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Target Acquires Grand Junction and Proves Delivery Matters

Last week, Target Corp. announced its intended acquisition of Grand Junction, a San Francisco-based startup that enables retailers and distributors to speed up the last mile of delivery in local markets by connecting retailers to a network of 700+ carriers.

Target currently uses Grand Junction’s platform for same-day delivery in NYC’s Tribeca neighborhood. The acquisition of Grand Junction will give Target direct and explicit access to those 700 carriers across North America. That, plus its 1,800 stores, will create a distribution network powerful enough to drastically improve its delivery promise to customers.

Why is this acquisition important?

eCommerce shoppers take delivery promises very seriously.

73% of shoppers want affordable, fast shipping, and 61% will abandon an online purchase if delivery fees are too high. Those barriers are precisely what Amazon has solved with Amazon Prime. Every member gets free, two-day shipping and, let’s be honest, free, same-day or next-day delivery isn’t far off.

Amazon’s focus on fulfillment is working in its favor. Consider this chart from Visual Capitalist. By a gross margin, Amazon is out-performing the top 8 retail “competitors” combined—its lead only increasing as its delivery promise improves.

Ten years ago, these same eight retailers were collectively valued at $400 billion and Amazon was only at $17.5 billion. Now, in order to retain and grow their respective corners of the market, these retailers (and many others) are responding with new initiatives to improve online traffic and conversion.

When Walmart acquired it demonstrated how important its eCommerce channel is and that organic changes to Walmart’s own website wasn’t enough. By acquiring, Walmart simultaneously increased its online traffic and entered new audience markets—and it’s seemingly paying off. Walmart’s online sales (which include’s) experienced 63% growth last quarter.

Over the last couple of years, Target also made strides to improve its digital performance. In Q1 2016, it created a multi-billion eCommerce plan to improve the shopping experience for its customers. Whether the Grand Junction acquisition was baked into that plan or not, Target is clearly recognizing that it has to consider digital platforms more strategically than just revamping its own website (though, presumably, it’s doing that, too).

Target acquiring Grand Junction is important because it’s another proof point that retailers are starting to think outside the box when it comes to eCommerce.

Let’s take a look at few retailers’ strategies for eCommerce, and why Target’s announcement represents a unique shift in strategy.

Retailers that are thinking outside the “box”

For legacy big-box retailers, the move to digital is probably akin to using your left and right brain at the same time. Physical vs. eCommerce sales require two totally different business models. It’s disruptive.

Conversely, the main contender, Amazon, was built for eCommerce. From day one, digital has been the primary platform and Amazon’s emphasis on data has enabled its teams to constantly measure, refine, and hone its eCommerce strategies to further incentivize buying on a by-user basis.

Legacy retailers determined to maintain market share are figuring out that to compete it’s going to take more than a website makeover—digital initiatives have to be more strategic. Here are three examples.

Walmart creates foundation through digital acquisition

We already mentioned the significance of Walmart’s acquisition of But there’s more to it than just expanding its online presence.

Walmart is a household name, and like any retailer, brand is everything. So, when Walmart acquired with the decision to keep Jet’s brand intact, Walmart showed that it also recognizes the importance of other brands and how maintaining separate identities can help it reach new markets and audiences.

Since, Walmart has made similar moves with other digital brands, including Bonobos, Modcloth, Moosejaw,, and

Each company has as strong brand and dedicated following that has enabled Walmart to grow market share rapidly—laying the groundwork for it to become a true digital competitor.

Nordstrom establishes itself as customer-centric … decades ago

Seattle-based Nordstrom has spent years cultivating its brand as one shoppers can trust. It has one of the most loyal customer bases in retail, which is undoubtedly a result of its commitment to customer service.

What makes Nordstrom unique is its retail divisions—each one caters to a slightly different audience, but all of them exude the same emphasis on customer service that has been at the core of Nordstrom since the start.

But what’s interesting is this strategy wasn’t a result of the Internet. Nordstrom’s first division, Nordstrom Rack, opened its doors in 1975. As the company has grown into the digital era, Nordstrom has created new divisions that cater to the online shopper, including its subscription-box offering, Trunk Club, and its online private sales site, Hautelook.

From its loyalty program to online and in-store experiences, Nordstrom has created a shopping experience that evolves with technology and market demands—create something sustainable that shoppers can count on.

Target turns to logistics to drive strategy

And finally, our headliner. While Walmart focuses on acquiring brands and their respective customers and Nordstrom cultivates brand consistency across its channels, Target’s acquisition of Grand Junction demonstrates a new kind of strategic digital initiative.

Not only is it investing in its IT infrastructure for eCommerce, it’s also investing in technology platforms to change the way it manages the thorn in every retailer’s side: the last mile of delivery.

The last mile of delivery accounts for approximately 28% of total delivery cost. For years, that cost has been too high for retailers to absorb so it’s been offloaded to customers as part of the shipping fees. But, 61% of online shopping carts that are abandoned are done so because of high shipping fees.

Grand Junction could be a game-changer for Target. Currently, Target’s standard delivery promise is 3-5 business days and free for orders over $40. It’s “premium” and “express” shipping options are marginally faster, but exponentially higher in cost. At best, the option for fast shipping is dismal.

The acquisition of Grand Junction will (hopefully) change that for Target—enabling it to expand the success of same-day delivery in Tribeca to other neighborhoods and cities. If that’s the case, not only will Target be better poised to tackle shopping cart abandonment, it might beven be able to compete with Amazon’s delivery promise.

Looking ahead

Retailers of all shapes and sizes are already struggling to independently compete with Amazon Prime’s free, two-day shipping, and same- and/or next-day delivery is right around the corner.

It’s no secret that Amazon’s loses money on its current strategy. In 2016, Amazon lost $7.2 billion to delivery costs. But fast, free shipping is the backbone of Prime. Amazon knows that sacrificing margins now will create a higher return down the line (Amazon Prime member spend nearly 2x more a year than non-Prime members). Plus, it’s Amazon. It can afford to do that. No other retailer can.

There’s no competing with Amazon on an apples-to-apples basis. Retailers that want to hold onto market share, need to find new ways to innovate. For Target, that’s Grand Junction. With a new solution for the last leg of delivery, Target is transforming a core business unit to lower outbound costs, improve its delivery promise, and convert more browsing shoppers into buyers. Could Target’s play on logistics foreshadow a trend? (We think so).

The future of eCommerce logistics

Walmart, Nordstrom, and Target are just a few of the retailers rethinking their eCommerce strategies. And while it’s not all about competing with Amazon, the truth is, Amazon is redefining eCommerce, customer expectations, and the role of the supply chain plays in retail.

For those of us in the industry, we know logistics is changing. New technologies, just like Grand Junction, are making it easier for eCommerce companies to create smarter supply chains. Lighter warehouse management systems (WMS), transportation management systems that use real-time GPS tracking, frictionless freight-forwarding, on-demand and scalable fulfillment networks—these solutions have the power to elevate supply chains and are the future of eCommerce logistics.

Retailers that are constantly seeking innovation to improve the customer experience and meet demands are joining the fray. New, agile logistics solutions will invariably be a part of the transformation.

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