Target Launches New Website to Drive Online Sales

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Market
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Trefis
TGT: Target logo
TGT
Target

Target Corporation (NYSE:TGT) has recently launched a new version of Target.com with an aim to increase its online retail sales. According to CEO Gregg Steinhafel, the new platform is easier to shop, has faster checkout and more closely resembles the store shopping experience. With modernization and more advanced technology becoming part of our lives, e-commerce is poised for enormous growth and Target wants to tap this trend. Target is the second largest retailer in the U.S. after Wal-Mart (NYSE:WMT) competes mainly with Best Buy (NYSE:BBY), Macy’s (NYSE:M), Sears (NASDAQ:SHLD), and Costco (NASDAQ:COST).

We have $58 price estimate for Target’s stock, implying a premium to the market price.

Target.com – the Online Portal

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In the last few years, Internet sales have grown at a much faster rate than sales at brick-and-mortar retailers. In 2010, for instance, Internet sales increased 10% compared to 6% for brick-and-mortar stores according to comScore. Target’s Internet sales constitute a very small proportion of its annual sales and is the 22nd largest Internet retailer in the U.S. with $1.3 billion in sales in 2010, according to trade publication Internet Retailer. It competes with Wal-Mart and Amazon with $4.4 billion and $12.95 billion in online sales respectively last year. [1]

In the past decade, Target relied on Amazon for its online sales and outsourced nearly all of its online operations to Amazon.com. With the launch of Target.com, it will no longer sell its products on Amazon and can better market and position its own products.

We believe that Target’s new online portal would help add meaningfully over time. Target plans to provide a bigger assortment of products such as baby furniture and patio sets through its online portal than it can carry in a store. It plans to ship more than 800,000 products free of cost to help promote its e-commerce channel that promises to be a major contributor in the future.

See our full analysis and $58 price estimate for Target stock here

Notes:
  1. See: Target to Launch Revamped Website, August 19, 2011 []