Omnichannel Helps Target Hits Q4 Digital Sales Out of the Park

Target saw a significant increase in digital sales in 4th quarter of 2015. They used “free shipping” as a marketing tactic, paired with sophisticated omnichannel fulfillment, to help them gain a competitive advantage among retailers. We’re sharing so that you can stay competitive, too. Learn more about how we do this for our customers here.

Posted on, Feb 26, 2016, by Mike O´Brien.

Target reported a 34% increase in digital sales in the fourth quarter, well ahead of Walmart (8% growth) and online sales in general as well as Amazon (both 15% growth), as free shipping and well-oiled omnichannel operations proved a winning combination. Walmart opted to keep its $50 free shipping threshold and paid the price as Target gained the edge in ecommerce growth.

By contrast, same-store sales rose 1.9% for the quarter and 2.1% for the year, affected somewhat by the departure of Target’s pharmacy business in December. This compared to comp sales growth of 3.8% in the fourth quarter of 2014, although executives pointed that figure represented some bounceback growth after the data breach fiasco in 2013.

Overall, Target’s digital sales were up 31% for the year. While it was below the much-touted “target” figure of 40% ecommerce growth in 2015, it was still a very impressive result.

“Strong Black Friday and Cyber Monday weeks drove this increase,” Target chairman and CEO Brian Cornell told analysts. “In fact, after setting a new digital daily sales record in the week of Black Friday, we shattered all previous records on Cyber Monday. Our offer was broad and simple: 15% off everything on our site. And the guest response was exceptionally strong.”

Omnichannel was a big part of the story in Q4 and the year. Thirty percent of the quarter’s digital sales came from either ship-from-store or buy online, pickup in store transactions. Cornell said Target is now shipping from 460 of its 1,792 U.S. stores.

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