Amazon buying Target? Not likely in 2018

Check back in 364 days for a full evaluation of all the predictions for 2018 but — spoiler alert — most of them will be wrong.

Probably included on that list is Loup Ventures’ Gene Munster, an analyst who predicts Amazon will buy Minneapolis-based Target this year.

“Amazon believes the future of retail is a mix of mostly online and some offline. Target is the ideal offline partner for Amazon for two reasons, shared demographic and manageable but comprehensive store count,” Munster wrote in a note with his predictions this week. “As for the demographic, Target’s focus on mom[s] is central to Amazon’s approach to win wallet share.”

The post was full of good reasons why Amazon would want Target, but nothing much to justify why Target would want to throw in with Amazon. And by “nothing much” I actually mean “nothing at all.”

In time, maybe Amazon will be successful at killing off retail, but it’s not likely to happen in 2018, at least not until Target takes on Amazon head-on, which last month’s deal to buy a same-day delivery service indicates is happening.

Target bought Shipt for $550 million and while it’s unlikely Target can out-Amazon Amazon, a company doesn’t throw a half-billion dollars away if it considers selling out to Amazon a possibility within the next 12 months.

“The fact that Target will have this service in place during 2018 will significantly improve its online competitive position,” Charlie O’Shea, chief retail analyst for Moody’s, tells CNN. “This is yet another example of a brick-and-mortar retailer leveraging its physical assets to improve its online offerings.”

Not that the gamblers aren’t taking a chance on the possibility. Shares of Target stock is up 3.5 percent today.

  • MrE85

    It feeds into the “bricks & mortar retail is dead” meme, but I also have my doubts.

    I have some limited investment in Target, so the stock rise is welcome news.

    • Kassie

      I welcome the change as it gives me more options for buying my things online. I hate using Amazon almost exclusively, but they are fast, easy and cheap, so I do. That said, the reason I don’t go to Target is because it is too busy, so I don’t think they are hurting much.

      • MrE85

        Regarding business at Target, I think Yogi Berra said it best:

        “Nobody goes there anymore. It’s too crowded.”

  • Zachary

    what’s the odds on Disney buying Target then?

    • QuietBlue

      Why would they want them?

      • Zachary

        A – since many mouse-branded goods move through Target, owning both ends of the supply chain is advantageous.
        2 – they don’t own them yet.
        And finally,
        D – whythehecknot? They certainly could.

        • Jack Ungerleider

          Option Z – They seem to be buying a lot of things lately.

    • RBHolb

      Would they do better at crowd control? My rants about the other “guests” at Target are legend in my family.

      • Zachary

        maybe they will give you a wrist band that has your check-out time pre-scheduled?

        • RBHolb

          Which is fine, except that the person ahead of you will wonder why the check-out system does not honor the coupon for 15 cents off a package of paper plates, the light will start blinking, and you spend the next two hours waiting for someone to straighten the whole thing out.

  • RBHolb

    Like most of us (I suspect), I do a combination of online and brick-and-mortar shopping. Online is for routine items that I’m not too particular about (e.g. dog waste bags), for deals that are too good to pass up, or for hard to find or obsolete items. Brick and mortar is for everything else. Written descriptions are not going to substitute for seeing something live. There is also the satisfaction of the serendipitous find that an algorithm is never going to provide (“Hey, this looks cool!”).

    Never say never, but it’s hard for me to see how online shopping will ever completely displace brick and mortar. There are too many reasons why ordering something from a distance and getting it delivered sometime later (however quickly) will always satisfy the consumer. I have no doubt that online will continue to expand, but not to the point where it approaches 100% of the market.

    • John

      I think online has expanding potential to destroy big box and big grocery stores, where the serendipitous finds are less and less, as more of their stock is the stuff that computer algorithms determine sell well. If I can plunk an order in at Target or Amazon (or wherever) and have my routine stuff at my door in an hour or three, that’s 1-3 hours that I won’t be wasting driving, parking, wandering the aisles, standing in line, driving again.

      As you said – the serendipitous finds are satisfying. That’s where I see small, independent, shops having a better go of it in the future.

