U.S. discount retailer Target (TGT) and Canadian e-commerce company Shopify (SHOP) are teaming up on a third-party online marketplace.
Starting today (June 24), companies that work with Shopify can apply to join “Target Plus,” the retailer’s third-party marketplace.
Many of Shopify’s customers are smaller concerns that have unique products and brands. The arrangement with Target gives Shopify’s customers a larger consumer base to draw on.
For Target, the deal adds new and diverse products and brands to its online marketplace. Financial terms of the arrangement have not been made public.
Target executives have said that the retailer may put some popular items discovered through the Shopify deal on shelves at its retail outlets across the U.S.
The arrangement with Shopify comes as Target struggles to grow its sales as consumers buy fewer discretionary items amid high inflation and interest rates.
Target has posted four consecutive quarters of declining sales, pushing its share price lower.
The Minneapolis-based retailer has also struggled to grow its e-commerce business. Target’s digital sales grew a tepid 1.4% in this year’s first quarter, the first increase in more than a year.
Shopify has also struggled after seeing meteoric growth during the Covid-19 pandemic when merchants were forced to sell their products online.
Target Plus faces stiff competition from other more established third-party marketplaces such as Amazon (AMZN), Walmart (WMT), and eBay (EBAY).
Third-party marketplaces are increasingly popular among retailers because they offer higher profit margins. This is because the sellers on the sites store and own their own inventory.
Target’s stock has gained 2% so far in 2024 and trades at $146.13 U.S. per share.
Ottawa-based Shopify’s stock is down 12% on the year and trading at $65.03 U.S. a share.
