Target Will Spend $100 Million To Expand Next-Day Delivery—And Compete With Amazon And Walmart

Topline

Target is the latest company to prioritize the next-day delivery model made popular by Amazon, announcing a $100 million investment Wednesday to expand its delivery capabilities, as the company appears to take on e-commerce giant Amazon and brick-and-mortar competitor Walmart.

Key Facts

The investment aims to expand the “supply chain sortation network,” in part by building six new sortation centers—facilities where orders that are packed in stores are sorted for local deliveries—by the end of 2026, Target said.

Last year, Target opened three new sortation centers in the greater Chicago and Denver areas, bringing its total to nine, including facilities in Minnesota, Texas, Georgia and Pennsylvania.

Target said it expects to create hundreds of new jobs with the expansion, but did not say where the new facilities would be located.

Key Background

Target is seeking to rapidly grow its delivery business, as consumers shift toward online sales and away from brick-and-mortar stores. In 2022, Target’s sortation centers delivered 26 million packages to customers, just two years after the company opened its first sortation center. This year, Target is projecting that number will double. Wednesday’s announcement comes less than a year after Walmart announced it was opening four new fulfillment centers, which heavily rely on automation, to help with next-day or two-day shopping. In 2020, Walmart introduced an Express service, which, similar to services like Instacart, delivers items from a store to a customer in less than two hours. But these updates to delivery models pale in comparison to the quick-shipping guarantees Amazon has used to draw in customers. Amazon has hundreds of warehouses and fulfillment centers, and in 2021, the company said U.S. customers received more than six billion free deliveries.

Tangent

Amazon is unique in that the company delivers many of its orders itself. Because of that, the company built up a large delivery fleet which reportedly includes 70 airplanes, 40,000 semi-trailers and 30,000 vans. Meanwhile, Walmart and Target use third-party companies to supplement their trucks.

Further Reading

Instacart Takes Aim At Amazon And Walmart (Forbes)

Last-Mile Delivery War Heats Up As Amazon Rivals Multiply (Forbes)