I look at Barnes & Noble as another company that is screwing the pooch by not doing a better job with Internet sales, and a better job integrating internet and meatspace (aka "click and mortar"). I do a lot of business with B&N but I almost never buy books from their online store. Why? Partly because their site sucks, looks & feels dated and klunky, lacks the selection of Amazon's site, and doesn't offer good recommendations like Amazon does.
And if I go into a B&N store and want to special order a book, I can get free shipping, if it goes to my home. But if I want them to ship it to the store so I can pick it up there, it costs extra. WTF? And if memory serves correctly, you can't return items bought online to a physical B&N store.
There's just so many ways that they are missing the boat and nobody seems to care.
My ideal B&N experience: go to their site, find the book I like, purchase it for the same price as Amazon (usually the prices are the same), then go pick it up at the store. But no, I can't do that. If I want to pick it up in store, I have to pay the "in store" price (which is often at 10-20% higher). No thanks.
Whoever is running their e-commerce operation really ought to be fired. Or if the lack of awareness is coming from higher up, somebody (CEO?) ought to be fired.
Amazon's Achilles Heel is browsing. Their selection may feature 100,000 relevant items to my search but I seem to only find shitty versions of products, or at too high prices, regardless of how I mess with the search filter.
Target is great when you have an idea of what you might like to buy: you can try on shoes, sit on furniture, feel the bedsheets - you get the idea.
Sometimes the hassle of not getting the right size/feel of a product bought online, and having to repackage it and wait for another delivery simply isn't worth it compared to driving out to your local Suburban Mall Hell to just go and buy things like mom and dad used to do.
I would say their major problem is the lack of curation. The Amazon Marketplace brought all the garbage of eBay sellers to Amazon, and mixed it in with everything else.
As a result, you have to carefully watch out for things fulfilled by third parties (often subject to high shipping and strange return policies), and items with sketchy review histories. I can't find an article on it now, but I've come across items where it seems like the manufacturer pulled a bait-and-switch. The initial reviews are all very positive, and all the recent reviews are low and talk about poor product quality -- yet the item still has a reasonably high score. Did they seed reviews themselves? Did they actually change to a lower quality product? Who knows.
There's certain categories of products that I find to be an an utterly frustrating shopping experience on Amazon -- cell phone accessories is the one that immediately comes to mind.
It's not unique to Sears either.
I know a few people who work at the Target HQ in Minneapolis and have heard stories in the past of executives being astounded by online shopping, especially the idea that people would do comparison shopping while in the store. Target has significantly increased their digital offerings since then but it's still far from the experience of Amazon.