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Target is testing a new way to deliver products directly from factories to customers' homes.

The move is part of an early-stage plan to reduce costs and better compete with low-cost online retailers like Temu and Shein, according to a report from Bloomberg News on Tuesday.

The idea is simple: instead of shipping items from Target's warehouses, the company would send them straight from factories.

This model, already used by some fast-growing competitors, could help Target offer lower prices on things like clothes, home goods, and other non-food items.

A Target spokesperson did not confirm details but told Bloomberg the company is "always testing new ways to serve customers better." The company is still exploring how this model might work in the long term.

This change comes as Target, like many other retailers, faces a tough shopping environment.

According to PYMNTS, the company's sales dropped 3.8% in the first quarter of 2025, and executives expect small declines to continue throughout the year.

Target Tests Direct Shipping Amid Budget-Conscious Shopping Trend

Target's Chief Commercial Officer Rick Gomez said in May, "Consumers have been very cautious, especially with rising costs and economic uncertainty. Families are watching their budgets closely and looking for more ways to save."

The timing of this test is interesting. In May, the US government closed a policy loophole known as the "de minimis" exemption.

This rule had allowed low-cost items (under $800) to enter the country without paying customs duties. Retailers like Temu had used it to keep shipping costs low, Reuters said.

Without that benefit, some direct-from-China retailers have already seen fewer US customers.

Despite the changes, Target may still find ways to make direct shipping work—especially if they focus on quality, trust, and better prices.

Bloomberg noted that Amazon has also started testing a "$20 and under" shop online, showing just how important low-cost options have become for big retailers.

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