The service would focus on low-cost products like apparel, household goods and other non-food items, Bloomberg reported Tuesday (June 24), citing unnamed sources.
Asked about the report by Bloomberg, a Target spokeswoman said the company is constantly testing new ways to deliver products and services, according to the report.
Currently, most online orders from Target and other U.S. retailers are shipped from warehouses. Shipping directly from factories could enable the company to offer lower prices, the report said.
Comparing the factory-direct model being tested by Target to those offered by Temu and Shein, Bloomberg said that the offering could be impacted by the U.S. government’s closure of the de minimis exemption that allowed orders of less than $800 to be imported duty free.
Target said in May that it saw a 3.8% decrease in comparable sales for the first quarter and expected to see a low single-digit decline in sales for fiscal 2025.
Company executives attribute the drop to declining consumer confidence, uncertainty around the impact of tariffs and a continued decline in discretionary spending.
“As we’ve shared for multiple quarters, consumers have been choiceful in their buying decisions, and recent declines in consumer confidence have made them even more cautious,” Target Chief Commercial Officer Rick Gomez said May 21 during the company’s quarterly earnings call. “They’re focused on finding ways to save as they manage their family’s budget.”
Amazon introduced a new store for products priced at $20 or less in November, following reports that it was planning to add a section to its site to compete with companies like Temu and Shein.
Dubbed “Amazon Haul,” the store is available on the company’s mobile website and shopping app and offers U.S. customers a chance to find more affordable products in a range of categories.
“Finding great products at very low prices is important to customers, and we continue to explore ways that we can work with our selling partners so they can offer products at ultra-low prices,” Dharmesh Mehta, vice president of Worldwide Selling Partner Services at Amazon, said at the time in a press release.
