The company's shares didn't move much on the news, but it's still worth noting that consumer electronics retailer Circuit City (NYSE:CC) yesterday morning announced that it's ending a relationship with online retail giant Amazon.com (NASDAQ:AMZN). Roughly three and a half years old, the deal allowed customers to buy Circuit City merchandise through Amazon's website. The change takes effect immediately.
Running online storefronts for retailers large and small is a nice business for Amazon: Its clients, from major international firms to mom-and-pop stores, get the benefit of an expert online merchant's brand -- and its service and fulfillment know-how -- while cutting down on the expense of setting up an Internet division. (As of this writing, details on the workings of the Amazon/Circuit City partnership are still on Amazon's website: Read 'em while you can.)
As retailers such as Circuit City, Motley Fool Stock Advisor recommendation Best Buy (NYSE:BBY), and others have persevered on the Web, however, they've not only built their own expertise in running Internet operations but also developed the brands and capabilities of those operations, making them viable revenue drivers. Once that happens, the few extra dollars that a company with nearly $10 billion in annual sales might get from another company's front end aren't worth the trouble. (Circuit City relaunched its own online operation in September.)
Funny how things change. A few years ago, it seemed as though only a few megabrand superpowers, Amazon among them, would dominate the Internet retail space. Companies with solid positions in real-world retail were all too happy to find partners in hopes of scoring a few online bucks on the online giants' coattails.
Now, type "iPod mini" into Google's (NASDAQ:GOOG) Froogle service, and the first company that pops up on that page packed with shopping options may not be what you expected. Once, Provantage came up, something I'd never heard of. Another time, it was Tweeter (NASDAQ:TWTR). Look for the big names, such as Apple (NASDAQ:AAPL), in the paid spots on the left.
Rather than being funneled toward a few well-known companies, shoppers can direct their online retail experience based on any number of factors, price among them. That takes some of the power out of the retailers' hands, but it also gives them ample opportunity to determine how they want to differentiate themselves from the competition.
Fool contributor Dave Marino-Nachison doesn't own any of the companies mentioned.
