Target is the latest example of a business turning to marketplaces as a model for growth and transformation. The 118-year-old company has announced the launch of its own third-party marketplace, Target+, designed to make Target more competitive in the digital world.
As I wrote recently on our blog, marketplaces provide tremendous growth opportunities to extend a business by creating an adjacent market, as Amazon and Alibaba have done with their retail marketplaces; or to launch a business from scratch, as Redfin and multiple automotive marketplaces have shown. For brick-and-mortar firms such as Target and Walmart, marketplaces are also a bid for relevance.
Walmart’s third-party marketplace, created in 2009, has positioned Walmart as a viable competitor to Amazon. By making it easier for marketplace shoppers to return goods at Walmart stores, Walmart has been able to complement its online presence with its extensive brick-and-mortar network. Target will rely on a similar strategy but with a twist: making Target+ a curated site, meaning that merchants can sell products by invitation-only. Target is reportedly reaching out to brands such as Mizuno sneakers to sell their wares on Target+. If the strategy plays out as Target hopes, Target+ will set itself apart from the “come one, come all” strategy of Amazon and Walmart, which has resulted in some embarrassing PR gaffes resulting from questionable merchandise being sold on their sites.
Here are some questions for Target:
- Will a curated approach be enough to differentiate Target+ in the increasingly commoditized world of marketplaces?
- How will Target integrate Target+ with its Target app? For instance, how might Target offer Target+ incentives for Target app users?
- How will Target leverage its brick-and-mortar network beyond making stores sources for pick-up and returns? For example, will Target use its stores to test demand for third-party merchants on Target+ and vice versa?
- How might Target complement Target+ with a services component, given the rise of services marketplaces?
Fortunately Target can rely on plenty of tools to test answers to these questions, including design sprints, With design sprints, organizations identify a problem they and their customers are trying to solve, come up with a rough solution, test the idea against feedback from real customers, and create a prototype of the minimum lovable product (the initial version of the product that can be created to generate the most customer love using the least amount of time and costing as little as possible). At Moonshot, we use design sprints as part of a larger process known as FUEL, in which we go beyond concepting and actually help companies launch products. (Here’s an example of how we’ve used design sprints.)
Over the years, Target has become renowned for its store design, merchandising, and willingness to change the entire shopping experience. With Target+, Target has created an opportunity to improve an experience it is still learning: digital.