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UPDATE: Target to Open Amazon Storefront, But Won’t Sell Video There

14 Sep, 2001 By: Holly J. Wagner

Target Corp.’s plan to open a Target storefront at Amazon.com later this fall will not affect the way either company sells packaged media because of noncompete agreements that are part of the deal.

“Categories that Target can’t touch [in its Amazon storefront] are CD/video, toys, babies and health and beauty products,” says Target spokeswoman Kira Perdue, although “Target can sell electronic hardware” on the Amazon site and plans to do so. Target will be forbidden from competing with Amazon’s core business or existing channel partners Toysrus.com, babiesrus.com and drugstore.com.

As a result, the new Target storefront under the Amazon.com shingle will not sell videocassettes, DVDs or video games, although Target Corp. will continue to offer those products over its own branded sites, Target.com, Mervyns.com, MarshallFields.com and GiftCatalog.com.

What it will do is expand product offerings at Amazon.com and increase Target Corp.’s electronic presence in time for the all-important holiday selling season.

“The Target store on Amazon will be offering things that Amazon does not currently offer,” Perdue says. “Target is looking to reach an increased audience that may not already be Target guests. They get to reach the 35 million customers that Amazon already has.”

Starting next summer, Target will entrust Amazon.com with its e-commerce technology services, order fulfillment and customer care services for its existing online properties, which will all remain under the Target Corp. banner.

Under the five-year strategic alliance, Amazon.com will receive per unit fees and annual fixed fees, while Target will receive the benefits of the Amazon.com e-commerce platform and vast customer base to accelerate its already-rapid growth online.

Target does not anticipate layoffs in the transition, although some employees will be reassigned, Perdue says.

“Target will be scaling down its call center facilities and some fulfillment centers. They will not be scaling down personnel,” she says. “Those personnel will be absorbed into other areas of the company. There’s no hard answers yet, but the plan right now is that no physical employees will be moved. Their jobs will probably morph.”

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