Target’s Website Crash: The Arrogance of Originality

By Douglas A. McIntyre Published Nov 14, 6:28AM EST

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Target (NYSE: TGT) announced in late 2009 that it would no longer use Amazon.com’s (NASDAQ: AMZN) tech platform to run Target.com. The country’s second largest retailer wanted to completely control its online operations. However, Target’s site repeatedly collapsed as it was launched on the company’s own platform two months ago. The company’s need to own the foundation of its online operations was the basis for the decision to leave Amazon. But it was a mistake of arrogance. Target never had Amazon’s website e-commerce skills.

Target’s management almost certainly did not want its website run by Amazon.com, the world’s largest e-commerce business, because Amazon is a direct competitor. The issue of competition is true. Amazon has moved far ahead of Walmart (NYSE: WMT) and Target in online traffic and revenue. The two bricks-and-mortar companies cannot afford to fall further behind Amazon, which has had revenue sales growth of more than 50% during the course of the past year.

Online tech news operation ZDNet reported at the time that the company made its decision two years ago that “Target has to decouple from Amazon’s platform seamlessly and add features that can keep up with other retailers.” ZDNet could see the problems with the new Target.com months before the separation took place. Target believed it had the expertise and personnel to make the new project work. That did not turn out to be the case. The many breakdowns of the new site, just ahead of the critical holiday season, caused Target to fire its online president, Steve Eastman, on October 14. It is extremely unlikely that Target has a highly talented online executive to replace him. That means managing the Target.com problem has fallen to someone who is not an online expert.

Target’s mistake as it moved its online operations from Amazon’s platform to one it built for itself was simple. It believed that Amazon was a biased steward of Target’s website. But Amazon would do nothing to undermine Target.com’s operations. The public relations fall-out would be too brutal. Actually, Target was a signature customer for Amazon’s platform. It showed that Amazon could operate a large independent website in a way as good as, if not better than, if that independent company ran the website on its own.

Target’s site would not have had intermittent availability problems if it had stayed with Amazon. Target customers do not care where Target.com is hosted. Whether Target is uncomfortable about associating with a competitor is beside the point.

The arrogance of Target’s management that it had to control its own fortune in a business where it has no expertise has cost it dearly.

Douglas A. McIntyre

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.