News Feature | June 30, 2017

Walmart Raises The Stakes Against Amazon To The Cloud

Christine Kern

By Christine Kern, contributing writer

Cloud Impact On MSPs

Retailer reportedly has told its vendors that it cannot run its apps on Amazon Web Services

The Wall Street Journal reported that Walmart has apparently told its technology vendors that if they want the retail giant’s business, they need to ensure that none of its applications are being run on Amazon Web Services., but to shift them to alternative services like Microsoft’s Azure. This is raising the battle between Amazon and Walmart to new levels, according to Fox Business News.

According to the WSJ, a Walmart representative confirmed that the company has issued the request to a “small number” of vendors, and said “It shouldn’t be a big surprise that there are cases in which we’d prefer our most sensitive data isn’t sitting on a competitor’s platform.”

Cloud commerce expert Scott Webb believes that this move could have various reactions from vendors and the companies involved. Webb is president of born-digital consultancy firm avionos.  In an emailed comment, he explained, "It is an interesting play for Walmart and strategically, it makes a lot of sense. As a retailer, Amazon plays by a completely different set of rules because they are able to subsidize operating margins in that business through the heavy profit they make as a technology service provider, primarily through AWS. If Walmart is able to successfully impact revenues for AWS, it may very well have an impact on Amazon’s ability to price compete in retail.”

And while one developer told the WSJ that they were told to build projects specifically for Azure to obtain Walmart’s contracts. He explained, “That was a deal breaker. Everybody knows that Walmart will not play ball with you if you use AWS.”  Webb explains. “This is not completely out of character for Walmart either, as Walmart has long set guidelines for how they expect their vendors to work in order to gain Walmart’s business. However, it will be interesting to see if this practice goes beyond one-off colloquial examples to become more formal expectations that they place on suppliers.

According to Webb, “There isn't a shortage of cloud infrastructure services, so it wouldn't be unheard of for tech vendors to go to other suppliers like Microsoft or Google to retain their business with Walmart. However; if Walmart were to enforce this beyond just service vendors to include retail vendors as well, it could be seen as anti-competitive."

Meanwhile, Amazon responded to Walmart’s efforts with this statement provided to Consumerist, stating “We’ve heard that Walmart continues to try to bully their suppliers into not using AWS because they have an incorrect view that AWS is somehow supporting Amazon’s Retail business…Plenty of suppliers are standing up to Walmart and refusing to be told that they can’t use the leading infrastructure technology platform (AWS). Tactics like this are bad for business and customers and rarely carry the day.”