Target looks to build a platform for third-party vendors that can differentiate from Amazon by playing to its strengths.

WHAT HAPPENED: Target is inviting sellers in high-performance product categories to join its third-party retail platform, Target +.

Why it matters

  • Target has been pouring more money into improving and expanding its brick-and-mortar stores and ecommerce. Now, Target + can build off of the retailer’s own insights as a wholesaler while saving costs on fulfillment, which vendors on the platform will account for themselves. The company is reportedly looking to brands in the sporting goods and toys arenas, both of which are promising categories at the retailer. Target + also comes with similar benefits as Amazon; Third-party marketplaces provide the companies that run them with large swathes of data from vendors about how consumers are shopping, further optimizing the platform, as well as the development of private labels by the platform retailer. While Target already has owned brands, an online vendor presence with infinite shelf space could provide even more insights about what consumers want and how the retailer could make this a reality.

  • But Target’s approach is much different from Amazon’s. For one, brands only have to fill out an application to gain approval to sell on Amazon. Target’s current invite-only strategy is significantly more selective, which, while limiting the number of vendors that join Target +, works in Target’s favor: Unable to build a marketplace that competes with Amazon in terms of breadth, Target’s selection process mirrors its reputation of a retailer that sells high-quality, on-trend brands (this will likely also prevent major issues Amazon has faced with counterfeit products). Because Target has established itself as a reputable wholesale partner, especially for digitally-native brands seeking to build an offline footprint, Target + has potential to bring these relationships online and reap rewards in the form of new insights that it can apply to its own growing roster of private labels and digital sales, which it wants to grow by 25% this year.