Can Shopify Help Target Compete with Amazon and Walmart?

Target has announced a strategic partnership with Shopify to invigorate its third-party marketplace, Target Plus, by adding new and trendy brands to its online offerings. This move is expected to attract more online traffic and rejuvenate Target’s e-commerce growth, which has been lagging in recent quarters.

Target’s stock has underperformed relative to the broader market, rising about 2% this year compared to the S&P 500’s nearly 15% increase. Currently priced at $146.13, Target’s shares are well below their pandemic-era highs of over $260.

Target’s marketplace, while still in its nascent stages compared to giants like Amazon and Walmart, has shown significant potential. Unlike its competitors, Target Plus operates on an invitation-only basis, ensuring a curated selection of over 1,200 sellers. This model contrasts sharply with Amazon’s approximately 2 million sellers and Walmart’s 135,000, as estimated by Marketplace Pulse.

The Minneapolis-based retailer, known for its wide range of consumer goods, will now allow companies using Shopify’s e-commerce platform to apply to join Target Plus. Shopify’s client base includes numerous smaller and up-and-coming brands, providing Target with an opportunity to feature unique and popular products that appeal to a diverse customer base.

Target Plus is known for its carefully selected range of over 2 million products from more than 1,200 brands, including well-known names like Ruggable, Crocs, Maui Jim, and Timberland. This marketplace prides itself on offering a curated collection of products that have been vetted by Target’s in-house team, ensuring quality and value for consumers.

For Shopify, the partnership offers a much-needed boost. Shopify’s shares have tumbled since their earnings report in May, and the stock is down about 17% for the year. Aligning with Target could help Shopify showcase its brands to a broader audience and increase sales through a prominent retail partner.

This collaboration also aims to integrate a curated selection of Shopify brands into both Target’s online marketplace and its physical stores, enhancing the shopping experience for Target’s customers and expanding opportunities for Shopify merchants. By teaming up with Shopify, Target aims to differentiate itself through a unique and thoughtfully curated product offering. This initiative will see a hand-picked assortment of brands that utilize Shopify’s e-commerce services being added to Target’s five-year-old marketplace, Target Plus.

In the coming months, Target will also begin featuring some of these Shopify brands in its brick-and-mortar stores, providing a seamless omnichannel shopping experience. This move is part of Target’s broader strategy to integrate digital and physical retail, catering to the evolving preferences of modern consumers who seek convenience and variety.

Shopify merchants in the U.S. can leverage the Marketplace Connect app to apply for inclusion in Target Plus. This integration allows high-growth brands like Caden Lane and True Classic to reach millions of new customers, potentially taking their businesses to new heights.

According to Prat Vemana, Target’s chief digital and product officer, digital marketplaces are poised to account for over 30 percent of all e-commerce growth in the next three years. Vemana emphasizes the transformative nature of these marketplaces, which offer retailers the ability to provide a vast array of choices to consumers without the need for extensive physical storage. However, he also notes the importance of maintaining quality and value, distinguishing Target’s marketplace from others that may prioritize volume over customer satisfaction.