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.
In 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 Corporation
- Target will take website in-house by 2011 - Minneapolis Star Tribune
- Target to Manage Target.com, End Contract With Amazon - Bloomberg News
- Target to build its own online platform - Reuters
- Amazon: Little Threat from Target, Says JP Morgan - Barron's Online (sub. required)