Target is winning greater digital sales and attracting millions of new customers, positioning it to bolster its e-commerce business beyond the pandemic
. And it appears to have brought in almost $3 billion in digitally originated sales in its fiscal Q1, which makes it Target's most lucrative digital sales quarter ever, including holiday quarters, by our estimates.
It posted 11.3% YoY overall sales growth in the quarter, but its cost of sales grew 18.5% YoY, limiting Target's ability to profit from its burgeoning sales. Fulfilling digital orders can introduce greater expenses than in-store shopping since Target needs to put the orders together and deliver them to consumers, so the increase in expenses is likely linked to its massive uptick in digital orders.
The retailer's stores fulfilled nearly 80% of its digital sales during the quarter, which can cut down on delivery expenses because stores may be closer to a consumer's home than a warehouse. Additionally, Target's in-store and curbside pickup services should eliminate all delivery fees, provided stores have the products consumers ordered and they don't still need to be delivered from a warehouse.
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