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Sears Canada outsources its online presence to Amazon

April 29, 2005

Yesterday, Sears Canada said it has outsourced the technology services of its Internet retail website to Amazon.com, in an effort to better capitalize on the online retail giant’s many years of experience in the field of eCommerce and Web services. According to spokesperson Vincent Power, Sears.ca will remain very much a Sears brand, with little to indicate Amazon’s involvement from a customer’s perspective. Sears will continue to host the site and continue to use the same internal fulfilment house that handles customer orders from the site and from Sears catalogues.

“We’re probably better at fulfilment and customer service on an Internet site than anybody is in the country,” said Power, “but the features that we can build into that site to make it more attractive to people and to keep up with the tide – those will be provided by Amazon.”

Amazon Services Inc., a subsidiary of the company best known for selling books online, will handle the arrangement. Amazon has struck similar deals with other retailers in the past month, including Marks & Spencer in the U.K. and OshKosh B’Gosh, a children’s clothier based in Wisconsin. Amazon already handles the online chores for several other prominent U.S. retailers like Target and Toys “R” Us.

Amazon has worked with a Canadian company in the past, like HMV.ca, but for a co-branded Web site. Spokesperson Drew Herdener said that Sears.ca is the first instance of a private label deal with a major Canadian retailer.

The new Sears.ca site won’t go live until summer 2006. The intervening year will be necessary to iron out the details, said Power.

“It’s going to take some time to get everything in place,” he said. “Right now, all we’ve got is a basic agreement. Now we have to really start delving in to see what we’ve got, what (Amazon) can add to it and how that’s going to happen. We want to do all that without any disruption to our site.”

The idea of retailers, both large and small, outsourcing their Web sites has gathered momentum in recent years, said retail analyst Jim Okamura with Chicago-based J.C. Williams Group.

“Given the retail industry, especially in the U.S. where there has been such a steeper growth curve and bigger market for the e-commerce side, a lot of retailers are realizing that it is better (to look) for an outsourced solution,” said Okamura. “It makes sense for a lot of retailers that don’t have the core skillset or capability in-house and can’t afford the learning curve to try to get up to speed.”

Okamura noted that Amazon has been one of the leaders in the trend, and Amazon Services is one of its fastest-growing subsidiaries.

Canadian retailer Hudson’s Bay Co. is also aware of the possibilities that outsourcing affords, according to its CIO, Gary Davenport. He said the company is currently mulling the future of its Web site.

Right now, hbc.com is largely an internally-powered entity, but taking on a third party provider is “certainly a consideration for us,” said Davenport. “As the landscape changes out there, including this deal with Sears and Amazon, how do we want to go to market, so to speak, and provide the best service? We’ll look at all options.”

Davenport added that all decisions are weighed carefully, since any change to a Web presence must include its impact on customer relationships, fulfilment services and brick and mortar locations. “It’s not just about the Web site,” he said. “It’s a holistic view of your strategy as opposed to just a silver bullet to fix everything.”

Source: IT Business.ca



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