The world of retail is changing. With the growth of e-commerce, traditional retailers must rethink their business models. And one of the biggest players in the e-commerce space is Amazon. Amazon's growth has been incredible. With record-shattering sales every quarter and a growing number of customers using its platform regularly, it's easy to see why Amazon is so prominent in the e-commerce industry.
But does Amazon have its sights set on Target? Recently, there has been speculation that Amazon is interested in acquiring Target. Is this just a rumor, or could it happen? Read on to find out.
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Does Amazon Own Target?
Target and Amazon are independent retailers, so they are not owned by each other. The two companies sell various products, including clothing, homewares, groceries, beauty products, electronics, and more. However, Amazon is more valuable than Target. The two companies have different business models and target different customers. Amazon sells products directly to consumers through its website, while Target sells its products through physical stores.
Amazon uses automation technology to reduce costs, which allows it to sell low-cost items like books at low prices. This means that Amazon can offer better deals on its products than traditional retailers can offer their customers.
In the past five years, Amazon's revenue has grown at an average annual rate of 29%, while Target has only grown at an annual rate of 10% during that period. Although both companies have experienced similar growth rates over the last five years, Amazon has generated higher profits because it does not operate stores or employ many people.
Is Amazon Bigger Than Target?
Amazon and Target are separate companies with no connection except their rivalry. Both companies sell products through their websites, and nothing stops you from using one website to buy items from the other. Amazon and Target carry top brands for homewares, beauty, and daily essentials, but Amazon is larger and more recent. In terms of sales volume and revenue, Target has fallen behind Amazon, despite being around since the 1960s.
In terms of size and scale, Amazon dwarfs Target in terms of revenue. The company reported $136 billion in sales in 2018 compared to Target's $59 billion. It's also worth noting that while both companies sell similar items online (for example, toys or clothing), they're not identical. For example, Target sells clothes at the total retail price, whereas Amazon offers discounts on some items (such as toys) and free shipping for orders over a certain amount (usually $35).
According to the Fortune 500 list, Amazon is ranked no. 2 and Target is ranked no. 30. With Amazon's market valuation at approximately $958.12 billion, this makes sense compared to Target's market valuation of $76.85 billion. The revenue generated by Amazon is much larger than Targets. A total of $386 billion was generated by Amazon in 2020, while $93 billion was generated by Target in the same year. It has been rumoured that Amazon is buying other retailers because of its size and value.
Why Doesn't Amazon Own Target?
There has yet to be a public statement from Amazon regarding its interest in owning Target, and this is probably due to its wildly successful business model without Target. Amazon is a company that thrives on growth. It has grown from a small online bookstore to one of the world's biggest retailers. It's also expanded into other areas, including streaming video, music, and grocery stores. The company has achieved these goals because it focuses on customer satisfaction and has a strong supply chain.
Target has struggled in recent years with its cost structure, which is usually the first thing companies try to fix when they fail. The chain has also been hurt by its struggles with online shopping and its decision to sell off its pharmacy business. That Amazon has made no moves toward Target likely means that it doesn't see many opportunities for growth or expansion.
Amazon has skyrocketed into one of the world's most successful companies in less than 30 years. Despite Target being up there in terms of successful retailers, it could be at the level of Amazon. Amazon has been very strategic in its acquisitions, and if it buys Target, it would be its biggest acquisition to date. Instead of spending money on its main rivals, Amazon buys much smaller brands and stores.
As a result, it benefits from some healthy competition and does not appear to be fazed by Target. Amazon acquires companies that can improve its technology, security, and streaming services. Amazon already dominates the retail space over Target, so it's unlikely it'll be a contender for Amazon's next acquisition. Further, Amazon may have been discouraged from buying Target because it would have to take over Target's 1,900 stores, most of which is owned, not leased.
Will Amazon Buy Target?
While some market watchdogs speculate about the possibility of Amazon buying Target, there is no indication that it will happen soon. In 2018, Amazon was speculated to be interested in buying Target, but no deal was ever made. While Amazon has remained silent on the prospect of acquiring Target so far, there's always the possibility it could happen in the future.
That's because both companies have similar business models and are taking steps to grow their respective businesses. Amazon's distribution network is a major advantage for retailers, and its purchase of Whole Foods last year shows a willingness to invest in brick-and-mortar stores. The company has also been investing in e-commerce fulfillment centers around the country at an unprecedented pace — 1,500 new facilities were built just this year alone — which means that it can effectively handle larger purchases like Target.
Does Amazon Own Other Stores?
Despite not owning Target, Amazon has acquired other stores since 1998. The following are some of Amazon's most famous acquisitions:
- Whole Foods Market
Amazon may not buy Target right now, but this situation can change. The retail industry is changing quickly, and smart businesspeople are always looking for new opportunities. If a deal like this gains traction, it might make all the sense for Amazon to acquire Target.