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Target, Unhappy With Being an Amazon Showroom, Will Stop Selling Kindles

Maybe it doesn't matter in the end to the Amazon steamroller, but this seems like a good case of "what goes around comes around".

From the article:

"Like other big retailers, Target has been trying to figure out how to
stop Amazon shoppers from visiting Target stores to check out
products, and then buy them online from Amazon. It is a practice
encouraged by Amazon; over the Christmas holiday, for example, the
company offered a promotion on its Price Check app that gave shoppers
5 percent off any item scanned at a store.

"Now that retailers like Target are aware of this so-called
showrooming, carrying Amazon’s Kindle is a little “like Starbucks
selling Dunkin’ Donuts gift certificates,” said Michael Norris, a
senior analyst for Simba Information."
IMO, it's a natural competitive pressure for companies to face internet comparison shopping by consumers. But it's entirely another for Amazon to actually run promotions encouraging them to shop in other people's stores, but then buy on Amazon, as they did last Christmas.

If you think about it the right way, it's a kind of "theft of service." The retailer with the showroom is in a tacit exchange with the customer: We will provide you with this amenity - the chance for you to lay your hands on the goods and take a look at them - in exchange for the chance to sell them to you.

As I wrote in my 2003 piece, "Buy where you shop" (http://tim.oreilly.com/articles/buy_where_shop.html), if consumers break this bargain, they ultimately won't have the showroom to go to. That's short sighted. But when one retailer, like Amazon, urges customers to use a service funded by a competitor but not to pay for it, that's sleazy, especially when that other retailer is a partner.

I always think of something Walt Mossberg once told me he'd said to Microsoft: "If you guys would dial back the greed just 5%, everyone wouldn't hate you so much."

It's that last extra squeeze that makes people turn on you. Right now, Amazon is still a darling of consumers (including me), but if their business practices are any indicator, their future is less rosy.

I have such mixed feelings about Amazon, Jekyll and Hyde that they are, incredible visionary value creator and hyper-competitive boot-heel in the face "partner."
Target has been trying to stop Amazon shoppers from checking products at Target stores and then buying them from Amazon.
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69 comments
 
I'll be honest, Target can't really say much about their "service". The only "tacit exchange" you get is that you can look at the object in person in their store. I personally don't think setting up a warehouse with nice sectioned shelves is quite on the same level of service as having an employee actually help you find what you are looking for, then you go buy it online. But that's just me. I don't generally go to stores to look at stuff before I buy online. With most day to day purchases stores have one major advantage over Amazon anyway: instant gratification. Doesn't help much in the Xmas season, though.
 
I don't know why does Amazon think that they can do something in a physical world which they'd never do in the virtual world. If they didn't pay their web affiliates percentage of items sold, nobody would be their affiliate anymore. But when it comes to brick & mortar store, suddenly everything is allowed.

Good thing for Target to stood up against their tyranny!
 
I have been wondering what will happen to retail of all sorts when internet discounters drive their free "IRL" showrooms out of business.
 
Amazon still a darling? Not for me. (Wikileaks.) And yes, that's pretty sleazy.
 
Anyone have any figures on how much this is projected to hit kindle sales? 
 
Core issue - sales tax treatment of Amazon vs. bricks and mortar.
 
I get the sense that Amazon would be more than happy to see all the walk-in stores go away & they are left being the only source of goods.
 
Sorry, Tim, but faulting Amazon for "(urging) customers to use a service funded by a competitor but not to pay for it, that's sleazy, especially when that other retailer is a partner?"

You're right. That would be encouraging de facto theft. Now if you could point me to the page on Amazon where such urging takes place, I'd appreciate it. :)

Here in the 'burbs I have lined up in one center a Target, a Best Buy and a Staples all in a row. I wanted to buy my daughter a Kindle for her birthday. (Don't tell her. It's tomorrow.) All three stores have Kindle Fires on sale. I would probably have bought it at Target but knew they had made this decision so I went to Staples instead. (I wanted to check out the Nook as well.) I ended up buying it there along with $30 worth of school supplies.

