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Will totally free shipping make a difference for Target's holiday results?

October 23, 2014Written by George Anderson

New Target CEO Brian Cornell is looking to establish a difference in the minds of consumers between his company and all the other competitors in the marketplace. Part of that approach will include free standard ground shipping on all target.com orders for the holiday season, with no minimum purchase required.

According to a Target press release, sales through the company's digital channels are up 40 percent this year. The free shipping offer, which started yesterday, will remain in effect through Dec. 20. Roughly two-thirds of target.com orders, according to a Wall Street Journal report, currently ship free either because they are purchased using the retailer's REDcard or meet its usual $50 minimum.

"Target will be spending a lot of money on shipping, but to some extent it's advertising," Amy Koo, an analyst with Kantar Retail, told the Star Tribune of Minneapolis. "They're really reaching out and trying to at least play evenly with Amazon this holiday period, particularly as they're trying to regain those less affluent or more occasional guests" following last year's data breach.

More than half of American consumers plan to make at least one purchase online for the holiday season, according to the eHoliday 2014 Pre-Holiday Retailer and Consumer Study conducted by Prosper Insights & Analytics for Shop.org. Online shoppers will spend an average of 16 percent more this holiday season than all other shoppers, according to the research.

Free shipping is just part of Target's plan to differentiate for the holiday season and beyond.

"We've been building capabilities that put us in a strong starting position, including the right digital tools and a broad assortment of unique, on-trend merchandise. Our value proposition will be unrivaled, with compelling promotions and an exceptional shopping experience online and in our stores," said Mr. Cornell in a statement. "It's about delivering on our promise of 'Expect More. Pay Less,' and when we do that, Target is impossible to beat."

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