August 25, 2011
By the ZippyCart Content Team
Back in 2001, Target decided to use Amazon as its primary ecommerce solution for selling its vast catalog of products online. The move seemed like a smart one, but years later Target CEO Steve Eastman decided it was time to let go of the company’s relationship with Amazon. Today, the Minneapolis-based Target Corporation officially unveiled its new website, which is independent of Amazon and fully controlled by Target.
Target has slowly been moving away from Amazon in recent years. Eastman said in 2009 that “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.” The new site is actually quite easy on the eyes, and is much easier to navigate than its previous counterpart. “Establishing a new platform for Target.com allows Target to reinvent our guests’ online environment and create a more user-friendly, reliable experience,” said Eastman. “With the new Target.com, we are in a better position to satisfy our guests’ constantly evolving preferences — whenever, wherever — in the same way we have earned their loyal support in our stores for decades.”
The new site features include improved navigation, search and security, streamlined cart and checkout, and increased personalization via product recommendations, improved wedding registries and lists, integrated community features and social-networking integration.
So, what does the loss of Target mean to Amazon? The move has been anticipated for a few years now, so Amazon was likely prepared for the eventual split. Baird financial analyst Peter Benedict notes that it could have an impact on Amazon revenues. He writes: “We believe that e-commerce became strategically too important for Target to outsource this business to Amazon, in particular given the increasing competition between the two companies. Nonetheless, Target was a source of high margin commission revenues for Amazon (we estimate in the $100M+ range) on roughly $1.2 billion in Target.com merchandise volume.”
Benedict also noted that a number of large retailers have left the Amazon nest in recent years, including Toys-R-Us and Marks & Spencer. But the departures are not a surprise given Amazon’s new weight in the retail industry. The company continues to put up impressive numbers across the board. Its market value sits at $87 billion, more than twice that of Target. So, essentially, losing the rights to run the ecommerce solutions for these companies is not making a huge impact on the bottom line.
Online sales have become increasingly important for brick-and-mortar stores. More and more companies are beginning to catch on to the importance of having a clean and easy ecommerce solution for consumers to peruse and purchase products from. Recently, European clothing giant Zara announced that it would make online sales available to its US customers. The company has become the number one clothing company in the world in terms of sales, passing Gap this year. Another European brand, H+M, also recently announced the availability of online shopping in the US. Previously, online shopping through H+M was limited to European customers only.
The move towards ecommerce solutions and away from brick-and-mortar shopping is gaining momentum. Whatever the reasons are, ecommerce solutions have seen a 16% month-over-month increase, with consumer electronics leading the way. This could also signal a gradual shift in consumer attitudes towards making more/more expensive purchases online.
Taylor is originally from Washington, DC, but has lived in the Seattle area for the past 5 years. He’s a senior at the University of Washington, studying Political Science (with no interest in entering the political world). He’s more interested in the Tech industry, especially consumer electronics, cloud computing, and how mobile internet and devices will change the business world. He spends most of his free time tinkering with his Subaru and surfing whenever possible.
