Over the past few months, Target says it’s been working with a handful of brands including sporting goods retailer Mizuno, educational toy maker Kaplan and keyboard company Casio to test this approach to third-party retailing. It says other areas where it wants to add more products online via third-party sellers are in home goods, electronics, musical instruments and outdoor gear.
“We are selecting these categories based on guest research … what people are searching for [on Target.com],” Gomez said.
Aside from helping boost profitability, this should also help Target continue to grow its online sales.
The company has for the past four years reported digital sales growth of more than 25 percent. And though that’s largely pleased analysts and investors, Walmart had e-commerce growth of 40 percent last year. Walmart has been adding items to its website through acquisitions like that of Moosejaw, tie-ups with other retailers like Lord & Taylor and making the terms of its agreements with third-party sellers more flexible.
While Target has been pouring more money into its stores — both remodeling existing locations and opening new ones — it looks to also be focused on building a better website this year. The rollout of “Target +” is a sign of that. And Gomez said the platform is just in its “early stages.”
Shoppers buying items via “Target +” will still get 5 percent off when they use a Target credit card, the company said, and Target will be accepting returns of items purchased from third-party sellers in its stores.
When Target reports fourth-quarter and full-year earnings on March 5, Wall Street will be monitoring for growth in the retailer’s e-commerce business. During the holidays, Target said online sales were up 29 percent. Though that growth often comes at a cost, Target has said it expects pressure on margins to lessen in the future.
For the fourth quarter, Cowen and Co. analyst Oliver Chen expects Target’s gross margins to be 25.7 percent, declining 40 basis points from where they were a year earlier. Target’s gross margins declined 91 basis points, to 28.7 percent, during the third quarter.