      Personally, I think the corner hardware store, boutiques, drug stores, etc. are poised to come back as the Targets, Walmarts, Best Buys, and Amazons of the world become more online. You can’t trust the online reviews now, and returns are a serious hassle when you mail order. That’s where smaller places will exist and excel. Good product and customer service.

      Unfortunately, that will likely only work in population centers above a certain size, where there are enough people willing/able to pay the price premium for known quality products. Walmart showed us a long time ago that Americans confuse “cheap” with “good” all the time.

      • QuietBlue

        Your point about algorithms and big-box retail is a good one; merchandise curation seems to be a dying art at big retailers and is one area where smaller ones definitely have an advantage. It doesn’t help that the big boxes tend to treat categories as interchangeable — a Target buyer might go from buying pet food, to auto supplies, to frozen pizzas all in the span of five years. Nobody can master three different businesses that fast, yet it’s what they try to do.

      • Postal Customer

        Amazon returns aren’t a hassle. In fact it’s easier than driving to a store.

        I package up the item and drop it in a UPS box in the skyway near my work. Easy for normal-sized items.

        • John

          I don’t have a skyway or a convenient UPS box. I typically need to go out of my way to a UPS store to make it happen. Sometimes that takes me months.

          • QuietBlue

            Some returns can also be done at Amazon lockers, which are becoming more numerous.

    • Kassie

      Some people just like shopping. They like talking to people and crowds and touching the things before buying. I mostly hate all those things. Just like there are people who really like reading physical books, or playing board games over video games, or talking to their spouse over texting them.

      I find myself buying more and more things online. This year I expanded into groceries, though the temp is too cold to leave them out on the porch for 8 hours right now. I bought a Roku and got 2 hour delivery when the dog ate mine earlier this year. $5 bucks for 2 hour delivery is worth every penny of not having to walk into a Best Buy. I do a subscription box for my clothes, so no need for clothes shopping anymore in store. I still like locally owned gift shops, and I’ll buy the washing machine we need this week in store, but more and more I’m online shopping.

    • wjc

      Before Christmas, I was standing in a Barnes and Noble looking at cookbooks to buy for my wife. Then I pulled out my phone and looked for the same items on Amazon. The two books of interest were both half the price on Amazon with 2-day free shipping (Prime). It was not a difficult decision.

      • Kassie

        Also, selection isn’t as good. I wanted a physical copy of War and Peace and B&N didn’t have the translation I wanted when we were there this weekend. Amazon did, of course. The pants Jerry wanted weren’t available in his size in the store, but they are online. And as a plus sized woman, finding clothes is hard, but Columbia, REI, Old Navy, Target all carry clothes that are my size online, but not in the stores.

      • Postal Customer

        B&N won’t even match their own online prices.

        • QuietBlue

          Yeah, as much as I want to support B&N (I have a membership), they keep doing things like that which sometimes discourage me from doing it. Another example is how the discount and coupons they send out seem like great deals, as long as the things you want are actually covered by them, and it seems like many things aren’t.

          • wjc

            Yes. We are probably going to drop the membership, since it is not valid on eBooks (which we both prefer).

          • QuietBlue

            I just re-upped mine, so I’ll see how it goes this year, but I don’t know about beyond that.

            They’d be better off with a program that provides a smaller discount for everything than one that provides big discounts for specific things (and, as you mentioned, doesn’t cover categories that are becoming increasingly important). That’s why I like Target’s 5% REDcard discount — it applies to everything, all the time.

    • Joe

      Buying online can also be slow and frustrating. I bought 3 things on Amazon on Dec 19th. I don’t have Prime, and didn’t pay extra, so I knew that they might not arrive in time for Christmas, which was fine, because we were celebrating late with my family (Dec 31).

      But none of it has been delivered yet, and none of it has even been shipped. We’re going on day 14. In addition, Amazon just informed me yesterday that actually they ran out of one of the items, and won’t be shipping it. 13 days after I ordered it!

      When I go to Target, the item is either in stock, or not. I don’t have to buy it, wait 13 days, have parts be cancelled, have others still in limbo, etc.

  • wjc

    The one reason that Target might want throw in with Amazon is money. If shareholders get a premium price for their shares, company directors might feel like there is no choice. Take the money and run.