Why Target Would Want To Kick Amazon Out

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According to a leaked memo acquired by The Verge, retailer Target is instructing its staff to remove Amazon own-branded hardware from its shelves. That means the Kindle suite.

Target's memo says simply that it's reviewed its product lineup and decided not to carry any further Amazon hardware. Stock will be replenished through May 13th, Mother's Day, and the memo notes that the Kindle Touch will be in an ad campaign for the week of May 6th. Staff are instructed to follow best practices to "remerchandise" remaining stock, and to explain to customers who ask that it's all just part of the normal flow of business, continually evaluating products they stock and so on.

A swift and decisive halt, then, carried out even as the store tries to maximize customer interest and, of course, its revenues by popping the Touch on an ad promotion just before Mother's Day. The Internet has a pretty clear idea of why Target is doing this, and it comes from Target's own words: The move is due to a "conflict of interest." That conflict is Apple.

Target and Apple got all chummy with each other recently to launch some of those in-store "mini" Apple stores—also seen in other U.S. retailers and big-box vendors elsewhere around the world. No matter that Amazon's Kindle Fire has snapped up over 50% of the Android market in the U.S., Apple products are selling like crazy right now—and for higher price tags. They also have an identifiable cachet which will attract customers to Target stores where—whadya know?—they may spend a little extra cash on other items too. That is to say: any one of the hundreds of iPhone, iPad, iPod and Mac accessories. Ironically, Target's keeping Amazon-compatible accessories on its shelves for exactly this reason: They may be impulse purchases, ensuring stores like Target get a steady dribble of cash from low-value items sold in bulk.

Would Apple have insisted, though, that Target only sell Apple's tablet devices (and other hardware) because Amazon is aiming squarely at Apple's markets in tablets, music, video, and so on? It's not beyond the pale. Apple does, after all, have a thing about controlling the market space.

As an interesting counterpoint, it's common in Europe to see an in-store mini Apple store right alongside a shelf of rival tablet PCs from competitors, which could be a hole in this logic. But the Kindle isn't really a presence among these devices because Amazon's taking ages getting its international thinking straight, and while there are a ton of peer tablets, none is quite as much a "threat" as the Kindle (at least, right now).

And if it is an Apple dictate that Kindles don't get sold alongside its precious tablets, then there's one very good reason Target could be persuaded to go along with it. It's because Apple isn't a threat to Target's business model in quite the same way that Amazon is. Amazon has oft been credited with the death of the physical bookstore, and nowadays sells all sorts of equipment and hardware that are typical Target stock. So much pressure on prices and convenience is exerted by Amazon that it may be one of the main factors behind Target rival Best Buy's decision to close many big-box stores and totally alter its strategy. And while Amazon just needs efficient, low-staff distribution centers, Target needs a whole infrastructure, sales staff, and space. It can't afford to "pile it high and sell it cheap" in the same digital way Amazon does.

Target's just trying to avoid Best Buy's fate. Or perhaps it also thinks e-readers aren't the wave of the future.

[Image: Flickr users Team TravellerTony Buser]

Chat about this news with Kit Eaton on Twitter and Fast Company too.

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1 Comments

  • Doug Stephens

    Great article Kit.  I think you're right in saying that this move by Target has much broader motivations than merely which tablet line-up will sell through best.  Target recently issued a letter to all vendors essentially reading them the riot act as it applied to Amazon and making it very clear that they would not tolerate being price compared on identical items.  There's no question that Target, who's customer's tend to be a little more web-savvy than Walmart's, views Amazon as a massive threat.  Yet Target also lack's Walmart's scale and resources to fight back against Amazon.