Target sees personal touch in delivery as key Amazon differentiator

OCTOBER 25, 2018 by Suman Bhattacharyya

Target is positioning itself as the anti-Amazon by focusing on personalized, one-on-one support to enhance its e-commerce deliveries.

In preparation for the holiday shopping season, Target is rolling out three significant upgrades to its e-commerce pickup and delivery services, two of which involve direct human assistance. The retailer is expanding its subscription-based Shipt personalized shopper service to 46 states, up from 35. Additionally, Target is extending curbside pickup to nearly 1,000 stores by the end of October and targeting Amazon Prime customers by eliminating the $35 minimum spend for free two-day shipping from Nov. 1 until Dec. 22.

“We’ve got a strategy of stores as hubs as a key differentiator,” said Target rep Eddie Baeb. “The idea is that our stores are very close to where America lives.”

By using its more than 1,800 stores as focal points for its e-commerce operations — with 75 percent of the U.S. population living within 10 miles of a Target store — the retailer can leverage its store employees to connect with customers and strengthen their loyalty to the brand. This approach allows Target to use its physical presence to its advantage, something online-only retailers cannot replicate.

Other major retailers, such as Walmart and Home Depot, have also utilized stores as pickup and delivery hubs, capitalizing on their extensive physical infrastructure. “They are leveraging their unique value proposition by enabling associates to provide additional services,” said Adam Silverman, SVP of marketing at Theatro, a Dallas-based software company that collaborates with retailers on business apps for indoor mobile workforces. “Amazon can’t do that, and retailers are increasingly doing it to differentiate.”

Target is investing heavily in improving the e-commerce experience in anticipation of a significant boost in online sales this holiday season. According to eMarketer, U.S. holiday e-commerce sales for 2018 are expected to reach $123 billion, a 16 percent increase year-over-year. EMarketer predicts that e-commerce will account for 12.5 percent of total U.S. holiday season sales, which are projected to be $987 billion.

With 100 million Amazon Prime members, a growing proportion of shoppers are already online. Target aims to meet its customers where they are and differentiate itself with added services. To execute personalized deliveries from stores, Target is investing in technology. Through Shipt, the personalized shopper service and tech platform acquired for $550 million last December, customers can create a profile on the Shipt app outlining their preferences and make purchases through it, with Target’s inventory integrated into the app.

Once an order is placed, Shipt shoppers, who are independent contractors, review customer information saved in the app to personalize the order and communicate with customers to understand their needs better. For instance, a Shipt shopper could ask a customer how soft they prefer their avocados, along with other specific attributes for their orders. The more purchases a customer makes, the smarter the platform becomes.

Using data from Shipt and Target’s other pickup and delivery services, the retailer can better anticipate customer behavior, said Jonathan Smalley, CEO of Yaguara, a data analytics company that works with retailers. Shipt is also available for other retailers, including local New York grocery stores like Fairway and Morton Williams. “They’re seeing what’s being ordered daily, so they can see what customers are looking for in different areas — that’s really powerful,” Smalley said. “They can start predicting what people want in different areas and have the right number of ‘shoppers’ available at busy times of the year.”

The curbside pickup option also employs technology to ensure timeliness. An in-house app on mobile devices used by employees utilizes geofencing to alert employees when a customer arrives to pick up an order. By deploying a Target employee to deliver items to a customer’s car, it reduces wait times and provides an additional help point if the customer needs more assistance. Target also offers customers the option to walk into stores to pick up orders.

“The customer is interfacing with someone who cares about their order and their experience as a customer,” Smalley said. “Amazon seems so impersonal; Target is smart to focus on that.”

As Target adds services, ensuring the integration of all delivery “pieces” into a single tech platform will be crucial in keeping up with customer expectations, Smalley added. With the expansion of Shipt, curbside pickup, in-store pickup, same-day delivery from stores in selected urban areas, and Target Restock (Target’s answer to Amazon Prime Pantry), Target offers as many options as possible to compete with Amazon. However, drawing loyal Amazon Prime members away won’t be easy.