Amazon and Target to End Collaboration in 2011

Target, the second biggest retailer in the U.S., announced in a press release that, starting 2011, it would manage and run its own e-commerce platform independently from Amazon's services. The service should be built and launched before the holiday season of 2011.

After a very lucrative deal with Amazon, the contract signed between the two companies in 2001 will not be renewed by Target's management. Steve Eastman, president of Target.com, had this to say about the relationship with its partners: “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.”

This collaboration was put in place in 2001, back when Amazon had established itself as the biggest online retailer in the world, benefiting from the most advanced e-commerce platform of its time. At that point Amazon's management started to sign contracts with various companies to sell products on its main page. But after a difficult negotiation process with Marks&Spencer, Amazon decided to offer web e-commerce services and power Marks&Spencer's e-commerce platform with their technology. Soon after, the Target contract was signed, offering, besides the e-commerce platform, other related services like customer support, order management and product delivery.

The two companies parted ways in a friendly fashion, with no lawsuits or derogatory statements about each other in the media. This comes after several lawsuits against Amazon were filed by some of its former business partners like Toys 'R' Us in 2006, and Borders (book seller) in 2007.

Sebastian Gunningham, senior vice president of Seller Services for Amazon.com, Inc. had this to say: “We are grateful to have been able to work with Target for the last eight years, and we wish Target the very best as they go forward.”

The loss of this contract will not affect Amazon that much, since it accounted only for 1% of its annual sales revenue (estimated at about $19.2 billion). The company will still work with Target through the rest of the contract till 2011. The online reseller still powers platforms for Marks&Spencer, Bebe, Timex and OshKosh B’Gosh.