Yahoo! Targets Online-Offline in Photo Deal

Yahoo! has partnered with U.S. retail giant Target to allow consumers later this year to manage/order prints online and pick them up at a local Target store. This closes the loop for Yahoo!'s photo site (Yahoo! just purchased Flickr) and extends it into the physical world.

That benefits Yahoo! in a couple of ways; it's also a win for Target.

There's considerable data, including from The Kelsey Group, that indicates consumers conduct research online, yet purchase offline at rates well above 90%. To provide some context, total 2004 e-commerce was valued at US$69.2 billion, which represented only 1.9% of U.S. total retail sales, according to the U.S. Commerce Dept.

However, the Web influences more and more of that offline buying. In a general sense, this Yahoo!-Target deal is a reflection of that larger trend. It's also a potentially successful marriage (a la Yahoo!-SBC DSL) of an Internet giant with a traditional, offline entity.

Amazon has been doing this sort of thing for some time. Expect to see more such partnerships and online-offline ("multi-channel") integration from here on.

The Yahoo!-Target deal reflects the understanding on Yahoo!'s part of the importance of a physical distribution point for photos (most Americans, even those with digital cameras, don't have the capacity to print photos at home and would rather not wait for photos in the mail). It also shows Target's acknowledgement of the Internet as a strategic way to acquire customers and potentially maintain loyalty. And while Target has an Internet site, it doesn't have the traction in the online photo arena.

There are many places consumers can get photos developed. And in certain parts of the country, drug store chains, such as Rite-Aid or Walgreens, are often more locally convenient than Target.

But with this deal, consumers may well be inclined to drive farther to Target (and while they're there, why not check out some of those weekly specials . . . ).

Can a similar Google-Wal-Mart deal be far behind?

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