Retail Channels

Target makes digital investments in ads, fulfillment

The retailer is investing up to $5 billion to scale across operations.

people gathering in front of brown building during daytime


Photo by Max Bender on Unsplash

Coming off a surge of growth in the pandemic, Target is making an investment of up to $5 billion to improve its experiences and scale operations. This will include digital upgrades and fulfillment capabilities that will improve the retailer’s ecommerce operations.

Among digital upgrades, Target said it will expand Roundel, a service that optimizes advertising placement on The media investment comes on the heels of announcements by Amazon and Walmart that revealed massive ad businesses worth billions of dollars. The company said Roundel drove more than $1 billion in value in 2021, but it's not clear whether that means overall revenue is at that level.

Target is also looking to expand its same-day fulfillment services. These have grown 400% since 2019, which accounts for half of the company’s $13 billion digital growth. Target will be expanding its sortation center model, which provides next-day local delivery in specific geographic areas, beyond Minneapolis. It is planning facilities in Dallas, Houston, Austin, Atlanta and Philadelphia, followed by five more cities to be announced at a later date.

This complements a strategy of positioning the big box locations for both in-person retail and ecommerce distribution hubs as online shopping increases. Target executives said 95% of orders were fulfilled in its stores in the fourth quarter, whether it was through an IRL sale or digital order.

When it comes to Target's growing ecommerce business, the stores serve as both order fulfillment and pickup locations. With nearly 2,000 stores, Target already has locally-positioned hubs to serve customers close to home. Now they will be complemented by more facilities enabling local-level delivery.

The growth announcements came as Target reported $106 billion in revenue for 2021, growing 35% over the two years of the pandemic-driven demand for consumer goods.

New Research

How 300+ leading ecommerce brands are positioning themselves for growth.
Download the Report

Trending in Retail Channels

We’re all navigating the changing ecommerce landscape together. Have a story idea? Want to write for us?
Drop it in The Cart

A closer look at Warby Parker

Bainbridge Growth breaks down the eyewear brand's Q2 results, and omnichannel approach.

A closer look at Warby Parker
In a Warby Parker store. (Photo by Phil Roeder | Flickr)

Warby Parker was founded in 2010 in Philadelphia by University of Pennsylvania students David Gilboa and Jeffrey Raider. Their goal was to offer a more budget-conscious alternative in an eyewear market dominated by a handful of companies with very high margins. The name “Warby Parker” is a combination of characters created by fiction author Jack Kerouac, an early creator of what came to be known as “hippie” culture. Their catchy-named sales tactics boosted sales early on, using offers like “$95 Glasses,” “Try 5 At Home,” and the charity-focused “Buy-a-Pair, Give-a-Pair” (8 million free pairs distributed).

Throughout the 2010s Warby Parker completed several early series fundings, growing in valuation at round. In their final capital raise prior to the IPO, Warby took in $245M from private investors at a valuation of $3 billion. This capped off its total venture capital intake of $572M since 2011. The company went public in September 2021, selling 92.5M shares at $40 each in a direct listing where the corporate entity received no additional capital. Shares closed at $54.59 on the first day of trading, totaling market capitalization at $6.8B. At that point in time, Warby’s fully direct-to-consumer business model split their projected 2021 sales of $535 million evenly between online and physical retail.

Keep reading... Show less

Latest from Retail Channels