Fast Five Shorts | Buy Or Sell: Target’s “Brown Box Delivery” Pilot?
In the latest edition of Omni Talk’s Retail Fast Five recorded live from Shoptalk 2025 in Vegas and sponsored by the A&M Consumer and Retail Group, Mirakl, Simbe, Infios and Ocampo Capital Chris Walton and Anne Mezzenga discuss: Whether They're Buying Or Selling: Target’s “Brown Box Delivery” Pilot
For the full episode head here: https://youtu.be/NPi_RSCdcTE
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Transcript
Target is testing a new delivery method for its shipped drivers.
Speaker A:According to Supply Chain Dive, the test enables brown box delivery or shipments outside of same day delivery and pickup options from the company's retail locations to customers in areas without a sortation center nearby.
Speaker A:Executives did not detail which or how many locations are participating in the program yet they say, quote, while we're in the early stages of expanding this test to more markets, we're very encouraged by the early results as it's making us faster and more cost efficient.
Speaker A:And quote, Target EVP and COO Michael Fidelke said.
Speaker A:Chris, are you buying or selling Target's brown box delivery test?
Speaker B:Oh, man, I have a lot of issues with this story, Ann.
Speaker B:Okay, a lot of them.
Speaker B:What are they?
Speaker B:Well, let me get back to the answer to the question first because I'll unravel it that way.
Speaker B:I think, number one, I think it's a smart idea.
Speaker A:Yeah.
Speaker B:But two, so I'm buying that it's a smart idea, but I'm selling the fact that it's a, it's an earth shattering idea.
Speaker B:Right.
Speaker B:And the reason I say that is because, like, you know, Target has basically taken the approach of sortation centers.
Speaker A:Yep.
Speaker B:Walmart has taken this approach already.
Speaker B:And it's basically a function of where are your stores?
Speaker B:Like, are they near, are they near a location where a sortation center makes sense by, by that, I mean like where you have a cluster of stores, or are they more like Walmart where they're probably outstanding standalone on their own and a sortation center just defeats the purpose.
Speaker B:Right.
Speaker B:That's the fundamental thing that we have here.
Speaker B:So to me, it's like, okay, you're testing this.
Speaker B:Like, no duh.
Speaker B:Like, I'm like, you should have been testing this already.
Speaker B:And it's not gonna be earth shattering.
Speaker B:I mean, it may be the right thing to do, but it's like the way the article's saying, like, oh, this great pilot.
Speaker B:We're doing all these things.
Speaker B:I'm like, come on here, people.
Speaker B:Like, you should have been doing this already.
Speaker B:And it's just, it's such a no duh idea that I can't even get my head around how silly the positioning is of this in the media.
Speaker B:That.
Speaker B:That's my take on it.
Speaker A:Yeah, this, this did.
Speaker A:I feel like this was definitely a stretch.
Speaker A:I mean, I think that the, the bigger story was actually in the Wall Street Journal last week where Target was or finally announced that they built for cold storage facilities.
Speaker B:Oh, that was baloney too though.
Speaker B:Oh my God.
Speaker B:Okay.
Speaker A:I don't know, I mean that's.
Speaker A:That to me is the right spot to start to talk about because they're going after a market that they're losing share in to Walmart.
Speaker A:And I think that that starting to put in more facilities like that to me make much more sense than talking about doing something as obvious as yes, testing out what happens with ship drivers.
Speaker A:Now the only thing that I do worry about here is that like we've seen ship drivers, I told you about this when like I've been to the sortation center outside Target, I've seen shift drivers that are sitting there with packages sitting outside their car trying to rearrange this.
Speaker A:Like my question is like how well prepared are some of these Target back of houses and back rooms?
Speaker A:How, how are they going to do this?
Speaker A:I think Target needs to think long and hard about how they're rolling this out in these test locations so that it's set up for success versus just like jamming this in with like order pickup on the side or like you know, getting in the way of trucks delivering.
Speaker A:Like I think that there's more to this test and I just hope that it doesn't become a distraction or doesn't get kids killed too early on because it wasn't set up correctly.
Speaker B:Well, yeah, and the other point I bring up too that you're kind of hitting on is there's also the question about is using gig drivers the right way to do this?
Speaker B:Like should you actually be using delivery?
Speaker B:Well, I think for an economies of scale standpoint, from what I've talked to the people that know a lot more about this than I do, what they tell me is like you need for this to work, the stores need a certain amount of orders going through them and you want to be putting those in like delivery trucks.
Speaker A:Sure, yeah.
Speaker B:And then you have the question of whether you're better equipped to have W2 drivers handling those loads consistently regularly versus versus gig drivers as well.
Speaker A:In the bunch of route where you're like your W2 drivers, they have vans that they're using to deliver, it's more systemized instead of just pick up a shift today.
Speaker B:That's where the real economies of scale come from.
Speaker B:And that's I think what Walmart is trying to do with their approach to this over the long run.
Speaker B:I don't know the exact split of W2, but I know from an order fulfillment standpoint, of course you want as many orders coming through that store as you can, but because that's what makes it work and that's what makes you drive profitability in the long run, so.
Speaker B:All right, well.
Speaker A:So you're buying?
Speaker B:Well, I'm buying the idea, but I just.
Speaker B:I'm not.
Speaker B:I'm not.
Speaker B:I'm not.
Speaker B:It's not the greatest thing since sliced bread, like, it was pitched in the media.
Speaker B:It's just.
Speaker B:It's just like I'm kind of pissed that you're just now talking about this.
Speaker B:You should have been doing this five years ago.
Speaker B:And my hunch is that they were and they're now just taking credit for it in the media.
Speaker B:That's probably what's happening here.
Speaker B:I'm shocked that they're just now testing this.
Speaker B:Honestly, as I think about it, at least I hope that's the case to credit them a little bit.
Speaker B:All right.
