{"id":2804,"date":"2019-09-07T10:21:11","date_gmt":"2019-09-07T08:21:11","guid":{"rendered":"https:\/\/www.dazzlepop.net\/site\/?p=2804"},"modified":"2019-09-07T10:21:57","modified_gmt":"2019-09-07T08:21:57","slug":"amazon-suddenly-became-a-massive-threat-to-target-then-target-did-something-brilliant","status":"publish","type":"post","link":"https:\/\/www.dazzlepop.net\/site\/amazon-suddenly-became-a-massive-threat-to-target-then-target-did-something-brilliant\/","title":{"rendered":"Amazon Suddenly Became a Massive Threat to Target. Then Target Did Something Brilliant"},"content":{"rendered":"<div style=\"text-align:center\"><\/div>\n<p>The year was 2001, and&nbsp;Target did something that would be unthinkable today: it outsourced its entire online operation to Amazon.<\/p>\n\n\n\n<p>It seems crazy, but&nbsp;Target wasn&#8217;t alone.&nbsp;Big names like Borders, Circuit City, and Toys R Us&nbsp;all did the same thing.<\/p>\n\n\n\n<p>Now those other brands are gone, but Target is thriving.&nbsp;So what did Target do differently? Why did it survive when the others didn&#8217;t?<\/p>\n\n\n\n<p>Here&#8217;s the story about a&nbsp;bold move Target made, that looks totally brilliant in retrospect.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Borders, Circuit City, and Toys R Us<\/h2>\n\n\n\n<p>Let&#8217;s go back to the start. E-commerce was still new in 2001.&nbsp;Online&nbsp;sales amounted to barely 1 percent of all retail.&nbsp;And Amazon was a small fraction of its size today. It had never turned a&nbsp;<a target=\"_blank\" href=\"https:\/\/www.computerworld.com\/article\/2575106\/amazon-records-first-profitable-year-in-its-history.html\" rel=\"noreferrer noopener\">profit<\/a>.<\/p>\n\n\n\n<p>Meanwhile, big retail leaders wanted to focus on their\u00a0core businesses, so a parade of brands went into partnerships with <a href=\"http:\/\/www.Amazon.com\">Amazon<\/a>. Here&#8217;s part of the timeline:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>August 2000<\/strong>: Toys R Us announces&nbsp;a&nbsp;a 10-year exclusive partnership with Amazon.&nbsp;<\/li><li><strong>April 2001<\/strong>: Borders, then the second-largest U.S. bookstore chain, strikes&nbsp;a deal to let Amazon take over its entire digital operation.<\/li><li><strong>August 2001<\/strong>:&nbsp;Circuit City, the number-2 consumer electronics chain, does a&nbsp;&nbsp;<a target=\"_blank\" href=\"https:\/\/www.wsj.com\/articles\/SB998312950487587416\" rel=\"noreferrer noopener\">deal with Amazon<\/a>.&nbsp;<\/li><\/ul>\n\n\n\n<p>But, look at where they all wound up:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Toys R Us needed a lawsuit to get out of its Amazon deal. Afterward, it never put anywhere near enough resources into its own online sales, and the company closed its doors in 2018.<\/li><li>Borders got out in 2007,&nbsp;but lasted only four more years before going bankrupt and closing all its stores.<\/li><li>Amazon grew its&nbsp;electronics business to $1 billion a year by 2004. Five years after that, Circuit City was on its own,&nbsp;in bankruptcy and&nbsp;<a target=\"_blank\" rel=\"noreferrer noopener\" href=\"https:\/\/www.inddist.com\/article\/2017\/02\/how-industrial-distributors-can-avoid-mistakes-circuit-city\">closing its stores<\/a>.<\/li><\/ul>\n\n\n\n<p>Target basically went into the same kind of deal &#8212; right after Circuit City, in fact. It was&nbsp;<a target=\"_blank\" rel=\"noreferrer noopener\" href=\"https:\/\/press.aboutamazon.com\/news-releases\/news-release-details\/target-and-amazoncom-team-advance-e-commerce-initiatives\">announced in the early morning of September 11, 2001<\/a>.<\/p>\n\n\n\n<p>But the big difference that came later was that Target perceived the threat that a quick-growing Amazon posed, negotiated its way&nbsp;out, and poured tons of money into building its own digital operation.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The Target deal<\/h2>\n\n\n\n<p>It&#8217;s worth noting how Amazon and Target switched places during the&nbsp;course of their deal.