Target Corporation, the eighth-largest retailer in the United States, will focus on selecting profitable national and specialty brands to grow its online business while slashing expenses.
It's launched a new curated marketing strategy called "Target +" where third-party sellers will be responsible for shipping and other costs. This invitation-only strategy will see Target ask this select group of third-party sellers to sell on its website.
Target + provides guests with a curated selection of product choices that enhance Target's existing assortment, with the perks they enjoy from Target, like five percent off with a Target REDcard, free shipping, and easy in-store returns.
It plans to partner with companies in certain categories such as sporting goods and toys that have high shopper demand. Partnering with third-party sellers will allow Target to pass on some of the hefty online costs.
It's not generally known that adding online customers can sometimes be more expensive for retailers than attracting customers to brick-and-mortar stories. Typically, hefty online shipping fees, returns, and other expenses make it more costly to add online customers.
"We see this as a long-term opportunity to drive profitable growth," said Rick Gomez, Target chief marketing officer, and chief digital officer. "This is intended to be a very curated and select group of products and brands. ... We are reaching out to the brands we want."
Target + should help boost Target's profitability and continue to grow its online sales. Target has reported online sales growth of more than 25 percent over the past four years. Although it looks great, it pales in comparison to Walmart's 40 percent growth in 2018.
But unlike Target that now wants to partner with select retailers, Walmart has grown by acquiring an array of online firms and tying-up with other retailers.
In addition, this invitation-only approach will also help Target avoid some of the blunders that have proved costly to its competitors. It will also allow Target to better police its third-party sellers, and what they're selling online.
Target admitted it's been working with a number of brands to test Target + and its effect on its third-party retailing. Among these brands is sporting goods maker Mizuno, educational toy maker Kaplan and music instrument company Casio.
Target said it will add home goods, electronics, musical instruments and outdoor gear to its third-party seller's list.
"We are selecting these categories based on guest research ... what people are searching for [on Target.com]," said Gomez.
