Amazon's E-Commerce Technology Is On Target

Target Corp. last week unveiled a new Web site--yet another case study in how Amazon.com Inc. has become a provider of E-business services. The new site, built on Amazon's technology and hosted by the online retailer, is the first end-to-end E-business deployment Amazon has done for another company, but it may not be the last.

Amazon already has engineered less-ambitious projects on behalf of Toys "R" Us Inc. and Borders.com, both of which have shifted their online stores to the Amazon site. Its relationship with Target, disclosed in September, goes deeper. Not only is Target's online store hosted and maintained by Amazon, but Target also has an electronic store on the Amazon site, and it's planning to launch another on Amazon for one of its retail properties, Marshall Field's.

Amazon is providing Target with its proprietary search engine, order-fulfillment and customer-service systems, and one-click shopping application, which lets customers pay for merchandise selected from the Target, Marshall Field's, and Mervyn's sites via one electronic shopping cart. In exchange, Amazon gets an undisclosed percentage of all sales from Target's retail sites, as well as annual fixed fees, an Amazon spokeswoman says, adding that the company wants to leverage its E-commerce expertise through similar arrangements with other companies, too.

Amazon isn't the first nontech company to take its technology know-how to market, but it has a distinct advantage over E-business services specialists such as Scient Inc. and Viant Corp. when it comes to delivering E-business services, says Ken Cassar, senior analyst with Jupiter Research. "An operating company has not only designed and implemented the technology, it's lived with it," he says, adding that "in difficult times, everyone is going to try to maximize revenue any way they can."