Target is cutting costs by 90% thanks to its same-day delivery options

Target‘s business is booming thanks to the investments the retailer has been making to make it as easy as possible for shoppers to buy things online and get them that same day.

When it reported quarterly earnings on Wednesday morning, it said digital sales surged 31%, with its same-day services accounting for 80% of that growth. Those services include a curbside pickup option, same-day delivery via its Shipt network and buy online pick up in store.

“When it’s delivered by our stores … those look a lot more like store economics,” CEO Brian Cornell said during an interview with CNBC’s Becky Quick.

He said when Target fulfills an online order from the back of its stores versus shipping from a distribution center, “about 40% of the cost goes away.” He said when customers order online and pick up at a store, use curbside pickup or select shipping via Shipt, “about 90% of the cost goes away.”

“We certainly like that,” he said.

Target’s net income rose 15.5% to $706 million during the latest period ended Nov. 2, up from $616 million a year ago.

Target shares surged more than 9% in premarket trading following its report, putting the stock on pace to open at a record high.

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