The supermarket chain has aggressively tackled the task of fulfillment, now offering multiple options for customers to obtain products: curbside pickup, same-day delivery, next-day delivery through Target Restock.
As the fourth quarter rolls along, the company expects to make strides in ship-from-store fulfillment. It aims to nearly the double the units shipped from stores during the peak four weeks of the holiday season—30 million units this year versus 18 million last year.
"Our stores play a really important role as a backend fulfillment option," CEO Brian Cornell told reporters in a media call following its third-quarter earnings release.
Stores usually fulfill about half of all digital orders, but come the holidays, Target expects that number to be upward of 80%. Delivery from stores tend to be the most cost-effective option for the retailer.
Target Restock, an option that allows customers to select enough products to get next-day delivery for $4.99, rolled out to 10 more markets in the third quarter. Same-day delivery is available in New York City, with fees that vary between $5 and $10. Curbside pickup is also in the early stages of development, available in the Minneapolis area and more recently Houston.
The company boasts that delivery premiums have been well-received by customers, who buy six to nine times as many products when they shop for same-day delivery.
Cornell said in the earnings call that the goal was to build a supply chain that services in two days or less all but the most remote spots in the U.S. "While a large percentage of our digital orders today are arriving that quickly," he added, "we have more work to do before we can reliably deliver in that time frame across all of our assortment."
The big box chain is sprucing up its supply chain in unconventional ways, such as through its new flow center in Perth Amboy, N.J. The facility functions separately from Target's overall operations, instead serving the five stores in New York City through new inventory and management systems developed by a "very lean team that operates like a startup," Cornell said.
While comp sales increased 1.4% in the third quarter, Target's digital sales rose 24%. Unlike Wal-Mart Stores, Inc. (WMT - Get Report) , which has relied on third-party acquisitions like Jet.com to bulk up its supply chain and delivery capabilities, Target is striving for innovation in-house.
TheStreet's "Black Friday and Holiday Shopping Survival Guide" series aims to to help you, the consumer and the investor, navigate the holiday season, Black Friday, Cyber Monday and everything in between. Through a number stories, videos, graphics and other multimedia elements TheStreet takes a look at the biggest challenges of the season, the winners and losers from the shifting retail environment and much more. Read More about navigating the holiday season.
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