Target is set to introduce an unlimited rush shipping subscription service to compete with Amazon Prime. This subscription will feature complimentary same-day delivery for purchases totaling $35 or more, as well as complimentary two-day shipping.
A person walks into a Target store in Washington, DC, on May 18, 2022. - With European markets also in retreat, major US indices took cues from Target, the North American-focused big-box retailer, which plunged around 25 percent after earnings missed expectations despite higher sales.
Launching Target Circle 360 Subscription
Target unveils Target Circle 360, a $99 yearly subscription, providing limitless delivery and expedited shipping for online purchases. Revealed during Target's recent earnings call, this competes directly with comparable services from Walmart and Amazon, eliminating shipping fees for an annual fee.
Members of Target Circle 360 will enjoy complimentary two-day shipping and same-day delivery on orders totaling $35 or more. The subscription will launch on April 7, initially priced at $49 until May 18 as part of a promotional offer.
Target Circle 360 subscription isn't entirely novel in Target's subscription repertoire. Instead, it seems to represent a rebranding and enhancement of its existing delivery services.
Currently, Target-owned service Shipt offers $99-a-year memberships for same-day delivery from nearby Target outlets via local drivers. Moreover, Target.com already extends complimentary two-day shipping for orders over $35 without any subscription obligations.
Target's upgraded offering merges the perks of Shipt membership with complimentary two-day shipping, eliminating the need for a minimum purchase threshold. For dedicated Target enthusiasts who are already enrolled in Shipt, the introduction of the new $99 subscription may not bring about significant change.
Furthermore, Target Circle 360 will grant access to the Shipt Marketplace, enabling complimentary deliveries from other partner stores as well.
During the earnings call, Brian Cornell, Target Corporation's chairman and CEO, emphasized the team's efforts in transforming the business trajectory. Their endeavors led to improved sales and increased foot traffic during the fourth quarter, surpassing profitability expectations.
Throughout the season, customers responded positively to the freshness, value, and convenience offered by Target's in-store and digital shopping experiences. Looking ahead, Target remains committed to investing in its core strengths and unique offerings that have consistently driven robust financial performance.
Additionally, the company plans to introduce new innovations as part of its growth strategy. The goal is to meet evolving consumer needs, reignite sales and foot traffic, capture market share, and position Target for sustained profitability beyond 2024.
Competing with Other Comparable Services
In the current landscape where the boundaries between online retail and physical stores are increasingly blurred, Target's latest initiative comes into play. Both Target and Walmart leverage their nearby physical outlets and warehouses to fulfill online orders.
Meanwhile, Amazon's extensive network of warehouses and fulfillment centers ensures proximity to delivery hubs at all times. Amazon's strategy includes expanding its Same-Day Delivery sites, capable of handling product fulfillment, sorting, and shipping from a single location.
Fortune reported that all three giants in the retail sector rely on a blend of gig workers and major third-party delivery partners such as UPS, FedEx, and USPS, each adding to labor and shipping expenses.
While Target may not match Prime's delivery prowess, it still aims to attract some of its customer base by offering a comparable membership program.
