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Target’s Ship-from-Store Distribution is New Ticket to Success

Prepared to use delivery drones at a moment’s notice, expecting 87 percent of online holiday shoppers to spend money on its site this year and offering same-day delivery for consumers, Amazon has established itself at the top of the retail food chain.

Less than one year since it began ship-from-store distribution, Target is catching up.

During a conference call with investors in mid-August, Target CEO Brian Cornell spoke about the many benefits the delivery service offers, noting that it “allow[s] us to balance inventory across the network, leverage the capital and labor already in our stores and reach guests more quickly.”

The mass-market chain is now reaping those benefits. Internet Retailer recently reported that between August 2014 and October 2015, the percentage of online orders delivered by Target within two days jumped to 26 percent from a low 2 percent.

Kevin Hills, vice president of customer service monitoring company StellaService, said he wasn’t surprised by Target’s achievements “because we’ve seen from other omnichannel retailers the power of ship-from-store.” He continued, “You can ship it from closer to your customers’ homes and cut down on the transit time,” making it a very attractive option for consumers.

Target is enjoying the success and plans to bump the number of Target stores that allow ship-from-store distribution from 140 to 450 by the end of 2015.

Hills also recommended that retailers such as Target offer in-store pickup for online orders, echoing a 2013 Aberdeen Group Inc. study that found that “companies with the strongest omnichannel customer engagement strategies” preserve about 89 percent of their customers, whereas companies that do not maintain only 33 percent.

And while Target is on the right track, the company still has a way to go to reach Amazon’s level: During the same 14-month period, the latter delivered a slightly higher 29 percent of online orders in two days.