As Amazon’s online business continues to cut into traditional retailers’ revenues, Target today makes a move to fight back. The Minneapolis-headquartered retailer has just launched a pilot program for subscription-based commerce called Target Subscriptions. Initially, the service is focused on new parents, with various products related to baby-care, including diapers, wipes, training pants, and other essentials.
At launch there are about 150 items that can be ordered on a subscription basis, including some of Target’s larger bulk-sized offerings. Customers can choose to have these items delivered in regular four to 12-week installments, and Target will send out reminder emails at least 10 days ahead of shipments to allow customers to make adjustments if need be.
The free program includes a variety of products from a dozen well-known baby care brands, including Huggies, Pampers, Seventh Generation, Enfamil, Similac and others, which users can browse now on Target.com where they can filter products by category, brand, price, rating, or associated deals. Shoppers can pay for the items using the credit or debit card of their own choosing or, of course, can opt to pay with their Target card or Target VISA to save an additional 5 percent.
The subscription-based service is clearly Target’s answer to Amazon.com’s own “Subscribe and Save” program, which also lets shoppers subscribe to regularly used items. With Amazon’s program, customers receive free shipping, and discounts of up to 15 percent when they have five or more subscriptions arriving monthly. Target Subscriptions, meanwhile, also offers free shipping, but isn’t currently touting any particular deals beyond its usual “price cuts” on select items. (At launch, there are just two deals available – both on baby wipes.)
Amazon is a serious competitor in the subscription-based commerce space, given its scale. Not only does it offer the Amazon Subscribe and Save service, it also offers shipping discounts through Prime, and subscriptions through its Quidsi-operated brands, like Diapers.com, which has featured autoship options since fall 2012, and reports 30 percent month-over-month growth in that sector. Plus, Amazon has a program focused on the new parent/budget-shopper demographic specifically with Amazon Mom, whose members receive various savings in addition to the Subscribe and Save discount.
A number of startups have also tried their hand at subscription commerce in recent years, with ideas ranging from the sample box – such as Birchbox’s monthly shipment of beauty items - to those focused on everyday needs, like Dollar Shave Club’s razors. Even Walmart has experimented in this space, with its snack box subscriptions service, Goodies.co. So if anything, Target is late to hop on the subscription bandwagon.
But taking the longer view, it’s fair to say the market is still a new one, and remains somewhat unproven at least in some verticals. (Watch as all the “Birchbox for X” startups begin to fold, for example.) But online shopping overall is a large and growing industry, and consumers are becoming more comfortable with the idea of subscriptions, thanks to other services, like Prime, but also content subscriptions for things like movies from Netflix or music from Spotify, for example.
Target previously tested the service among employees ahead of today’s public debut. And given its “pilot” designation, the company isn’t talking in terms of expected revenues at this point. The retailer won’t confirm plans to expand beyond baby-care for now, but says it will take the learnings from this pilot program into account to help it shape future plans, and will share those details when they become available. The company also declined to discuss whether or not it would consider other new e-commerce services, like grocery delivery or same-day delivery, another area seeing a lot of activity recently.
Incidentally, the announcement of Target Subscriptions comes on the same day that Target launches another tech-led initiative, Target Ticket. As we previously reported, the TV and movies on demand service is Target’s response to Walmart’s Vudu, Netflix, and iTunes. Though unrelated to the e-commerce service, it’s another example of how the retailer is taking steps to face down competition from various tech companies and other industry players.
