Target to end Amazon.com partnership in 2011

After partnering with Amazon.com for nearly a decade, Target announced today that it’s parting ways with the e-retailing giant and will build and manage its own Target.com platform.

“Amazon has been an important strategic partner since we re-launched Target.com in 2001,” Target.com President Steve Eastman said. “However … 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 and Amazon have two years left on their contract together, during which time both companies said they plan to work together to get the most out of the existing website.

I know many smart tech and retail people read MinnPost. Any ideas why Target would be making this move, and does it make sense?

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Comments (1)

  1. Submitted by Richard Schulze on 08/11/2009 - 11:00 pm.

    //As executives at Target have likely realized, the e-commerce arrangement with Amazon was heavily tilted in Amazon’s favor.

    In retrospect, the “partnership” with Amazon.com seems like anything but. Amazon did everything for Borders-inventory management, content development, back-end fulfillment and customer service-and grew its business into the juggernaut it is today. The wealth of intellectual capital and hard-earned lessons that Amazon realized over the years from selling to Borders’ online customers stayed inside Amazon’s Seattle headquarters. All Borders got out of the deal was a percentage of sales.

    Target will now have to spend millions (if not billions) to build out its new e-commerce infrastructure during the next two years-integrating the various ERP, customer relationship, retail analytics and supply chain systems. And, of course, one of its chief competitors-besides Wal-Mart-will be Amazon.com, which continues to dominate all comers online.//

    http://www.computerworld.com/s/article/9136462/Target_Dumps_Amazon.com_Reboots_on_E_Commerce?taxonomyId=60

    The last full-year estimate of profit from Target.com sales on Amazon.com’s platform was about $100 million, or less than 1% of Amazon’s annual profit. So, the deal — while a large loss for Amazon.com — is not a game changer for the company.

    One thing is clear — in two year’s time, Target’s revamped website better deliver if it indeed launches right before a holiday season. Online shopping won’t be slowing down while Target retools itself — it will only become larger.

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