I'll probably spend another $100 on books to load into it. Amazon doesn't care where I bought the device. They just want the high-margin downloads.

If Target wants to sell only Apple stuff, and deny me any cheaper options for tablets in their stores, that's their choice. It's mine to shop elsewhere. I don't need Amazon to urge me. The selection and price are all the urging I need.
 
I hope they first offered to make a STRONGER partnership first. Amazon and Target could both benefit.
 
I looked at a Kindle in store about 1month ago and the display was hideous. I can't understand why anyone buys them. For serious reading you need real paper and real ink.
 
If Target is selling the Kindle products and making a profit, why should they really care how many used them as a showcase? I bought a Kindle Touch in March at Target after playing with a few models there. I loved the opportunity to try it out and decided to reward Target for it.

At the end of the day, it's about whether it's profitable, not how profitable it "could" be.
 
Well I hope the brick and mortars don't start using your "theft of service" language. Calling your customers thieves doesn't go over that well.

But your point is well taken.
 
+Aaron Smith , I think the point is that people are looking at ALL products, not only Kindles, and THEN buying them directly from Amazon (thus skipping paying tax).
 
Next week, I'm going to go to a Verizon store and check out some phones. I'll probably buy the one I want from Amazon. There's nothing sleazy about it. I'll probably tell the Verizon salespeople that I'm going to do it. It's nothing like stealing. Brick and mortar stores let people come in and check out their items and prices for free. There's no condition that the stores put on customers that requires them to pay anything to look at them. If Target wants to stop people from doing that, they should change ther business model.
 
Sportsman's Warehouse posts large, vaguely threatening signs at its entrances warning that the use of mobile devices to scan items is disallowed. I cannot imagine what they would do if you were caught at it, since none of it carries the force of law.
 
I think all retailers should have the same tax obligations. Once that is fixed, vigorous competition between online and brick and mortar is good for everyone.
Also, more competitors is better than few competitors. That is why I buy my ebooks from Barnes and Noble and not Amazon.
 
+Roger Weber I think the logical conclusion is one of two things:
1. Amazon and other online-only retailers will drive B&M stores out of business and be forced to create B&M extensions of their businesses to meet the demand for 'hands on' demonstrations and such, or (probably more likely)
2. New, smaller, lower margin B&M stores will pop up that sell the items just like today but at a slightly higher price than Amazon -- say, Amazon + shipping (+ tax of course). Then the convenience of buying in store is on par or greater than the (slightly) lower online price before shipping (and potentially taxes).

If I were to create such a retail store I'd take it one step further and give customers the option to order it from Amazon at the store for convenience. They can try it out, price compare, and choose to buy it there (possibly with some extra benefit like an awesome return policy) or order it online.

The best business model is the one that can adapt.
 
I'll bet that mentality from Amazon wouldn't be a problem if Target had negotiated a decent margin on Kindle sales with a competitive price. Or possibly a cut of all Amazon eBooks sold to that devices unique id.
 
If Target feels that way, they can charge a 'membership fee' like Sams's, Costco, or BJ's.
 
Target is looking at this the wrong way, frankly. Amazon is doing them a favour by essentially advertising their showroom and directing people to them. Target then has the opportunity to sell me all sorts of things while I am in their store to check out a product from Amazon. Sure, there is the chance that I might buy nothing there and still buy from Amazon, but equally, there is a real chance I'd never have been in their store otherwise as well. I think Target could use this as a strategic opportunity by reversing the stakes on Amazon ... perhaps by offering a discount from the Amazon price of any item the customer is in the store to look at. Again, any time a "competitor" directs traffic to your store, at WORST you should see it as increased traffic and an opportunity to sell to that traffic.
 
Great points, and I have to admit to some sense of guilt when shopping and then comparing prices afterwards. At least I avoid doing it in the store.

