers will cater to their preference for free shipping. While shoppers aren’t guaranteed to get free shipping on their orders — Target has a minimum order threshold of $35 unless paying with a store credit card — a dollar credit will cheapen the cost in any case. And consumers are hugely in favor of free shipping, even more so than fast shipping: 88% say that they’d prefer free shipping to fast shipping, making the possibility that using order consolidation will cause orders to arrive later less of a concern for Target.
The bigger picture: A reduction in costs for Target would help offset the expenses associated with the recent improvements it’s made to its e-commerce offering.
- Target is expanding a free loyalty program. Dubbed “Target Circle,” the service offers several benefits like 1% back on Target purchases and some shipping benefits — free delivery on Target Restock orders (usually a $2.99 cost) and the option to sign up for a one-year membership to same-day delivery service Shipt at a 50% discount — among other perks. And the retailer isn’t charging for membership, despite the fact that offering these benefits costs it money. The savings from consolidated shipping, however, could help offset these costs.
- The retailer is inviting brands to its marketplace to grow product selection. The new initiative, “Target +,” is seeing the company invite sellers like sporting goods company Mizuno and electronics company Casio to sell on its website. While sellers are being held responsible for their own shipping, Target will accept returns of other merchants’ items at its stores, which will, at the very least, incur some logistical costs, such as the labor required to process extra returns. These too could be offset by the gains the retailer could see from customer usage of consolidated shipping.
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