Minneapolis — Every day, hundreds of drivers park at the target’s hometown delivery hub and load their luggage into the trunk of their car for delivery to customers.
Soon, large retailers will have similar centers and gig workers in three more locations (two in the Chicago metropolitan area and one near Denver) to serve online orders faster and at lower cost. is.The new center is part of a growing push among retailers, including: Walmart To increase the profitability of e-commerce because shoppers shop online and expect their purchases to reach the door within a day or hours.
Since starting testing at its Minneapolis facility in late 2020, Target has added five similar hubs to sort and group out-of-the-box packages to create dense delivery routes. Three more are scheduled to open by the end of January.
“Our goal is to meet guests where they want, when they want, and in the way they want,” Chief Operating Officer John Mulligan said in an interview. “So if they want us to ship something to their home, we want to make it as efficient as possible.”
E-commerce is currently just below 20% of Target’s sales, more than half of which comes from same-day services such as curbside pickups, and the rest from delivery to home. However, due to labor and shipping costs, these sales are less profitable than if a shopper visits the target store, removes the item from the shelves, and takes it home.
Like other retailers, Target has endeavored to reduce chips at the expense of fulfilling online orders. This is a new urgent goal for retailers amid rising fuel prices.
A delivery hub, called a sorting center, receives boxed online orders from stores twice a day. Luggage that goes to the same town or nearby neighborhood is packed to deliver more luggage to the customer the day after the order. After that, more and more sorted packages are delivered by contract workers who drive Shipt. Delivery startup Target acquired in 2017. Some are categorized and distributed by domestic carrier partners such as: FedEx — Usually to a distant address such as another metropolitan area or state..
Over the last five years, Target has transformed the back room of a store into a warehouse where employees select and pack most orders. The company has acquired two companies, Delive and Grand Junction, that provide software to help determine which stores process online orders and design dense delivery routes. The device also helps guide some workers to the best path to retrieve items from store shelves.
However, as we grew, new challenges arose. Luggage began to pile up in the back room, and employees had to wait for state airlines to pick up their luggage daily. Carriers had to stop across regions. For example, trucks had to collect luggage from 43 Minneapolis stores and fulfillment centers before the sorting center opened, which took more time and effort.
Target’s First sorting center In Minneapolis, it was built in a former Sears warehouse. Packages from the hub are delivered by over 2,000 Shipt drivers or carrier partners. The center started delivering 600 packages per day and is currently capable of delivering 50,000 packages per day.
According to Mulligan, the target has three new hubs and nine sorting centers. In addition to Minneapolis, its hubs are near Atlanta, Philadelphia, Dallas, Austin, Texas, and Houston. In the first quarter, we processed 4.5 million packages.
According to Mulligan, the target is still trying to figure out how much the sorting center will reduce shipping costs. In March, Target said it had already reduced the average cost per unit of digital fulfillment by more than 50% over the last three years.
Ultimately, he said he wanted to reduce the distance traveled by the package by placing the desired product in a store near the customer.
Target is also piloting a new concept at the Minneapolis location. Some Shipt drivers use delivery vehicles that can hold up to eight times as many packages per route.
Other retailers are also working to increase the profitability of e-commerce.In addition to Building a high-tech fulfillment center, Walmart teeth Use the store as a warehouse and use contract workers Deliver the package. Buy online at Home Depot, Chico’s and other companies A new business called GoLocal.
Another way Target can reduce shipping costs is to encourage shoppers to use DriveUp, a curbside pick-up service that collects purchases in the parking lot. Shipping packages from the warehouse reduces the cost of achieving that by 90%, said Chief Store Officer Mark Cinder.
For Target, the move to improve profitability is at a crucial time. Retailers Two operating profits in the last few monthsAs warned, you need to cancel the order, increase the price cuts and get rid of the unwanted items in stock in the meantime Covid pandemic..