Supplier lessons from Target's cya to Amazon
Target just decided to take its web platform away from Amazon and bring it in-house. Before you say, “Who cares? I’m not Amazon,” I pulled together a couple of insights from the development that retail suppliers might want to think about.
If we've said it once, we've said it hundreds of times: retailers see themselves AS a brand these days, and perhaps no retailer out there believes that more than Target. They want to control every major touch point for their brand (and quite a few minor ones as well) and make moving among those touch points as seamless as possible for shoppers. Delegating chunks of brand execution to a third party can make brand impressions seem disjointed, and at some point Target decided that having a third party (and a competitor at that) owning and running a big portion of its strategy represented too much risk. Retail suppliers, too, are being challenged to manage a delicate balance: Being a resource to retailers without crossing the line into being perceived as a risk.
Whether you work with Target or not, retailers’ visions for their websites extend far beyond being a sales channel; retailers view them as a critical connection point that completes the “conversation” loop with shoppers. As we've blogged before, retailers want you to participate in their online marketing initiatives, not just to sell products online, but to drive store sales and brand awareness as well.
One man's knockoff is another’s “brand lifecycle." A retailer brings in your high-equity national brand to get a category going, and then switches the same items to a private label once they do. These days, that’s not a knockoff, it's a fairly predictable brand lifecycle scenario. The same holds true for technology platforms, service models, sales organizations . . . Third-party-to-in-house transitions should be anticipated and leveraged, not feared and denied. In the case of Amazon, Target’s less than 1% (or up to 3% depending on who you ask) contribution to sales is a drop in the bucket. As a supplier, you should have a handle on YOUR exposure at all times . . . and a plan for the next "in-house" transition, whether self-initiated or foisted upon!
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