Target begins testing next-day delivery with ‘Target Restock’ service

Target announced this morning it’s testing a next-day home delivery service called Target Restock. The service, which is currently being trialed with Target employees ahead of a customer-facing pilot this summer, is designed to offer an easy way to shop online for household essentials which will arrive the day after you place your order.

The move is clearly meant to compete with similar offerings from rival retailers, like Amazon’s Prime Now and its Prime Pantry service, as well as Walmart’s efforts in same-day grocery delivery and pickup. In addition, same-day grocery delivery is offered by third-parties like Instacart, Shipt, Peapod, Postmates and others, who work with local stores.

However, Target Restock is focused on household items, beauty and personal care products, and dry goods – think, things like laundry detergent and paper towels. It’s not getting into the complexities that come along with having to ship fresh and frozen items, including refrigerated trucks, cooler bags, coordinated drop-off times, freezers in the back of stores, and more.

Target says the service is now in testing with staff at Target’s headquarters, and will launch as a customer-facing pilot this summer. The service will be tested in Target stores throughout the Minneapolis-St. Paul (Twin Cities) area.

Target Restock will initially only be open to those customers who are REDcard holders, the company notes. It has not yet decided if it will open it up more broadly to all online shoppers at a later date.

“Focusing on REDcard guests also allows us to build a more personalized experience for guests who take part in the pilot,” a Target spokesperson explained. “Guests will have the option to pay with REDcard – and receive the 5 percent discount – or use another card of their choice,” they said.

To use Restock, customers will visit a dedicated online storefront for the service where they can shop over 8,000 products and add them to a box that will be shipped to their home for a flat fee.

The boxes Target offers for Restock can hold up to 45 pounds and will arrive the next day if the order is placed by 1:30 PM.

The flat fee has yet to be determined, but it’s likely that it will be priced competitively with Amazon Pantry’s $5.99 per box price point.

After the order is placed, existing Target personnel will fill the boxes with the necessary items and prepare them for shipping. Currently, Target is working with UPS on Restock, but plans to test with various shipping providers going forward.

Target is arriving a bit late to the next-day delivery market for consumables. Without a product offering of its own in this space, the retailer could have risked losing customers to Amazon, Walmart, and to local grocery stores who partner with delivery providers like Instacart. However, a large number of customers head to Target stores today to pick up everyday essential items, so even if it’s late to market, it may still be in a good position to compete if and when the service becomes widely available.

The company believes its assortment of products on Restock and its ability to ship from stores will help it better compete with Amazon Pantry and others. Target’s own label brands are a draw for customers, and could entice people to try Restock.

“We want to provide more options to shop Target, and we believe many guests will appreciate the ease of shopping all their favorite essentials online and the convenience of next-day delivery,” a spokesperson said. “Target can provide industry-leading service and value with Target Restock thanks to our assortment and using stores to deliver orders faster than our rivals.

What’s not yet known is how shifting those so-called “Target runs” online will ultimately affect the retailer’s bottom line.

There’s an ongoing joke among Target’s best customers, that entering the store for a simple purchase leads them to fill their cart and overspend on things they didn’t even come for – sometimes even forgetting to buy the item that brought them into the store in the first place. But if the online customers are no longer exposed to those potential upsells because they’re locked into a cordoned off portal for Restock, Target still could lose their dollars to Amazon and others.

To help address issues with falling sales, Target has said it would invest in its stores, supply chain and digital – including the rollout of smaller-format stores in urban areas, denser suburbs, and colleges. It’s also aiming to slash prices.

But one price that’s not dropping is its online order minimum for free shipping. The company on Sunday raised this to $35 – the same as Amazon and Walmart – after having lowered it to $25 a couple of years prior.

Target says it does not yet have a timeframe in mind for how long the pilot will run before expanding elsewhere.