The War Between Amazon and Walmart’s New Cloud Network

AMAZON-WALMART

There’s a war going on in the cloud. No, we’re not talking about Greek gods, but instead the latest clash two of the U.S.’s biggest retail titans, Walmart and Amazon. While Walmart remains a global giant, with $485.9 billion in revenue, it is seeking to take a preemptive measure to check Amazon’s rapidly-ascending place in the marketplace (itself a powerhouse at $178 billion) by entering the race for cloud computing supremacy.

Amazon may be a cloud-computing giant in its own right, but Walmart has chosen to up the competitive ante. By using its proprietary cloud system they have been able to update the company’s growing cloud-based operations and to step-up its customer data analysis. Amazon has already been heavy into leveraging its extensive servers to other companies and its own analytics, but they may have cause to worry about Walmart’s typical juggernaut-style of doing business.

Here’s why: Over the course of five years, Walmart has been quietly building its capabilities with six server-farms that each span over ten football fields (let the enormity of that figure sink in for a moment!). Of these six farms, there are 75 micro clouds that run independently. Essentially, this means that Walmart’s enormous power doesn’t rely on a single 3rd-party cloud service provider, which gives the retailer the ability to control its own capabilities and destiny — a trait that has defined Walmart’s rigid approach in the past.

Walmart executives have commented on the company’s decision, citing how a broad analysis of customer data and their spending habits (instore and online) can help create more personalized offers per customer and anticipate on-demand needs fulfillment (à la Google Home) with an intent to facilitate the growing of its e-commerce sector — something Amazon and other companies are taking note of. Commenting on the matter, Tim Kimmet, head of cloud operations for Walmart, stated, “It has made a big difference to how fast we can grow our e-commerce business.”

If the world’s largest retailer’s recent online sales are any proof, their online sales have been continuing on an upward trend for the past 3 quarters: Walmart’s online revenue climbed 50% year-over-year during the 3rd quarter, also the company’s strongest-ever quarterly growth in nearly a decade. This growth has far outpaced growth levels seen in its competition, and it has been predicted that if Walmart can pull off this tech to its benefit, it may demolish all competitors just with its in-house capabilities alone.

The extent of Walmart’s reach due to implementing its cloud and other tech isn’t known as of yet, but as gleaned from the Reuters report, Walmart is planning to supercharge its methods. Currently, Walmart makes 100 changes to its online activity each month; with the new system in place, according to executives, this capability will increase to a staggering 170,000 changes per month (again, let that number sink…). “We are now able to execute change faster,” commented Jeremy King, Walmart’s chief technology officer.

This can dramatically increase how the company collects data from online and in-store shoppers, using Big Data analysis to make its marketing efforts more efficient and customized. Walmart’s new server network has already shown results to its in-store efficiencies, with a 60% increase to how quickly customers can return online purchases to their local stores. Furthermore, Walmart now has the ability to adjust its in-store price almost instantly and across entire regions. Combined with the latest advances in machine-learning and artificial intelligence, Walmart’s market domination may increase exponentially.

What makes this such a bold move is that Walmart is shucking industry trends simply because it can. Not every organization is capable of devoting resources to creating such a monolith of cloud computing in such a short time. With the prohibitive costs of maintenance and infrastructure — and the inevitability of outages that can bring service to a halt — many companies opt to seek 3rd-party providers to delegate their cloud computing needs. This delegation saves the bottom line of most companies, but with Walmart’s nearly-unchecked resources, the company is planning to take 2018 by storm.

Considering that Walmart is moving in a tech-centric direction, the company has to maintain a top-notch tech team that can compete with some of the biggest tech companies in the US and its global competitors such as the UK, Dubai, China, and the United Arab Emirates. This massive effort may not be an easy feat, especially as there are many tech talent wars in Silicon Valley that are fueled by Big Data, AI, and other developing technologies. With no comparable historical precedent to draw from, only time will tell if Walmart’s massive gamble will bear fruit.

Walmart’s reach, however, isn’t completely its own idea, especially with Amazon offering their own AWS (Amazon Web Server) service to companies looking to get a Big Data boost via cloud computing. Sensing Amazon’s competitive edge, Walmart has reportedly told vendors to not use AWS in hopes to abate the leaking sensitive data that can give Amazon agile maneuvers to outsmart Walmart’s approach. This exclusivity is not limited to Walmart. Other Amazon competitors, like the supermarket giant Kroger, similarly has instructed its vendors to opt out of AWS for their cloud computing needs to keep its data under the radar. This type of exclusivity demanded by retailers may be a sign of shifting within industry alliances and how connected businesses may or may not be able to fully realize their future outcomes.

In response, Amazon remains unperturbed. After all, the AWS service has prestigious big-money contracts with clients like Disney and the NFL, and still holds 30% of the market share for IaaS (Infrastructure as a Service). In other words, AWS isn’t going away anytime soon. With Walmart’s new capabilities and whether they plan to lease out their digital cloud computing services isn’t known yet, but it isn’t out of the question, according to tech experts.