Target, which has invested in equipping its big box stores to become online fulfillment hubs, is looking to grow online revenue through a third-party marketplace on its website. The program, called Target+, will let the retailer compete with Amazon and other retailers’ e-commerce platforms, generate service revenue from third-party sales, and drive traffic back to stores through product return drop-off points.
Target is billing this move as an extension of its in-store and online inventory, supported by Target’s expertise as a product curator.
“Guests look to Target for great products,” wrote Target’s chief marketing officer and digital officer, Rick Gomez, in a blog post Monday. “With Target+, we aim to give them easy access to even more great products by partnering with best-in-class specialty and national brands.” Target customers who hold a loyalty card get 5 percent off and free shipping, an additional lever to lock in the customer.
Like Walmart and Macy’s before it, the marketplace lets Target grow its fee-based revenue from third-party sales. It’s a strategy that’s worked for Amazon, where third-party sales have proved to be a profitable channel. Target has an extensive store network to bolster its third-party marketplace presence and look after customer service needs should problems arise. Target’s e-commerce growth was up 25 percent last year, according to results in December.
Unlike Amazon, Target is taking a cautious approach to growing its marketplace through its invitation-only process. Taking control over which sellers get to participate helps Target control the customer experience more closely and avoid problems other marketplaces have encountered with counterfeit sellers.
“They have a real advantage by sourcing reputable sellers; with Amazon, they end up with so much crap being sold since no one has any sense of the quality with questionable brands,” said Kiri Masters, CEO of digital agency Bobsled Marketing. “By going out and cherry picking, they have a massive edge over Walmart and Amazon.”