Target (NYSE: TGT) is tired of sleeping with the enemy. The country's second-largest discounter is cutting ties with Amazon.com (Nasdaq: AMZN) when its fulfillment deal runs out in 2011.
Amazon has served Target well over the years. The online retailer manages Target's online store and handles all of the nitty-gritty warehousing, shipping, and customer-service functions.
Have you ever heard an online Target shopper complain about virtual-shopping-cart downtime or holiday orders that didn't arrive on time? Exactly!
However, Target has grown, and the time has come to take the keys and go it alone -- the way that ex-Amazon partners Toys "R" Us and Borders Group (NYSE: BGP) have ultimately done. It also helps these companies if they can stop feeding coins into the meter of a major competitor.
This news doesn't mean Target will have to end all of its online relationships, though. Target has deals in place with Shutterfly (Nasdaq: SFLY), Kodak's (NYSE: EK) Gallery, and News Corp.'s (NYSE: NWS) Photobucket, through which visitors to any of the three photo-sharing sites can order prints and pick them up at a local Target store. That approach works. It's symbiotic, and Target knows that Shutterfly, for example, is never going to be selling table lamps or denim.
Amazon, on the other hand, is a clear competitor, as it fleshes out its store with dozens of categories that branch out ever further from its media-peddling origins.
Will Target stumble? Perhaps. Discounting behemoths Wal-Mart (NYSE: WMT) and Sears Holdings' Kmart had a few online false starts at first. Target, though, has the advantage of learning from its rivals' previous mistakes. It also has two years to prepare itself.
This is a logical -- and evolutionarily necessary -- thing for Target to do.
Don't worry about Amazon, though. It will be just fine without Target.
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