Target (TGT) is taking a very big risk in the hope of improving its online sales capacity. It will build up its own e-commerce site and end its relationship with Amazon (AMZN).

According to The Wall Street Journal, "Since 2001, Target has outsourced nearly all of its online operations to Amazon."

Why would Target make the decision? That is a puzzler. The big box retailer can promote its online brand any way it likes. Its relationship with Amazon is to run the back end of the Target site, something the the shopper does not see. Amazon is the world's leading expert in operating e-commerce sites because of its size and scale online. A number of retailers let Amazon handle the mundane tasks of site operation.

Target will have to set up its own software and server relationships. Since it is not an IT company, it takes the chance of doing an imperfect job, and, in the process, losing sales.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Increase your money and finance knowledge from home

Bonds for Beginners

Learn about fixed income investments.

View Course »

What is Short Selling?

Make a profit when stocks prices fall.

View Course »

Add a Comment

*0 / 3000 Character Maximum