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What do Wesfarmers (ASX:WES) and Amazon.com have in common?

Retail conglomerate Wesfarmers Ltd (ASX: WES) is looking to channel some of Amazon.com, Inc. (NASDAQ: AMZN) magic to save its…
The post What do Wesfarmers (ASX:WES) and Amazon.com have in common? appeared first on The Motley Fool Australia. –

Retail conglomerate Wesfarmers Ltd (ASX: WES) is looking to channel some of Amazon.com, Inc. (NASDAQ: AMZN) magic to save its struggling department stores.

The ASX retail group selected Amazon to provide cloud-services to boost online sales of its embattled Target outlets, reported the Australian Financial Review.

Who better to provide such expertise than the world’s largest online retailer that have made it an artform to target and track online consumers?

Wesfarmers’ Amazonian task

Wesfarmers picked Amazon Web Services (AWS) over Microsoft Corporation’s (NASDAQ: MSFT) Azure, which is used by Woolworths Group Ltd (ASX: WOW).

The hope is that Amazon will be able to turnaround Wesfarmers’ Target department store. The chain is the Achilles’ heel in the business and the business has dragged on Wesfarmers’ financial performance for some years – even before COVID-19.

But the pandemic made a bad problem worse. Consumers were forced online to shop due to rolling lockdowns, and it’s retailers with the stronger web presence, like Temple & Webster Group Ltd (ASX: TPW) and Shaver Shop Group Ltd (ASX: SSG) that have benefitted.

Wesfarmers needing some Amazon retail magic

While Wesfarmers’ other retail brands like Bunnings and Officeworks aren’t exactly pre-pandemic online leaders either, they were at least allowed to operate during COVID restrictions as essential services.

Target’s general manager Samantha McIntyre noted that its systems weren’t up to the task before AWS, according to the AFR.

But now, Target’s website can manage surge in traffic during sales events and can provide more timely inventory checks for shoppers.

“We’ve got really big aspirations in the online space and really want to grow that, and we’re really super excited with how Black Friday went,” the AFR quoted McIntyre as saying.

“Sales of apparel, particularly kids wear was very strong, and now we are in our busiest period leading up to Christmas.”

Wesfarmers share price holding its ground

Target will need all the help it can get as it struggles to stand out in a highly competitive retail environment.

Wesfarmers owns some of the most well-known retail brands in the country. But it’s been slow to adopt the online shopping revolution despite buying Catch.com.au.

At least the conglomerate is moving quickly to close the digital divide. Shareholders will also be relieved that the Wesfarmers share price is holding up well with gains of around 17% in 2021.

That’s about in-line with the S&P/ASX 200 Index’s (Index:^AXJO). It’s also much better than the JB Hi-Fi Limited (ASX: JBH) share price, which is down around 3% for the year.

The post What do Wesfarmers (ASX:WES) and Amazon.com have in common? appeared first on The Motley Fool Australia.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Microsoft and Temple & Webster Group Ltd. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended Amazon and Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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