It’s no secret that Amazon.com, Inc. (NASDAQ:AMZN) and its ubiquitous online presence have changed the retail industry forever. But AMZN won’t quit beating up on its competition, and the decision by Target Corporation (NYSE:TGT) to shutter its flailing online video service, Target Ticket, only underscores that fact.
AMZN’s remarkable growth, fueled by its aggressive dominance in all things e-commerce, has come at the expense of big box retailers like TGT and Wal-Mart Stores, Inc. (NYSE:WMT), each of which are currently struggling to grow revenue, even at low, single-digit rates.
Target Ticket: No Match for Amazon Prime Video
Target Ticket, launched in the fall of 2013, was a horrendous idea from the beginning. TGT somehow believed it could enter and compete in an arena already dominated by Netflix, Inc. (NASDAQ:NFLX), Amazon Prime Video, and Hulu.
Target Ticket was the company’s ill-fated attempt to lure its customers away from the warm embrace of AMZN, its popular streaming video service, and, of course, its endless catalog of goods for sale.
Even Redbox — owned by Outerwall Inc (NASDAQ:OUTR) — couldn’t keep its online streaming service viable, despite partnering with Verizon Communications Inc. (NYSE:VZ), the largest telecom company in America. Redbox Instant also launched in 2013, but realized the unfavorable economics of competing with AMZN and NFLX far quicker than Target did, killing the service on Oct. 7, 2014.
Five months later, AMZN is enjoying a hearty laugh at the TGT decision to finally pull the plug on Target Ticket. The service will meet its maker on March 7.
If you’re one of the dozens of Target Ticket subscribers who’ve actually bought (instead of rented) movies and TV shows, don’t worry. You’ll still be able to watch your purchased content after March 7, thanks to a deal Target struck with CinemaNow.
Target’s Fresh CEO: Forget AMZN, Let’s Get Back to Basics
Target CEO Brian Cornell, according to the The Wall Street Journal, wants to refocus the company “around offerings like housewares, baby products and fashion.”
You know … the stuff that actually makes sense for Target to pursue.
Cornell also wisely decided to end Target’s Canada experiment, which the company figured out wouldn’t turn a profit until 2021. But make no mistake, AMZN is the massive thorn in Target’s side, not TGT’s whimsical venture into Canada.
Consider this: In 2006, Target posted revenues nearly 10 times larger than AMZN. In 2006, AMZN revenue came in at $5.9 billion. The same year, Target logged $59.5 billion in sales. By 2013, AMZN had eclipsed Target, selling $74.4 billion to Target’s $73.3 billion.
Moreover, in 2006, Target grew sales 12.8% year-over-year. After growth slowed to 6.2% in 2007, it kept slowing, and sales growth hasn’t been above 5% since. In the 2014 fiscal year, TGT actually saw sales decline. AMZN, on the other hand, grew its sales by about 20% last year.
Jeff Bezos just can’t stop — and he won’t stop.
Target executives probably lost their minds when Amazon recently decided to start making its own line of diapers. (“Baby products?! That’s our area!”) Thankfully for the babies of the world, Amazon ditched the diaper idea less than two months after its launch.
While I applaud both AMZN and TGT for knowing when to abandon a project, the Target Ticket failure is the least of Target’s problems. The elephant in the room is Amazon’s relentless and successful efforts in e-commerce, which won’t stop anytime soon.
Unfortunately for Target, that’s one horror movie you can’t turn off.
As of this writing John Divine held no positions in any of the stocks mentioned. You can follow him on Twitter at @divinebizkid.
