SUMMARY
- Target trials "extension facility" in Smyrna, Georgia to expedite next-day deliveries for online orders.
- The extension facility is part of a larger $100 million investment to create a vast network of supply chain hubs.
- Despite a downturn in e-commerce, Target remains hopeful, thanks to the new model designed to serve a wider customer base.
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Target is reimagining its delivery system with a pioneering solution aimed at swiftly getting e-commerce purchases to customers residing in outlying suburbs and neighborhoods of major cities. This strategy is expected to revitalize its online sales operations.
Recently, Target announced its trial of an "extension facility," a novel concept intended to expedite online order deliveries, ensuring customers receive their purchases within a day of their online transaction. The first such facility commenced operations last month in Smyrna, Georgia, approximately 16 miles northwest of Atlanta. If successful, Target plans to extend this model to other cities.
Packages from the extension facility are collected by drivers from Target's proprietary delivery service, Shipt. These drivers, akin to Uber's independent contractors, then deliver the orders directly to customers' residences. This is all part of Target's larger agenda of making next-day delivery accessible to a wider customer base. To further this goal, Target had declared earlier in the year that it intends to invest $100 million over three years to construct a more expansive network of supply chain hubs.
A majority of Target's online orders, approximately 96%, are currently fulfilled at stores. As a part of the expansion strategy, the company has established several "sortation centers" that consolidate these orders into more efficient delivery routes. With nine facilities operational, the plan is to have at least 15 by January 2026.
Despite declining e-commerce sales and the consequent downgrade of Target’s stock by analysts, the retailer is optimistic. The company's CEO, Brian Cornell, asserts that customers continue to shop online, and Target is determined to ride out the downturn by revamping its delivery infrastructure, making it more robust and agile.
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