Retail powerhouse Target Corp. (TGT, $157.49) plans to establish three additional sortation centers or logistics facilities to enable quicker ordering and lower shipping costs.
Sortation centers are locations where online orders from the retailer are received and distributed. With the addition of the new three locations, two in the greater Chicago area and one in the metro Denver area, Target will now have a total of nine facilities.
But Target has taken steps to lower costs, such as fuel prices, connected with fulfilling online purchases. In an effort to increase the profitability of their online sales, several merchants are also doing the same. Currently, Target's overall revenues from e-commerce are just under 20%, with the bulk coming from same-day services and the remainder from home deliveries.
Why it matters
This latest development is a far cry from Target's first sortation facility which was established in Minneapolis with at least 2,000 drivers transporting goods from the hub. The factory can now supply 50,000 items daily compared to the initial 600. Those parcels are delivered by Shipt drivers, a delivery startup Target purchased in 2017.
