Dive Brief:
- Target is testing delivery routes from stores that use drivers from its Shipt subsidiary, EVP and COO Michael Fiddelke said on a Q4 earnings call this month.
- The test enables "brown box delivery," or shipments outside of same-day delivery and pickup options, from the company’s retail locations to customers in areas without a Target sortation center nearby.
- Executives did not detail which or how many locations are participating in the program. "While we’re in the early stages of expanding this test to more markets, we’re very encouraged by the early results as it’s making us faster and more cost efficient," Fiddelke said.
Dive Insight:
Using Shipt drivers to deliver more brown box shipments from brick-and-mortar locations builds upon Target's stores-as-hubs strategy, in which local stores are used to fulfill orders, according to Fiddelke.
The test also adds another wrinkle to the subsidiary's role in Target's supply chain. Shipt already provides same-day delivery from Target stores and helps bring packages from sortation centers to customers' doors. Drivers delivering for the company go to a designated pickup location for loading before dropping off each package along an optimized route.
"We saw our sortation center packages delivered by drivers using the Shipt capability up over 30% last year, and so that just means a lot more packages delivered in a more cost-efficient manner," Fiddelke said.
The recent experiment with Shipt comes as Target is pushing to ramp up its shipping speeds, particularly for brown box deliveries. In 2024, the retailer doubled the number of packages delivered next day year over year, while also trimming its average delivery time by over 11%, according to Fiddelke.
"We know speed matters to our guests and that with increased speed comes more sales," he said.
Target has also explored ways to make its delivery operations more efficient with Shipt. In markets with a company sortation center, the retailer has leaned more on Shipt drivers with larger vehicles to allow for more deliveries to be made per route.