My desire to buy where I shop, however, if much, much greater at local mom&pop stores, or small regional chains. To be honest, it's hard to have too much sympathy for Target and Walmart. Aren't they just offering massive retail with a soulless, cost-efficient methodology? It's hard to be loyal to a a chain, versus an actual store.
 
+James Wester and +Elron Steele I totally agree. Who goes to Target, massive store with a massive parking lot, to look at one thing and buy nothing? At the very least I would walk out with a few items I needed (the usual shipping list) for having had to spend the time just getting into the store.
 
Maybe Target will hire some geeks to cook up a replacement Android rom for the Kindle Fire. Offer Target customers 5% discounts on their entire shopping trip, if they bring their Fire in to get re-flashed with the Target build. Considering that Amazon is reportedly selling those tablets at a loss, it'd be quite a way to turn the tables. ;-)
 
maybe they shoulda bought some AMZN stock, duh... ;)
 
When I see something expensive I want at Target, I pull out my cellphone and read amazon reviews. If it was not for reviews, I would not buy many things in stores. It goes both ways, though someone could measure the flux and see who is winning.
 
How is Amazon encouraging people with discounts for scanning any different than, say, the Sears ad running in my area claiming to match competitors prices and offer a $100 gift certificate if Sears' original price was higher?

Aside from there being much less footwork involved, I have a hard time criticizing Amazon for doing their own version of what other retail stores have been doing for years.
 
People have always priced shopped. Today we can do it more effectively. Amazon's infamous app is just the latest example. Yes Amazon can undercut Target in some cases, but Target often undercuts smaller retailers.

As for the issue of taxes, retailers might want to be careful what they wish for. If Amazon can be forced to collect taxes for States, counties, and possibly even cities. How long until high tax states like California and New York decide they want the difference in sales taxes for items their resident purchase across state lines, county lines, or city limits?

Current law already requires this at the state level, but it is self reported and very few do it. Certain big ticket items like automobiles already require this. You pay tax when purchasing your car, not based on where the dealership is, but on where you live.

If Amazon shows calculating local taxes on purchases based on your address is possible, I predict cash hungry legislatures will see it as a new stream of revenue.

I wondered if Amazon will not offer this tax "calculation" or even collection as a new service for business customers. Even a small fee on each transaction could bring in lots of money.
 
RE barcode scanning: even iOS has a great many apps for scanning barcodes at retail outlets to find a better price elsewhere. This isn't a battle between Target and Amazon, it's between old-world retail models and the present in which customers are simply more well informed.
 
That's what happened to the bookstores. Customers come in, check out the book, buy it online and leave the store. Guess what, no more bookstores.
 
One of Target's advantages in this situation is immediacy. If I've actually GONE to the store to check something, they have a huge opportunity to sell me that item NOW, instead of me having to wait for shipping when I buy from Amazon. Rather than whining about the loss of traditional market-share, they should be looking for ways to exploit the fact that Amazon is sending wallets to their store, where they can offer product and service immediately.
 
I was in Target this past weekend and noticed iPads where the Kindles once were. It led me to believe that it was less about Amazon and more about Apple feeling the heat and strongarming out a competitor.
 
Cool, one fewer reason to even go to Target.

If you sell things at a B&M store, you need to make people come to your store first and foremost, and make the sale when they're there. If they come to shop around, show them something that convinces them to buy something while they're there.

But telling people to not show up at all, because you don't even carry the products people are looking for? That probably won't help you out in the long term, even though it must be tempting to flip the bird to Amazon.
 
This may be considered sleezy tactics by Amazon but I think they are just playing on what people tend to do anyway. Long ago before the internet market really took off I used Best Buy the same way. Their prices were insane I could rely that they had the electronics product so I can go in and demo it before shopping around for somewhere cheaper. I think Target just needs to evolve their marketing techniques rather than stop the product line.
 
