The Washington Post
Target to open 3 new package-sorting hubs
Target will open three new package-sorting centers during the next year — two in greater Chicago and one in the Denver area — to further its strategy of using stores to handle online orders.
The expansion will give Target nine of the mini-warehouses in the United States and more are planned for the coming years, according to a company statement Monday. The hubs, which receive goods from stores and forward them to customers, are designed to speed local deliveries and cut the shipping costs that typically make online orders less profitable than instore sales.
For Target, fulfilling online orders from stores yields savings of about 40 percent per package compared with shipping them from big distribution centers. Using sorting hubs eases the burden even more, and surging digital sales since the start of the pandemic are pushing the retailer to add more of the facilities as it vies for online orders with the likes of Amazon and Walmart. (Amazon founder Jeff Bezos owns The Washington Post.)
“The biggest part of fulfillment costs is shipping,” Target Chief Operating Officer John Mulligan said at a recent briefing for reporters. “Stores are the asset, they’re close to consumers. We continue to believe they are the fastest way to fulfill, and the cheapest.”
Target says it recorded an increase of almost $13 billion in digital sales from 2019 to 2021.