In an effort to compete with big online marketplaces like Amazon.com Inc. and Walmart Inc., Target Corp. has announced a partnership with e-commerce platform Shopify Inc.. This move will allow vendors using Shopify’s platform to apply to sell their products on Target Plus, the retailer’s online marketplace. Certain Shopify clients will also have the opportunity to sell in Target stores.
The partnership is set to expand the range of merchandise available on Target Plus, further fueling its growth. Cara Sylvester, Target’s chief guest experience officer, explained that both Target and Shopify will collaborate to identify trending products and react swiftly to meet consumer demand.
Target’s Selective Approach
Unlike Amazon’s extensive product array, Target has adopted a more selective approach since launching its marketplace in 2019. Target Plus operates on an invite-only basis for merchants and currently offers over 2 million items from more than 1,200 sellers. This approach is in stark contrast to Amazon, which boasted 2 million merchants selling on its platform as of 2022.
“We are not the everything store. We don’t aim to be,” said Sylvester, expressing Target’s strategic focus on quality over quantity.
Expanding Inventory and Generating Extra Income
Online marketplaces have become an effective strategy for retailers to diversify their merchandise and price points, while generating additional income through merchant fees and advertising. For instance, Walmart has identified its marketplace as one of the fastest-growing aspects of the company.
Similarly, Amazon capitalizes on its marketplace to grow its product inventory without the usual financial implications of traditional retail businesses. Over 60% of the items purchased on Amazon in the period ended March 30 were sold by independent businesses, paying commissions and fees for logistics and additional services to the e-commerce giant.
Over the past year, Target doubled the number of sellers and products on its marketplace. Sylvester acknowledged this as one of the fastest-growing parts of the business.
Shopify – A Strategic Partner
Target’s partnership with Shopify is a strategic one. Shopify is a software company that assists vendors in setting up online stores and processing payments. It currently works with millions of merchants in approximately 175 countries. Analyst estimates indicate that shoppers will spend $282 billion this year on stores managed using Shopify software, more than double Target’s projected sales for the year.
Shopify primarily operates behind the scenes, processing purchases for goods typically found through marketing campaigns on social media sites. Its consumer app, Shop, allows users to search products from Shopify’s merchant partners, serving as the company’s online marketplace.
Overall, this collaboration between Target and Shopify is poised to enhance the Target Plus experience for both merchants and customers, promoting quality and diversity in product offerings.