<\/p>\n\n\n\n<p>At the start, Target was much bigger, based on&nbsp;market capitalization:&nbsp;$31 billion for Target versus&nbsp;$4 billion on the day they signed the deal. But then&#8230;<\/p>\n\n\n\n<figure><iframe width=\"1\" height=\"1\"><\/iframe><\/figure>\n\n\n\n<ul class=\"wp-block-list\"><li>In July 2006,&nbsp;<a target=\"_blank\" href=\"https:\/\/www.cnet.com\/news\/target-amazon-extend-partnership\/\" rel=\"noreferrer noopener\">when they agreed to extend the deal through 2010<\/a>, Amazon had grown to about $15 billion, while Target was worth just over $40 billion.<\/li><li>By August 2009, Amazon had grown to roughly $40 billion, while Target had fallen to just under $34 billion. (This is when they announced the end of their deal.)<\/li><li>By Labor Day 2011, when Target launched its own site, Amazon was at $85 billion; Target was still just over $33 billion.<\/li><\/ul>\n\n\n\n<p>Today, while Target has grown healthily ($56.16 billion),&nbsp;Amazon is off the charts at over $900 billion.<\/p>\n\n\n\n<p>In short, Target saw what was going on. And the fact that it had tied its online efforts to Amazon wasn&#8217;t helping its competitive position.<\/p>\n\n\n\n<p>In the&nbsp;<a target=\"_blank\" rel=\"noreferrer noopener\" href=\"https:\/\/consumergoods.com\/how-target-responsible-amazons-success\">words<\/a>&nbsp;of former Target executive Casey Carl, who later became Target&#8217;s chief strategy and innovation officer (but who left in 2017): &#8220;They learned a ton on our dime, and we didn&#8217;t learn much [in return] and that&#8217;s a massive issue.&#8221;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Growing pains<\/h2>\n\n\n\n<p>In 2009, Target made its bold decision. It announced it was going its own way, and it went live on its own digital destination in 2011. It also poured&nbsp;literally billions of dollars into its technological infrastructure.<\/p>\n\n\n\n<p>Compare that to Toys R Us, which in 2017 said it would put a relatively paltry $100 million over three years into its online product. It just wasn&#8217;t enough.<\/p>\n\n\n\n<p>Granted, the first version of Target&#8217;s site&nbsp;<a target=\"_blank\" rel=\"noreferrer noopener\" href=\"https:\/\/www.geekwire.com\/2011\/target-finally-parts-ways-amazoncom-retailers-web-site-launch-starts-outage\/\">had issues<\/a>. Carl was later&nbsp;<a target=\"_blank\" rel=\"noreferrer noopener\" href=\"https:\/\/consumergoods.com\/how-target-responsible-amazons-success\">quoted<\/a>&nbsp;as calling it a &#8220;horrific, &#8230; monolithic stack of code &#8230; [and] a frankenmonster of a website&#8221; that crashed at the most inopportune times.&nbsp;&nbsp;.<\/p>\n\n\n\n<p>&#8220;Amazon is extraordinarily good at technology and logistics, so when Target decided to do this on its own,&#8221; said Lee Schafer, a columnist for Target&#8217;s hometown newspaper, the&nbsp;<em>Minneapolis Star-Tribune<\/em>&nbsp;who has&nbsp;<a target=\"_blank\" href=\"http:\/\/startribune.com\/target-still-trying-to-catch-up-after-mistaken-web-strategy\/360619791\/?\" rel=\"noreferrer noopener\">written extensively about the company<\/a>, &#8220;it&nbsp;was a huge tech problem and [took]&nbsp;years and a lot of money to catch up. &#8230; I think they deserve a lot of credit for getting back here.&#8221;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">A unique experience<\/h2>\n\n\n\n<p>It seems like we&#8217;re well past that now. At Target today, the focus is on creating a unique Target experience across online shopping, the Target app, and in-store.There&#8217;s no longer that sharp divide between&nbsp;online and &#8220;the real world.&#8221;<\/p>\n\n\n\n<p>Among the features they&#8217;ve rolled out:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Target+ (&#8220;Target Plus&#8221;), which is &#8220;a curated assortment of products from third-party sellers on Target.com.&#8221;<\/li><li>Wallet, within the Target app, that lets customers check out with their phones.<\/li><li>&#8220;See It in Your Space,&#8221; which uses augmented reality to show customers what potential purchases would look like in their home.<\/li><li>Fulfillment options like order pick up and Drive Up, which is Target&#8217;s curbside pickup service, along with Shipt same-day delivery, and 2-day shipping options.