Retailers Can Beat Amazon through Omnichannel, Target.com President Says

Target, Target.com, retail, omnichannel, omnichannel fulfillment, IRCE, IRCE 2015, Amazon, Amazon.com, retail beacons, i-beacons, ship from store, ship to store, curbside pickup, retail innovationJason Goldberger, president of Target.com and mobile for Target Corp., used a trip to this year’s Super Bowl with his father to illustrate a point to IRCE attendees about how retailers can beat Amazon.com.

Goldberger said he checked off a major bucket list item by taking his father, a diehard New England Patriots fan, to the big game, while he himself was pulling for the Seattle Seahawks. As everyone on earth knows, Seattle blew the game by calling a last-second goal line passing play instead of handing off to “beast mode” running back Marshawn Lynch.

“How are you going to beat Amazon? The answer is simple,” said Goldberger, who came to Target from Gilt in 2013, during his keynote speech. “Target.com cannot beat Amazon, but Target will. We’ve spent tens of billions of dollars building a network of stores. Not to use them as conventional stores is like keeping Marshawn Lynch on the bench.”

He then went on to detail a number of initiatives Target has implemented to establish a leadership position in omnichannel retailing by finding and exploiting synergies between its physical and digital assets, while focusing on “being guest-obsessed, not channel-obsessed.”

For instance, he talked about Target’s decision last fall to offer free shipping on purchases of $50 or more – since lowered to $25 to undercut Amazon’s $35 threshold.

“We wanted the experience to be friction-free for guests,” Goldberger said. “Most (online) abandoned carts happen because of the shipping fee at the last minute. For us it was a real cost per order, but we ate it because it signaled to our guests we were making it easier than ever for them, and sales soared.”

Goldberger began his presentation talking about Target’s major glitch when it launched its line of Lilly Pulitzer clothing this past April, when the company’s website, app and stores were overwhelmed by the demand and influx of orders. He said it was because the company based its battle plan on consumer data that was six months old, in a retail world that’s moving much faster. Goldberger said he was in Target’s war room in the wee hours that day composing an email to Target CEO Brian Cornell that said “it’s a great success” which quickly changed to “Brian, we’ve got a problem.”

“You can’t attend a tech conference without hearing one speaker talk about the glories of failure, and we failed very publically,” he said. “My recommendation: I advise you to avoid it; it sucks and rattles your confidence. But it’s a good thing if forces you to learn and get better. Target is working to catch up, keep up and stay ahead in a world that’s moving incredibly fast.”

“There’s crushing pressure to innovate and deliver,” Goldberg continued. “Even failures are a part of the job, trying to run a retail business in the digital age, so you have to learn new tricks.”

Goldberger talked about Target’s subscription program, where members can get regular deliveries of all kinds of household items. While the margins on items purchased through the program may be thin, he said it’s a winner because it drives loyalty and shopping both online and in stores.

“Guests who sign up for the subscription service still make the same number of trips to the store as non-subscribers, about once every three weeks,” he said. “What we’ve lost in shipping big bulky items to their door we’ve gained from guests who spend six times more online than non-subscribers.”

Goldberger also described a pilot program started in February in 29 Target Denver areas stores, which turns the tables on showrooming. It allows customers to come into the store, check out patio furniture and buy it online.

“In those stores, we’ve had two to three times more revenue in patio furniture than in our other stores,” he said. “Also providing incentives to the store team matters. We’re chewing up a big chunk of their space with these displays, so by giving them credit there’s more buy in and engagement, which is a huge part of the success.”

Goldberger said Target plans to replicate the program in other product categories, including nursery, furniture and electronics. He added the company is also using iPads to make it easier for customers to check out items in store and order them online, and testing out a mobile beacon system to send deals and offers to shoppers in store who use Target’s highly popular Cartwheel app.

Target’s overall digital approach, which includes a $1 billion investment in technology, has been paying dividends – the company’s online sales grew 37% in the first quarter, contributing .8% to same-store sales growth. Customers who shop in store and in digital channels do so three times more often, Goldberger said, producing three times as much in sales as those who are store-based only. “They represent more trips and more sales as they establish a deeper relationship with the brand,” he said. “A guest becomes more valuable when we interact with them in more than one channel.”

Nearly all of Target customers – 98% – shop the store online, with 75% of the sales starting on a smart phone or tablet, Goldberger said.

In terms of omnichannel performance, he said 25% of all Target.com orders are either picked up in store or shipped from store, which doubles to 50% during the year-end peak season. By the end of this summer, he said, Target will ship from 500 of its 1,800 U.S. stores, reaching 90% of the country within one to two days. The company is also testing out a curbside pickup program. “She isn’t coming into the store and make an incremental purchase, but we’re building loyalty,” Goldberger said.

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