Target will invest $100 million to build a sorting center to speed up the delivery of online orders!

It is learned that according to foreign media reports, Target recently announced that it will invest US$100 million to build a larger supply chain center network to speed up the delivery of online orders and reduce delivery costs.

The retailer plans to build at least 15 facilities, known as sorting centers, by the end of January 2026. Currently, Target has opened nine. On average, more than 100 people work in each sorting center. Needless to say, this expansion will also increase Target's workforce.

The company is betting on growth in e-commerce even as it faces overstocking and a waning online boom. Target lowered its outlook for the holiday season and announced plans to cut as much as $3 billion in costs over the next three years.

The company's e-commerce sales growth has slowed due to overcapacity caused by crazy expansion during the epidemic. In the third quarter ending October 2022, the company's e-commerce sales increased by less than 1%. In contrast, it increased by nearly 29% in the third quarter of the same period last year.

Gretchen McCarthy, Target's global supply chain and logistics leader, said: "Regardless of the economic backdrop, Target must meet customer expectations by helping them make online purchases easily and conveniently, and we are closely tracking consumer spending and are considering recent trends."

Target says it has increased next-day delivery by 150% since the first sortation center opened, and it expects the center to deliver 50 million packages this year, double the number it will deliver in 2022.

Target's sorting centers delivered 26 million packages in 2022, and the retailer has enabled up to 40% of online orders to arrive at customers' homes the next day through a partnership with Shipt.

In its partnership with Shipt, Target is providing delivery drivers with more routes and larger-capacity vehicles that can hold up to eight times more packages per route. The company is testing third-party delivery vehicles in two markets where it has sorting centers, and plans to expand them to all markets in the coming years.

Target said that over the past six years, it has been adopting a "store as hub" strategy. It has turned its approximately 1,950 stores into mini warehouses where employees can help pick and pack most online orders. The sorting center is Target's next stage of growth, ensuring that it can provide customers with faster delivery, save transportation costs, and promote the company's long-term growth.

Target has opened sorting centers in major markets in Minnesota, Texas, Colorado, Illinois, Georgia and Pennsylvania, and opened two more in the Chicago and Denver areas last month.

Editor ✎ Nicole/

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