Target and Amazon to Part Ways in 2011
Target believes it has gone as far online as it can with Amazon.com
and has announced that prior to the 2011 holiday it will build and manage the
brand new Target.com all on its own.
“Amazon has been an important strategic partner
since we re-launched Target.com in 2001, and the strength of Amazon’s technology
and fulfillment services has been a contributing factor in Target.com’s success,” said
Steve Eastman, president, Target.com, in a press release last Friday. “However,
to deliver a customized multi-channel experience for Target’s guests, we believe
it is in Target’s best interest going forward to assume full control over the
design and management of Target’s e-commerce technology platform, fulfillment
and guest services operations.”
Target’s move follows others including Borders and Toys “R” Us that
have chosen to bring their online operations in-house.
“There’s a lot more at stake now,” Scott Silverman, executive
director of Shop.org,
told the Minneapolis Star Tribune. “It’s
a boardroom priority figuring out the role of the Internet in your retail business,
where 10 years ago it wasn’t.”
It wasn’t immediately clear how big a hit losing Target would mean
for Amazon, although at least one analyst, according
to a Barron’s report, said the effect would be negligible.
a letter to clients, Imran Khan of J.P. Morgan wrote, “Rolling
out a platform to fulfill the sales of a top-20 e-commerce site is likely to
hit a few bumps in the road and Amazon’s market share could see benefits if Target.com
has any difficulties providing a top-notch customer service experience.”
Discussion Questions: What will
the Target/Amazon split mean for each company? How much will Target benefit from
or be hurt by going it alone with Target.com in 2011?
- Target to Build and Manage New Target.com Platform – Target
- Target will take
website in-house by 2011 – Minneapolis
- Target to Manage
Target.com, End Contract With Amazon – Bloomberg
- Target to build its own online platform – Reuters
Little Threat from Target, Says JP Morgan – Barron’s Online (sub.