The likeliness of such a deal occurring depends on who you ask. Amazon and Target share customers to a great extent, considering Amazon’s Prime membership overlaps with Target’s higher income, better educated core customer, according to marketing consultancy Magid. But Amazon would need to dig deep to determine whether Target’s operations are worth the expense, according to Jim Fosina, CEO of Fosina Marketing Group.
“Amazon would need to understand what the current Target customer provides in terms of incremental shopping visits and whether they can gain in terms of the number of products in the Target shopping cart vs. the Amazon visit,” Fosina said in an email to Retail Dive. “Are the Target customers more frequent shoppers with larger carts than the same shoppers when they shop with Amazon? The size of cart and transaction plus the frequency of shopping visit and margin on aggregate number of products per visit is really the determining factor.”
An ideal takeover target for Amazon is a retailer with strong physical retail but not necessarily strong e-commerce, also said. Such a retailer “can put solid infrastructure and operational efficiency along with brand to improve overall value to the customer and profitability to the bottom line,” he said.
It could be a win for Target, too, and it could arm Target and Amazon against a surging Walmart. “A deal with Amazon allows the combined company to consolidating their operating expenses and build a new working model that provides much better bottom line,” Fosina said. “Amazon is No. 1, Walmart is No. 2 and Target is the distant No. 3. Acquiring Target gets Amazon in both the first and third position, accelerating advances on Walmart but, more importantly, it puts Amazon into the brick and mortar business, which would give them double advantage on Walmart — both direct and retail.”