Target and Amazon have different approaches to appease impatient customers who want same-day delivery.
The big picture: Target wants to fill more orders from its store inventory, which is cheaper than fulfillment centers. When it comes to same-day shipping, CEO Brian Cornell told CNBC yesterday that “90% of the cost goes away” when customers order online and pick up at a store, use curbside pickup or select shipping via Shipt for same-day delivery.
- Amazon, which doesn’t have a network of stores like Target, said last month it spent nearly $10 billion in Q3 — 50% more than the prior year — on shipping and fulfillment costs.
The bottom line: Companies are racing to get people stuff faster, but that comes at a cost.
- Investors have long been OK with Amazon spending big to invest in things like same-day shipping.
- Shares of Target hit an all-time high on Tuesday after it reported upbeat quarterly results.