Bullseye or Bust? What's the Deal with Target Plus?
Although they've earned a clearly differentiated position in the world of physical retail, Target has had a rough time when it comes to eCommerce. The retailer doesn't even make the top-10 list of US eCommerce players. They do, however, have some momentum going for them at the moment (25% sales growth on eCommerce YOY) and are now looking to push that further by launching their own unique version of the eCommerce marketplace called Target+. Let's have a look at what they're building and evaluate what it could mean for brands...
Differentiating Their Offering
Why another marketplace? Target's point of view is that their curation will make all the difference. Unlike other marketplaces that are open to all, Target+ will be more choosy. No invite? No selling! In addition to a more "targeted" assortment, the retailer will also make sure that products are placed in the right categories and that content is up to its high standards.
Target takes great pride in their image and product quality, so they are taking a cautious approach with this venture to continue to maintain their affordable chic image. Target’s CMO and Digital Officer Rick Gomez says, “Guests look to Target for great products. With Target+, we aim to give them easy access to even more great products by partnering with best-in-class specialty and national brands.” Brands like Mizuno and Kaplan will help set this eCommerce offering apart.
Leveraging their Asset Base
Like Walmart, Target has a huge investment in real estate and capital with nearly 2000 US stores. Leveraging those assets to help drive online sales is a great way to improve the return on investment. Like Walmart, Target will allow shoppers to return their Target Plus goods at any location. Target is looking to drive omni-channel loyalty as well. Target loyalty cardholders receive a 5% discount off their purchase using their REDcard and also get free shipping.
Target is taking a shopper-centric approach with this offering. The retailer is hoping to avoid issues with counterfeits, expired products, and service breakdowns that have have been prevalent to varying extents on Walmart.com, Amazon.com., and eBay.com. As on Amazon and Walmart's marketplaces, customers will be supported by Target's customer service infrastructure no matter who the seller is.
Potential Risks and Challenges
Attracting sellers & brands from Amazon and Walmart's much larger and better known platforms will be the first major challenge. Reportedly, Target will require sellers on Target+ to cover cost of fulfillment. With two-day shipping becoming an expectation in eCommerce, this could be challenging for smaller suppliers, especially since Target may be unable to get the same shipping rates that Amazon commands as a much bigger shipper.
The biggest challenge for Target, however, will be earning and maintaining a unique position in the crowded eCommerce space. Amazon will likely continue to beat Target on both assortment breadth and pricing. Only time will tell if Target's "cool factor" is enough to set it apart.
Should brands be excited about this? Yes, if Target is part of their strategy then Target Plus also merits serious consideration. That said, we do not expect it to become a serious challenger to Amazon or even Walmart's eCommerce offering in the short-term. Target will need to make a much bigger eCommerce move to challenge these heavyweights.
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