NEW YORK (REUTERS) - Target Corp said it will drop shipping fees for all online orders during the holiday shopping season for a second year in a row, ratcheting up competition with rivals including Wal-Mart Stores Inc and Amazon.com.

The discount retailer also said it has struck a deal with Borderfree Inc to ship products to 200 countries and territories outside the United States during the holiday season.

This comes as Target expands differentiated products and stylish merchandise at affordable prices to draw in its core customer base of middle-class shoppers. Last month, the retailer said it will price-match its largest rivals in-store and online.

"Traffic is very important for us during the holidays and ... free shipping was very well received last year," chief executive officer Brian Cornell said on Thursday (Oct 29). He expects the shopping season to be driven by discounts to lure shoppers who remain cautious about making purchases.

Target will offer free shipping for orders placed online from Nov 1 to Dec 25, he said. Target currently requires a minimum online order of US$25 to qualify for free shipping.

Wal-Mart has said it will keep its minimum online order size for free shipping at US$50 this holiday season.

Best Buy will waive its US$35 minimum through early January, while Amazon offers free delivery to members of its Prime shipping service.

Target expects its ship-from-store programme which it has recently expanded to 460 stores to become the real differentiator and speed up delivery times.

Growing digital sales, which were less than 3 per cent of Target's business through the first half of the year, has been a priority for Mr Cornell. Free-shipping boosted Target's digital sales 36 per cent during the fourth quarter last year.

Among other initiatives, Target said it will expand its online grocery delivery partnership with Instacart to six stores during the holidays from two currently.

It will also expand its curbside pickup service next week to 121 stores from 21 currently.