Target launches Restock home delivery service, takes aim at Amazon

Target's latest answer to Amazon — a next-day delivery service of household and packaged grocery items — went live Tuesday around the Twin Cities and other parts of Minnesota.

While Target may be a few years behind Amazon in rolling out such a capability, the service is priced for a dollar less and promises faster delivery than Amazon's counterpart, Prime Pantry.

Target Restock, as the new pilot program is called, charges a flat fee of $4.99. When customers go to Target.com/restock, they can select from more than 10,000 baby, beauty, personal care, food, pet and household products and choose as many as can fit into a box about the same size as a shopping cart. As shoppers add each item, the website shows shoppers how much more room they have left in the box, which is limited in weight to 45 pounds.

A quick browse of the website on Tuesday showed that select beverages such as San Pellegrino and La Croix sparkling water also were available through the service, while others such as Diet Coke, were not. Produce and other fresh grocery items are not part of the program.

"We'll continue to tweak and add additional products to our assortment based on our learnings and guest feedback," said Jamie Bastian, a Target spokeswoman.

Target is touting the program as a way to provide faster delivery of items in one package. In the process, by encouraging shoppers to buy more items at one time, it also helps the Minneapolis-based retailer make shipping online orders more cost-effective at a time when online shopping has put more pressure on profit margins.

Orders placed by 2 p.m. Monday through Thursday will reach customers' doorsteps by the next day, Target said. That cutoff time is a half-hour later than when Target first announced the program last month. Orders placed over the weekend will arrive on Tuesday.

Target has been testing the program among headquarters employees in recent weeks. When it first unveiled the program last month, analysts took notice, especially since Target's sales have been on the slide in the last year amid the shift to online shopping.

"Target Restock is squarely aimed at taking share back from Amazon," Matt Sargent, senior vice president of retail for consulting firm Magid, wrote in a recent research note. "The need for Target Restock to succeed cannot be underestimated."

He added that his firm's research indicates that about 57 percent of Target's regular customers are Prime members. This program also makes sense because household essentials is one of the categories where Amazon Prime has made the most inroads with Target's customer base.

Target Restock is initially only available to holders of Target's Redcard. Customers will not be able to redeem coupons or other special promotions, including Cartwheel offers, through Restock. However, they will receive their 5 percent discount for using the Redcard. In addition to the Twin Cities, the service is also being tested in other parts of the state such as St. Cloud, Red Wing and Stillwater. Eligibility is based on ZIP codes and customers' proximity to a participating Target store.

Target hopes to quickly expand the service to other markets if the test goes well in Minnesota.

"We're going to go as fast as we possibly can," Mike McNamara, Target's chief technology and digital officer, told the Star Tribune last month. "But it really depends on whether we've got a proposition that our guest thinks is fantastic."

By leveraging its network of stores from which employees will assemble and ship the packages, Target can get the items to customers by the next day. The retailer is initially using UPS to deliver the items. Bastian said the company also will test other processes and carriers.

Amazon first rolled out its Pantry program in 2014 to members of its $99-a-year Prime program. That service, which also allows customers to fill up a box of household essentials for a flat fee, costs an additional $5.99 per order but is free with the selection of five qualifying items.

While Prime members usually receive two-day free shipping, Amazon uses ground shipping for Pantry orders and said most orders arrive within four business days.

Amazon has said the Pantry service allows it to expand its selection of items that are otherwise cost prohibitive to ship for free individually such as a single box of cereal.

At the same time, Amazon is looking to get more aggressive in the food business. Earlier this month, it announced plans to buy Whole Foods for $13.7 billion.

Kavita Kumar • 612-673-4113