<\/li><\/ul>\n\n\n\n<p>Now, sales are up, its&nbsp;<a target=\"_blank\" href=\"https:\/\/www.cnbc.com\/2019\/08\/21\/target-reports-fiscal-2019-q2-earnings.html\" rel=\"noreferrer noopener\">most recently earnings report<\/a>&nbsp;beat every Wall Street forecast, and parts of its digital effort &#8212; like in-store pick up and same-day shipping &#8212; are getting a lot of credit.<\/p>\n\n\n\n<p>But it&#8217;s easy to imagine a world in which Target didn&#8217;t move quite as quickly, and stayed tied to Amazon until it was too late.<\/p>\n\n\n\n<p>The key takeaways: Identify your core business, move quickly, and be willing to invest in changes when the need becomes clear.\u00a0<\/p>\n\n\n\n<p>Source:  <a href=\"https:\/\/www.inc.com\/bill-murphy-jr\/amazon-suddenly-became-a-massive-threat-to-target-then-target-did-something-brilliant.html\">https:\/\/www.inc.com\/bill-murphy-jr\/amazon-suddenly-became-a-massive-threat-to-target-then-target-did-something-brilliant.html<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"<p>The year was 2001, and&nbsp;Target did something that would be unthinkable today: it outsourced its entire online operation to Amazon. It seems crazy, but&nbsp;Target wasn&#8217;t alone.&nbsp;Big names like Borders, Circuit City, and Toys R Us&nbsp;all did the same thing. Now those other brands are gone, but Target is thriving.&nbsp;So what did Target do differently? Why [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":-1,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_vp_format_video_url":"","_vp_image_focal_point":[],"footnotes":""},"categories":[48],"tags":[37],"class_list":["post-2804","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technology","tag-technology"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Dazzlepop | Amazon Suddenly Became a Massive Threat to Target. Then Target Did Something Brilliant<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.dazzlepop.net\/site\/amazon-suddenly-became-a-massive-threat-to-target-then-target-did-something-brilliant\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Dazzlepop | Amazon Suddenly Became a Massive Threat to Target. Then Target Did Something Brilliant\" \/>\n<meta property=\"og:description\" content=\"The year was 2001, and&nbsp;Target did something that would be unthinkable today: it outsourced its entire online operation to Amazon. It seems crazy, but&nbsp;Target wasn&#8217;t alone.&nbsp;Big names like Borders, Circuit City, and Toys R Us&nbsp;all did the same thing. Now those other brands are gone, but Target is thriving.&nbsp;So what did Target do differently? Why [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.dazzlepop.net\/site\/amazon-suddenly-became-a-massive-threat-to-target-then-target-did-something-brilliant\/\" \/>\n<meta property=\"og:site_name\" content=\"Dazzlepop\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/dp.Dazzlepop\" \/>\n<meta property=\"article:published_time\" content=\"2019-09-07T08:21:11+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2019-09-07T08:21:57+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.incimages.com\/uploaded_files\/image\/970x450\/getty_71478735_200012331653767174233_401434.jpg\" \/>\n<meta name=\"author\" content=\"Mohamed Adel\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/www.incimages.com\/uploaded_files\/image\/970x450\/getty_71478735_200012331653767174233_401434.jpg\" \/>\n<meta name=\"twitter:creator\" content=\"@dazzle_pop\" \/>\n<meta name=\"twitter:site\" content=\"@dazzle_pop\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Mohamed Adel\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.dazzlepop.net\/site\/amazon-suddenly-became-a-massive-threat-to-target-then-target-did-something-brilliant\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.dazzlepop.net\/site\/amazon-suddenly-became-a-massive-threat-to-target-then-target-did-something-brilliant\/\"},\"author\":{\"name\":\"Mohamed Adel\",\"@id\":\"https:\/\/www.dazzlepop.net\/site\/#\/schema\/person\/4e2d6569ff1ef594b95a450b50752594\"},\"headline\":\"Amazon Suddenly Became a Massive Threat to Target. 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