Target has partnered with e-commerce specialist Shopify to expand its marketplace for third-party merchants as big retailers try to catch up. It competes with major competitors Walmart Inc. and Amazon.com Inc.
The Minneapolis-based retailer said vendors using Shopify's e-commerce platform can now apply to sell their products on Target's marketplace, Target Plus, and that selected Shopify customers will also be able to sell in Target's stores.
Target shares were up 1.6% as of 9:39 a.m. in New York, bringing their gain this year to about 4%. Shopify, which has fallen 16% this year, was up 0.7%.
Carla Sylvester, Target's chief customer experience officer, said the partnership, which is the first of its kind for Target+, will help expand the marketplace's product offerings and accelerate growth. Target and Shopify will share insights on trends, such as what's trending on social media, and move quickly to offer popular products on the marketplace, she added.
Since launching its marketplace in 2019, Target has been selective about the products it offers there, in contrast to Amazon's broad range of products. Target+ operates by invitation only and currently offers more than 2 million products from more than 1,200 sellers. According to the company.
By comparison, Amazon announced that it had 2 million merchants selling on its platform in 2022. Walmart, which does not disclose its merchant count, sells about 420 million items on its marketplace. Walmart and Amazon launched their marketplace businesses in 2009 and 2000, respectively.
“We're not an all-purpose store, and we're not trying to be,” said Sylvester, who oversees Target's e-commerce, loyalty and marketing businesses.
Additional Income
Marketplaces are an easy way for retailers to expand their range of products and price points while also earning additional revenue through merchant commissions and advertising. Walmart, the world's largest retailer, touts its Marketplace as one of its fastest-growing divisions. The company is introducing new features while adding more merchants and products.
Amazon is using its marketplace to expand its inventory without investing its own funds like traditional retailers. More than 60% of items purchased on Amazon through March 30 were sold by independent businesses, who pay Amazon a commission on each sale plus fees for logistics and other services. The online marketplace has also become the launch pad for a lucrative advertising business, where sellers pay for ad space to catch shoppers' eyes.
Target has more than doubled the number of merchants and products on its Marketplace over the past year, and Sylvester said it is one of the fastest-growing parts of its business.
The company plans to maintain its invite-only model and continue to vet sellers on the platform. Curating the selection — for example, only allowing one seller to offer a particular product — is a strategy that helps Target stand out, she said. It also builds trust with consumers by ensuring only quality products are shown, she added.
Target's partner, Shopify, makes software that helps merchants quickly set up online stores and process payments. The company says it works with millions of merchants in about 175 countries. Analysts compiled by Bloomberg estimate that consumers worldwide will spend $282 billion this year in stores managed by Shopify's software, more than double Target's expected sales this year.
Shopify is software that works mostly behind the scenes, with many consumers unaware that it's processing purchases of products that would typically be found through marketing campaigns on social media sites like Instagram. The company's consumer-facing app, Shop, allows users to search for products from Shopify's partner merchants, the closest thing the Ottawa-based company has to its own online marketplace.
