Target’s latest quarterly earnings call could have gone better.
The retailer fell short of Wall Street expectations, and comparable in-store sales declined by 1.9% in the third quarter.
Still, there were bright spots — including a 10.8% increase in comparable digital sales during the same period.
Target executives detailed three factors that contributed to the double-digit increase in online sales.
Have you used any of these features that are driving people to order more from Target?
Target Circle 360
Target executives say nearly 3 million people enrolled in Target Circle 360 during the third quarter.
Target Circle 360 is the retailer’s paid membership (not to be confused with Target Circle, the retailer’s free loyalty program). Members get unlimited same-day delivery on orders over $35, free two-day shipping and an extra 30 days to return items, among other perks.
Same-day delivery seems to be a member favorite. The service grew nearly 20% during the third quarter, and Target Chief Financial Officer Jim Lee cited this growth as a contributor to the overall increase in online sales.
Target Circle 360 annual membership plans are $99 (equivalent to $8.25 a month), or you can get the membership monthly for $10.99 per month.
Annual memberships are 50% off until Dec. 2, as we detail in “6 Memberships That Are Deeply Discounted This Week (Even Costco).”
Drive Up
Target’s Drive Up service also saw “double-digit growth” in the third quarter, which Lee said was another factor that contributed to the 10.8% increase in online sales.
In fact, Target CEO Brian Cornell said on the earnings call that Drive Up accounted for $2 billion of Target’s third-quarter sales.
To use Target’s Drive Up service, you order online and indicate when ordering that you will pick up the order. When you get to the store, you park in a designated Drive Up area and use the Target app to let the store know that you are there and want an employee to bring your order to your car.
You’ll also be able to indicate how you’d like the Target employee to load your order into your car, so you never have to leave your seat.
During a Drive-Up purchase, you can even order Starbucks if there’s one at that particular Target location. You’ll put the order in through the Target app.
You can conduct returns this way too. Use the app and select the “Drive up return” option. Once you get to the store, an employee will meet you at your vehicle to process the return.
Shipping
“A healthy increase” in orders shipped to customers’ homes in the third quarter was the last factor that CFO Lee cited as contributing to the 10.8% increase in online sales.
Stores and sortation centers handled 25% more packages in the third quarter. Target was also reportedly shipping packages a day faster during that period.
Target offers free two-day shipping on thousands of items with no order minimum if you are a Target Circle 360 member or you pay with a Target Circle Card (Target-branded debit or credit card). Otherwise, you can get free shipping if your order totals at least $35.
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