With trial and error, Target moving forward with in-house websiteby Martin Moylan, Minnesota Public Radio
St. Paul, Minn. — Shoppers expect stores to close in the evening — but retailers' websites are supposed to stay open 24-7.
Yet that hasn't been the case lately with Target's e-commerce site. Target.com has had two high-profile and lengthy website crashes in the past month or so, raising questions about Target's e-commerce strategy and the technology behind it.
For about a decade, Amazon.com handled Target's online sales and offerings. But about two years ago, Target decided to bring management and operation of the site in-house. Analysts say Target wanted more control over its e-commerce site, and more bells and whistles than Amazon could deliver.
Industry watchers also say Target probably didn't like sharing online profits — and customer information — with the nation's biggest online retailer.
Target's do-it-yourself site went live in August, but the transition has not gone smoothly.
"Unfortunately, their site crashed last month and then it crashed again yesterday," said Don Davis, editor of Internet Retailer magazine. "Not a good start and probably has something to do with Mr. Eastman departing."
Mr. Eastman is Steve Eastman, the former president of Target.com. Target abruptly announced Thursday that Eastman had left the company. But Target said his departure was unrelated to the website's performance.
Advertising Age reported last week that Target's website has been plagued by glitches and friction between marketing and technology teams. Target said it has no comment on the report.
But Forrester Research retail analyst Sucharita Mulpuru said it's not unusual for retailers' websites to suffer major snafus.
"There are always going to be hiccups. We've seen much worse where major sites have crashed on Black Friday," Mulpuru said. "There have been sites that have been taken off-line for weeks on end, major sites, because they've had challenges with their site launches."
Mulpuru said Amazon has run e-commerce sites for many retailers. But she said they've steadily chosen to dump Amazon and run the sites themselves.
"You are basically giving all of your sales information to your largest online competitor," she said "It made really no sense for a lot of these companies to continue that relationship."
But Davis, the editor of Internet Retailer magazine, said technology issues were more of a factor in Target's decision to drop Amazon. Davis said Amazon couldn't give Target the sophisticated site Target wants for its customers.
"For example, Sears — not only can you order online and pick up in-store, you can designate someone else to pick it up in the store," she said. "This is the kind of thing Target wasn't able to do as long as it was on Amazon."
Just how much brick-and-mortar retailers benefit from selling on the web is open to question.
Overall, online sales account for about 5 percent of total U.S. retail sales. But many customers buy products online and pick them up in stores.
Morningstar retail analyst Michael Keara said a retailer's website simply siphons off purchases that would otherwise happen in its stores.
"Online sales are necessary obviously," he said. "But what online sales do is cannibalize sales of the actual stores."
But retailers believe they have to compete on the web, battling web-only retailers that have lower costs and other advantages such as not having to collect state sales taxes.
Edward Jones retail analyst Matt Arnold said traditional retailers must integrate online and store experiences — and provide good, reliable websites.
"It's a strategic necessity because those retailers that don't have those capabilities will ultimately lose online and footfall traffic," he said.
Arnold said Target's decision to take its web site in-house will eventually be vindicated.
"It does make sense to bring it in-house, and they have the size and capabilities long-term to get it right and do it themselves," Arnold said.
Target has all the motivation it needs to get its website done right. The retailer said its best customers love to shop the web and they spend more — both online and in stores.
- All Things Considered, 10/14/2011, 5:51 p.m.