Are Amazon.com and Target going the way of Jon & Kate? |
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Are Amazon.com and Target going the way of Jon & Kate?
It may not be the stuff of tabloid headlines, but Amazon.com and Target could be headed for splitsville, according to new research report. For years, Amazon.com has run Target's website, even as it's lost other big enterprise customers like Toys "R" Us and the Borders book chain. Now an analyst is questioning the long-term prospects of the Amazon-Target relationship.
In a research report on Amazon today, Cowen & Co. analyst Jim Friedland writes:
Target.com, which accounts for an estimated 7% of 2010 non-GAAP operating profit, could end its partnership with Amazon. Amazon currently powers the website and provides fulfillment for Target.com. We believe Amazon's contract with Target.com ends in August 2010. We believe it is possible that Target will eventually decide to take its website operations in house.
Amazon has provided the ecommerce backbone for Target.com since 2001. A few months ago, a Target spokeswoman told me the retailer's current contract with Amazon runs through August 2011. If Amazon were to lose Target, its biggest known customer for the enterprise business would be U.K.-based Marks & Spencer.
I've heard that Amazon has a secret internal project code-named Vitamin C to create ecommerce platform tools for middle-market retailers. Perhaps Amazon is looking to middle-market, rather than the Targets of the world, to grow its enterprise business.
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