Did Amazon Indirectly Bring Down Target?

Back in 2001, e-commerce was a really big word; in 2014 it is really big money.

The problem in 2001 was, how were all of these retailers going to get online? Few of them had any real expertise in selling online. Both the market and the technology were new and challenging, yet none could afford to ignore it, or even wait too long.

Target appeared to have the fast and easy solution. While others went to the pain and expense of building out their Web presence – purchasing servers, leasing data centre space, hiring digital marketing experts, retaining consultants – Target leveraged Amazon. Through its 2001 partnership, Target essentially gave over its Web site to then (and now) e-commerce expert Amazon.

The deal seemed to make a lot of sense. Target would gain Web presence, servers without paying for them or even thinking about them. It didn’t need teams of Web developers or systems administrators, no server deals with HP or Dell or Compaq, let alone the intricacies of Cisco routers or CheckPoint firewalls. Target could focus on what it did best, and let Amazon carry water for them.

The deal lasted for 10 years, until parting ways in 2011; ironically, Target’s launch started with… an outage.

Or perhaps not so ironically. By the time 2011 rolled around, most other Web retailers had earned their spurs, and learned the hard way how to build, market, operate and sell online, in an environment full of risk and hackers. Target, on the other hand, was missing 2 crucial elements to long-term success… elements it had outsourced to Amazon:

  • Knowledge: Far more important than servers and software is knowledge. You can buy infrastructure – although it takes real time to set it up – but you cannot easily buy knowledge. Even hiring experts at a premium only gets you so far.
  • Culture: Target became a culture in which Web and technology savvy were secondary. After all, it was not a core in-house business driver for the crucial crucible decade of 2001-2011, and it did not have a major impact on executive decisions through then.

Given the lack of knowledge and weak culture, is it surprising that Target was unprepared for a serious breach in 2013, less than two years after bringing it back in house?

Before outsourcing its operations in the crucial Web space, Target should have evaluated not just how painful it would be to do, but how crucial this knowledge and culture would be to its long-term. And then it should have kept it in house and learned.

Target paid Amazon to go through boot camp for it, and then got shot at in the field. The training is there for a reason…

About Avi Deitcher

Avi Deitcher is a technology business consultant who lives to dramatically improve fast-moving and fast-growing companies. He writes regularly on this blog, and can be reached via Facebook, Twitter and avi@atomicinc.com.
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