Target will expand its next-day delivery capabilities by investing $100 million in its sortation center network to open six additional facilities by 2026. The retailer is aiming to operate more than 15 sortation centers across the country to enable flexible and efficient last mile options that build on its store-as-hub strategy.
Each sortation center can retrieve packages from 30 to 40 local stores. The items are sorted, batched and routed for delivery with either a third-party carrier or Shipt, depending on which incurs the lowest cost. The process is designed to reduce costs for customers while increasing speed and efficiency for Target’s own operations.
“By removing the sorting and packing process from our store backrooms, we save valuable time and space for our store teams to fulfill additional orders and serve guests,” wrote the retailer in a statement. “And because our sortation center technology presorts and arranges packages for easy pickup, it reduces processing time for our delivery partners. As Target’s stores fulfill the bulk of online orders, our sortation centers have made this process even faster.”
Target currently operates nine sortation centers in Minnesota, Texas, Colorado, Illinois, Georgia and Pennsylvania, and they are expected to double their annual delivery volume to more than 50 million packages in 2023. Markets served by these facilities have seen the number of next-day order fulfillments grow by more than 150%, and up to 40% of Target Last Mile Delivery orders with Shipt are delivered by the next day.
Target also is planning to expand its rapid delivery capabilities with the rollout of larger capacity vehicles in partnership with Shipt. Drivers can use these vehicles, which can hold up to eight times more packages than standard delivery loads, to handle longer routes. The retailer is currently testing these larger capacity vehicles at two sortation centers, with plans to expand to all markets over the next few years.