Amazon's move did feel a little sleazy. However, I often research products on Amazon (easier to find and get info and reviews than on, er, retailer sites) and then buy them in a store, especially when I want a product now. So showrooming goes both ways. Of course, the physical showroom no doubt costs the retailer more than Amazon's site costs Amazon, though Amazon's site and infrastructure costs are not zero.

Anyway, I couldn't help having a bit of fun with all this: http://www.forbes.com/sites/roberthof/2012/05/03/target-customers-barred-from-researching-products-on-amazon-com/
 
So Amazon got customers to walk into Target stores... and Target is upset? Take advantage and sell them something when they stop in...
 
Interesting. Yesterday I was in a Target. I saw a few Kindles there, (display units.) I got the impression that they did not want to be there. Funny same for the Nook units.
 
+Tim O'Reilly I actually fully agree with you, it feels wrong and parasitic in a way... but, just to gut-check, I asked myself if I ever do the reverse, and I do.

When I've needed a product somewhat quickly (like, same-day), I've gone online, read reviews (including on Amazon.com, since they have a pretty healthy set of customer reviews), and then driven to the local Best Buy to pick up whichever product I elected to buy.

Funny how on one hand, I'm very sympathetic to the cost of stocking and lighting this giant square-footage retail establishment, and quick to judge Amazon for parasitic behavior against it... but somehow it's easier for me to dismiss the cost of operating the web site and collecting all the reviews, when I do the reverse.

I think what you said is right though, because it works both ways: buy where you shop. If Amazon is providing me the valuable service of having collected all the reviews, maybe I ought to have completed that transaction there.
 
And strangely enough Target and Best Buy are owned by the same holding company and that is from the Twin Cities area.
 
The tougher question is what should I do if I needed both to make my decision? Eg I needed to hold the product in my hand to assess if it looked durable enough (or whatever) but I also heavily relied on the reviews I read on Amazon. It's not so cut and dry then...
 
I'm just as guilty of doing my research at Amazon, then going to the B&M store to see the product live and buying it there. I may be the exception, but it seems like this issue goes both ways.
 
Most of these commenters are more concerned with price than anything else. If that really is the case, then I suggest you buy your products directly from the manufacturers and cut out that Amazon middleman.

Amazon has several selling points: a wide selection, product reviews (both customer and non-customer), and searchability. Yes, their products are cheap, but they are a warehouser, not a retailer. Perhaps you should consider the effects of shopping by price alone, as this book describes:
http://www.amazon.com/Cheap-High-Cost-Discount-Culture/dp/0143117637/

As the adage says, you get what you paid for.

I like retail stores, because I can check the product out, and I can buy it immediately. And isn't that why people move to big cities--because everything is there?
 
In the UK I often find that I have no mobile reception when visiting Tesco, Sainsbury, etc supermarkets. I've always guessed this is to stop online price comparing? So I wonder if Target is just being more open in its policy?
 
I think that's just coincidence, +Eddie May, indoor reception just tends to be pants in large stores and even if they could block phone signals they'd court trouble if they did. 
 
+Kim Aldis you're probably right, since they are just large metal boxes for the most part.
 
I love shopping at Target; they have so much stuff in one place. However, their selection is not always that great, and the red-shirt stockers (if you can find one) don't usually have any in-depth knowledge about the products.

I've also noticed how my phone's reception drops to zero as soon as I enter the store. Not true at other big box stores like CostCo, BJ's, and Walmart's. Suspicious.

I think if Target were making a good margin off Kindles, they wouldn't have dropped them. No retailer in his right mind is going to discontinue a profitable product, even one that allegedly helps shoppers order over the internet instead (a questionable claim at best).
 
It is wrong to litter. It is wrong to shop at Walmart. It is wrong to use physical stores as showrooms for online competitors.

That said, I have frequently looked at Amazon on my cellphone while at a physical store. I do it to get more information on product specs. I do it to read user reviews. But I don't then order the product online. If I am in a store it is because I want to buy now.
 
You mean why are they all done in overstrike? Good question. Perhaps Google Plus has an online editor who took insult at that.
 
