Retail Target fuels next-day delivery expansion with Shipt -US$2.50 lower cost per package.

1) What is Shipt?

Shipt is a last‑mile delivery platform and a wholly owned subsidiary of Target Corporation. It uses a network of contracted drivers to deliver orders directly from nearby stores to customers’ homes. Initially known for same‑day delivery, its role has expanded to next‑day “brown box” parcel delivery that competes directly with national carriers.

Key points:

• Operates as a local delivery network rather than a long‑haul parcel carrier.
• Integrated tightly with Target’s store operations.
• Used to reduce delivery cost and improve speed versus national parcel services.

2) How Target Corporation uses Shipt

Target is redesigning its fulfillment network by turning selected stores into mini fulfillment hubs. Instead of sending every online order through a central DC and parcel network, Target:

• Picks online orders from store inventory
• Hands parcels to Shipt drivers
• Delivers next day from the store closest to the customer

Why this matters

• Cost-to-serve reduction: Target executives report roughly US$2.50 lower cost per package versus national carriers for these routes.
• Speed: Shorter shipping distances remove network bottlenecks.
• Network orchestration: Not every store fulfills orders—Target concentrates volume in high‑performing locations.

This is a deliberate shift from “every store does everything” to precision fulfillment.

3) Where RFID fits into this model

This fulfillment strategy only works reliably because Target already uses RFID at scale.

Target’s RFID foundation

• Target rolled out item‑level RFID starting in 2015, now covering large portions of apparel, home, and other categories.
• RFID gives near‑real‑time inventory accuracy at store level, far beyond barcode accuracy.

What RFID enables for Shipt‑based fulfillment:

• Confidence to promise next‑day delivery from stores
• The system “knows” the item is physically in that store.
• Fast pick accuracy
• Store staff locate items quickly without multiple substitutions.
• Reduced cancellations and split shipments
• Critical when stores act as fulfillment nodes.

Without RFID, store‑based fulfillment at this scale would cause:

• Higher order failure rates
• Empty‑shelf frustration for walk‑in customers
• Excess labor searching for inventory that isn’t really there

4) RFID + Shipt = practical “store‑as‑DC” execution

Putting it together:

This is why Target can confidently expand next‑day delivery to 100+ stores across 50+ markets instead of relying purely on parcels.

5) Why this matters beyond Target (industry signal)

Target’s model shows a broader retail trend:

• RFID is no longer just for shrink or cycle counts
• It is becoming a core enabler of last‑mile economics
• Store networks + RFID + local delivery = carrier disintermediation

For retailers without RFID, store‑based next‑day delivery remains risky. For those with it, stores become profitable micro‑fulfillment centers instead of cost centers.

Short takeaway (exec‑ready)

Shipt provides the delivery muscle, RFID provides the inventory truth, and Target’s store network becomes the fulfillment engine. Remove RFID, and the model breaks.

If you want, I can:

• Map this directly to NZ or AU retail conditions
• Contrast it with Walmart or Amazon’s approach

 

 

Target’s next‑day delivery with Shipt isn’t powered by drivers alone — it’s powered by RFID.

Store‑to‑door delivery only works when you trust the inventory.

Target can do that because item‑level RFID tells them exactly what’s in each store, right now.

RFID enables:

✅ Confident next‑day delivery promises

✅ Fast, accurate in‑store picking

✅ Fewer cancelled orders

✅ Lower last‑mile costs

Shipt delivers the speed.

RFID delivers the truth.