Target teams with Shopify to challenge Amazon and Walmart for a piece of the third-party marketplace pie.
June 24, 2024: Target Corporation announced a new partnership with Shopify to offer merchants’ products on Target Plus, Target’s third-party marketplace. This pairing aims to provide growth opportunities for new brands, with True Classic and Caden Lane being among the first to be featured on the Target Plus marketplace. This curation of brands will increase the assortment of available products on Target Plus, thus giving Target shoppers even more choices in affordable, high-quality goods. Target is the first major big-box retailer to collaborate with Shopify in bringing select merchants’ products into its physical store locations. As of this writing, Target is the 7th largest retailer in the United States while Shopify is the #1 leading eCommerce platform in the United States market.
US-based retailers can apply to sell online on Target Plus through the Shopify Marketplace Connect app. Shopify Marketplace Connect (formerly Codisto) lets merchants connect their entire product catalogs to the most popular online marketplaces including Amazon, Target Plus, eBay, Walmart, and Etsy. Order processing, inventory management, product listings, analytics, and more can all be easily and effortlessly maintained within Shopify itself.
“Target Plus invites consumers to explore a curated collection of products from vendors we trust, so they can shop our assortment with confidence. Our partnership with Shopify extends the breadth of thoughtfully designed and affordable items available to discover and enjoy as part of Target’s distinctive mix of brands shoppers love.“
Cara Sylvester
Executive Vice President and Chief Guest Experience Officer at Target
June 24, 2024
“It’s table stakes for merchants to be everywhere customers are, and as the world’s leading retail operating system, we make it easier and more accessible for brands to sell directly to their customers on the best channels. Partnering with Target helps high-growth brands like Caden Lane and True Classic reach millions of new loyal customers and take their business to the next level.“
Harley Finkelstein
Shopify President
June 24, 2024
What is Target Plus?
Target Plus was launched in 2019 to offer consumers an assortment of carefully selected products that are of the same high quality and value that they are accustomed to from Target. Target’s curation team helps expand its collection quickly by adding trending, premium and direct-to-consumer brands that consumers know and love to Target.com. Today, Target Plus offers more than 2 million products from brands like Ruggable, Crocs, Maui Jim, Timberland and more, ranging from home and sporting goods to apparel, selected by Target’s team from more than 1,200 partners to complement its current product offering.
“Make no mistake, we’re all-in on Target Plus. In the past year, we’ve more than doubled the number of partners and products hosted there, and new partnerships like our latest with Shopify will help it continue to grow. But we’ll also keep being mindful about the way consumers use digital for inspiration, tapping into resources like the Target app to plan their in-store Target runs. We want to keep making those experiences as seamless as possible, ensuring they’re as inspiring and welcoming as consumers have come to expect from us. These are just a few of the ways we’ll bring the joy of endless discovery and drive growth for our business in the years ahead.”
Prat Vemana
Chief Digital and Product Officer at Target
June 24, 2024
The Potential for Stock Growth
In spite of reports from Washington DC citing improvement in the US economy, inflation continues to stifle consumer spending and consumer sentiment continues to spiral downwards into a lowering trend. Target Corporation’s performance in the S&P 500 has been rather tumultuous during the past year, but the company’s recent developments–including the partnership with Shopify–have given hope to investors of both Target and Shopify that good things may be on the horizon.
According to a recent report by MSN, Target’s recent efforts in improving its logistics, customer service, physical storefronts, and overall branding has put them as a stock to watch. Target was one of the many businesses negatively impacted by the COVID pandemic but while others struggled to survive (with many meeting their demise during COVID), Target management hunkered down and realized that work needed to be done in order to repair their standing in the marketplace to pre-pandemic levels as Amazon and Walmart’s success had absolutely decimated Target’s presence.
Shopify themselves are also slated to benefit from the partnership through increased brand exposure alongside one of America’s most popular retail companies. With Shares down 17% since Shopify’s earnings report in May, an alliance with Target could help Shopify showcase its brands to a broader audience and boost sales. According to Citigroup analysts, Shopify stock has a 46.2% upside from where it trades today, and its price targets have been raised to $96 a share. Even more noteworthy is that this boost occurred just a day after Target announced the partnership. To gain a second perspective on Target’s partnership, investors can gauge the sentiment of the market toward Shopify stock. In terms of price-to-book (P/B), Shopify’s 9.3x valuation places it above the average computer sector valuation of 6.5x, or 43.1% above.
Price-to-sales (P/S) proves Shopify’s superiority in prepackaged software. With a valuation of 11.9x, Shopify stands 47% above the average for the industry. In general, stocks trade at these sorts of premiums for a reason and investors can now identify that reason. Shopify may get all the attention due to their brand presence in the mainstream but Target could be the dark horse in this relationship and end up being the big winner.
Target & Shopify VS Amazon, Walmart, and Other Marketplaces
Amazon and Walmart didn’t become the world’s largest retailers for no good reason. This is mainly due to the overwhelmingly vast selection of brands and product types both companies have available for sale in their marketplaces. On the other hand, this can also contribute to the negative perception(s) both major conglomerates have with the consumer public. Amazon, through their various scandals involving unfair business practices and controversies surrounding company founder Jeff Bezos, and Walmart, through its stereotype-ridden brand image, still collect millions in monthly revenue–but they do so in spite of an increasingly agitated consumer public. People shop Amazon and Walmart but aren’t exactly happy about doing so; Amazon and Walmart have more or less become a type of necessary evil. Target, on the other hand, is still held on a higher pedestal with the consumer public due to their lack of controversies and customer-friendly image, but their inadequacies and past failures in keeping up with consumer demand have resulted in the company sliding further and further away from the top of the US retail market–especially, during COVID when big-box retail and eCommerce were the last bastions of trade as the world went into temporary shutdown due to the pandemic.
But if Target isn’t in the same league as goliaths Amazon and Walmart, how do they expect to seriously compete? The answer may be in small businesses. During the pandemic, Amazon and Walmart managed to prosper while other retailers struggled to stay afloat but supply chain shortages and challenges in logistics eventually started to affect Amazon and Walmart’s earnings. Both retailers were experiencing difficulties in answering their customers’ demands. When these customers couldn’t purchase their goods from these major retail juggernauts, they took to the Internet and started shopping at smaller stores and independent retailers. This turn of events benefited Google as they were able to recapture bits and pieces of the market share that was bled from them by Amazon and Walmart in the years leading up to COVID. Together, Target and Shopify hope to repeat this good fortune for themselves for the same reason.
How the Target-Shopify Partnership Can Help Small Businesses
Another way for Target and Shopify to compete against Amazon, Walmart and their ilk is in their own business model. Amazon and Walmart house countless brands but do so with very little vetting of their sellers. Amazon is especially rife with bootleg foreign traders and untrustworthy sellers. When fraudulent accounts are (infrequently) identified, a ban on the offending account is not enough to deter future delinquent behavior; they just sign back up again under another name until that one garners enough complaint for Amazon to step in and disable the new account again–only for the cycle to repeat itself. Target and Shopify operate differently with Target Plus. Target Plus is an invite-only program, meaning that Target will sort through and select the brands and merchants they deem worthy for entry. While this can potentially limit the amount of items and brands to be featured on the marketplace, it also culls the viable brands and merchants from the undesirable and untrustworthy. Shoppers who are already familiar with Target’s selection will be put at ease, knowing that their shopping experiences will not be too dissimilar when shopping on the Target Plus marketplace or shopping in a physical Target store location.