+Paula Luciano Google+ has markup! If you surround text with hyphens or asterisks or underscores you'll get neat results.

I prefer traditional forest-depleting books, too, but I love reading on a tablet on my elliptical machine; otherwise it's too dark to read, and the pages don't stay open, etc. It remembers my place, and I can whip out my smartphone in the waiting room at the dentist's and pick up where I left off on the kindle or ipad, and so forth. My mother, in her eighties and with macular degeneration, can read much more easily with her Kindle, and in fact says it has tripled her reading speed.
 
Thank you Terry, that is an interesting one.
 
I have purchased two Kindles. (Both gifts, still only have Kindle app on my phone.)

One I bought online from Amazon. The second at Target.

I won't buy a Fire, not the product I want...but I did play with one at Target. Background research, and maybe it would have convinced me otherwise. Maybe I would have eventually bought it online.

I guess I do very little "shopping", rather if I have something to buy I buy it. Very un-American of me. Were I to go to stores as recreation, then it would be harder for me to segregate my brick and mortar shopping from my online shopping.
 
+Aaron Cole I tend to disagree. What drove me away from bookstores was the lack of selection. It started with the magazines (cutting out science and science fiction in favour of additional titles in topics already covered). Then they stopped carrying much in the way of anthologies. Finally, they shifted their focus to yet another edition of Lord of the Rings, Foundation, etc. while virtually ignoring non-blockbuster new works. One local store (McNally Robinson) seems to be the lone exception and they continue to thrive.
 
The tide is already turning on Amazon...with their tax collection for the State of Texas come July 1st, their "value" in the Lone Star state dwindles. I think the love affair with Amazon will end faster than most might think.
 
+Nicasio Martinez Until recently, Amazon ran the Target website. They were partners in this, while urging Target customers to go instead to Amazon using the Amazon Price Check app.
Scot B
 
Great point of view as always. Thanks Tim!
 
I stopped using Amazon in any way a while back after the "one-click" kerfuffle. That showed me where Amazon's business ethics were right away. This newest denouement should surprise precisely no one.
 
When Target moves into a market no one laments the local retailers that made it possible and lose their businesses as a result. Target is a victim of a newer form of retailing as were the mom and pop stores that they destroyed. I am having trouble tearing up about it.

It is evolution applied to the marketing channel. Evolve or perish.
 
Just because Target applied competetive pressures that Mom & Pop were not equipped to withstand doesn't make it right for Amazon to do as they did.

They entered into an agreement with Target to allow them to market an Amazon product, and, instead of treating them like a partner, they act as though they are a competitor? I'm not tearing up about it so much as just not being too surprised at it, given Amazon's past history of asshattery.

Want a good book reader? Get a Nook tablet, jailbreak it, and put Gingerbread on it. Then get your books from a DRM-free publisher like TOR or O'Reilly.
 
target could:

1. Sell the Kindle at Target stores for LESS than it sells on amazon
2. Encourage people to scan items on amazon and buy them at Target
3. Offer Archer Farms products on amazon
4. Invent and sell their own eReader the Target Tinder
5. Insist on unique product codes for Kindles sold in Target stores that did not match Kindles on amazon

...or many other business-competitive things. But instead they chose to whine like a baby. I think that was not their wisest business choice.
 
I've been a Kindle user since the beginning - went to buy one for my dad at Target last year, but they ONLY carried the model with ads. And nobody in the store had any information about them at all. So yeah - I'd rather buy from Amazon.
 
Target could tell Amazon to pack their s--t and git, too. Seems like that's what they did, and it's probably because they feel it will have more impact on Amazon's business practices, especially if other businesses take note of what's happening here and decide they're better off not doing business with a "partner" who will gladly stab them in the back for a lousy percentage.
 
i like amazon, but i don't get this. a lot of times the retail stores aren't more expensive than amazon. and with gas prices these days if you drive somewhere to scan prices you might as well buy it there since your savings just vanished with the gas you burnt.
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