Target just announced some astonishing quarterly results, but the numbers themselves weren't even the most impressive part. Sure, if you're an investor, the fact that the company raced past expectations is great, especially considering the stock jumped 12 percent on the news that same-store sales were up 4.5 percent. And you're probably thrilled that the increase was largely due to a 31 percent jump in online sales.
But there's a bigger story, and it's the reason behind why Target's strategy to beat its larger competitors is working so well. Let's face it, Target is still a relatively small player compared to Amazon, which accounts for almost half of all online sales. But Target has one thing the ecommerce giant doesn't. Actually it has 1,800 things: its stores.
Those stores have driven Target's success already this holiday season, serving as virtual distribution centers for its in-store pickup and drive-up services, as well as Shipt same-day delivery. In fact, Target says that 80 percent of its growth in online sales falls into one of those three same-day services.
One of the reasons this is such a big deal for Target is that instead of incurring expenses related to shipping all of those online orders, Target is able to leverage its network of stores, which it says lowers the cost of fulfilling those orders by 90 percent. Compare that to Amazon which is investing billions of dollars to build out its own delivery network in order to offer one-day shipping to Prime members.
Here's the thing: Target has made huge investments in both its stores and its team, and both of those are paying off big time as it heads into the most important shopping season of the year.
Those investments including adding team members to handle online orders within its existing stores, as well as $50 million in additional staffing to handle the rush of customers during the holiday shopping season. It also includes a major refresh of many of its stores to create a customer experience that online retailers simply can't match.
For example, Target has built out a network of smaller-footprint stores in order to get closer to customers in urban areas and on college campuses. It also stepped up the in-store experience by adding Disney mini-stores to a few dozen locations this fall, aiming to give families with children a reason to linger and spend more.
But, aside from the store experience, Target is using its stores in a way that Amazon can't--to get customers their online orders quickly, often within an hour. That's because its biggest focus by far has been to build on common services like in-store pickup, to offer new options like drive-up, where a Target employee will bring your order out to your car within two minutes of your arrival.
Plus, Target owns Shipt, the same-day delivery service that often gets your order to your doorstep within an hour. And, of course, Target likes to point out that with Shipt there's "no membership required."
And, here's the bottom line--it's working. Sure, people continue shopping at Amazon, and that company isn't going anywhere. Customers, however, have clearly flocked to Target's shopping experience just ahead of this holiday season. That's largely due to two things--Target is the place they already like to shop, and now it's just as convenient, if not more so than Amazon.
And that's the point. When you figure out how to do what you do best and beat your competitor by doing it better, faster, and at a lower cost, that's a strategy for crushing it this holiday season.