Target Corp. is back in the driver’s seat of its e-commerce business.
The mass retailer on Wednesday relaunched its Web site, signaling the end of its relationship with Amazon.com. Since 2001, Amazon has been running target.com, including providing technology services, order fulfillment and customer service.
Target wants to maximize its online profits — Amazon.com received per-unit fees and annual fixed fees — and wants control over the design and management of the site. The retailer said the relaunched site is the first step in “an ambitious multichannel expansion.”
But delegating its Web site to a third party for so many years has left Target at a disadvantage, according to retail analysts. “Target really hasn’t emphasized [e-commerce],” said Matt Nemer, an analyst at Wells Fargo. “They’re a little late to multichannel retailing. That’s one of the outcomes you get when you outsource your Web site.”
The new target.com has bolder photos and improved search and navigation features, streamlined checkout and bells and whistles such as enhanced registries and lists and integrated community and social networking features. Nemer found other aspects of the site to be lacking. For example, the depth of recommendations has been sacrificed on the new site due to the prominence of graphics, he said.
“We were surprised that the new site didn’t roll out key multichannel features such as site-to-store shipping, same-day pickup, broader inventory lookup and a robust third-party marketplace,” Nemer said in a research note, adding that Target’s natural search rankings “could drop materially — by over 50 percent — versus our test in March when the site was powered by Amazon.”
Another criticism of the Web site is that it “still lacks or removed opportunities to up-sell customers during the order process, including ‘suggested products’ or a ‘continue shopping’ feature from the shopping cart,” Nemer said. Pages have fewer categories and less text, and Nemer said it takes an extra one to two clicks to order a product.
While there seems to be more emphasis on free shipping, the offer hasn’t changed — more than 500,000 items are delivered free with a purchase of $50 or more.
A section on the target.com homepage called “So many ways to save” lists daily deals, coupons and clearance items, grouped together with a greater emphasis on value. There’s also a new feature on subcategory pages that allows users to select and compare as many as three items. There’s now a quick way to search for products that are available in stores versus online, and Paypal was added as a payment option at checkout. Target.com stresses personalization with the ability to upload customer profile photos when creating an account, similar to Facebook.
The relaunch of Target’s Web site comes shortly after its rival Wal-Mart last week restructured its global e-commerce division following the resignation of two key executives. Wal-Mart reportedly does about $5 billion to $6 billion in online sales, while 1 percent to 2 percent of Target’s revenue comes from online business, or about $1.33 billion last year. Both retailers significantly trail Amazon.com’s $34 billion in 2010.
“Wal-Mart is much further along than Target in terms of e-commerce,” Nemer said. “Wal-Mart’s Web site is a marketplace. Wal-Mart offers ship-to-store shipping, is now rolling out same-day ship-to-store and is running an online test with FedEx.”
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