Supply Chain Management

Amazon has been an innovator in the e-commerce arena. They started supporting two innovative models for businesses with the Merchant.com and the zShops (Merchant @) model. The Merchant.com model is what Target and ToysRUs primarily used. This is a Business model based on technological know-how rather than a partnership wherein Amazon basically packaged its technological knowhow to put up and manage the ecommerce model which could be used to support the Partner’s online businesses.  The biggest USP of this model was the faster GTM lead time. It made a lot of sense in those days for a lot of Brick and Mortar businesses who were just starting up their ecommerce initiatives to leverage Amazon's experience and technical know how.
 
But in the longer run, this model has some serious shortcomings for the partners.
 
The biggest one in my opinion is Customer ownership. With this model, Amazon owned all the customer interactions. This goes against my basic belief of core competency. For a retailer, especially of the size of Target (or even ToysRUs), owning the Customer should be a very important if not THE most important factor of their online Multi-channel strategy. Given the current trend of retailers moving towards the 'Buy anywhere, return anywhere', owning your customer interactions in all channels is an important factor.
 
Another shortcoming (which probably this model shares to a large extent with a SaaS model) is the dependency on the partner for technology and the underlying processes. Amazon, for all its flexibility, still could and would dictate some of the important decisions like order sourcing. This again will impact Target's fulfillment strategies directly.
 
For Target, Amazon is also becoming a key competitor in the online space. And it really does not bode well for a company to have dependency on its competitor, however professional the relationship is.
 
Target has a long way to go before they will be successful in their stated mission of bringing their Target.com platform in-house. They would need all their best resources to pull together the technological know how for the front end, optimizing their supply chain execution and taking over the servicing of their customer, but I still maintain that this is a more robust decision in the long term.