The Walmart and Amazon battle now has been escalated to another level as Wal-Mart has asked its technology vendors not to use Amazon Web Services.
As per the report from Wall Street Journal, Walmart Stores Inc. is telling some technology companies that if they want its business, they can’t run applications for the retailer on Amazon.com Inc. leading cloud-computing service, Amazon Web Services.
While one would hope that Walmart would compete by offering a superior product or service to customers, the retail giant is instead attempting to bully its vendors.
Walmart might not happy with the fact that Amazon’s market cap was twice as high as theirs was just a month ago, and that the online giant will now be competing directly against them in the grocery business with the proposed Whole Foods acquisition.
The retail company keeps most of its data on its servers and uses services from emerging Amazon cloud rivals, like Microsoft’s cloud-computing platform Azure. However, it still uses some tech vendors’ cloud apps that run on Amazon’s platform. Walmart spokesman Dan Toporek admitted instances in which Walmart pushed for Amazon alternatives.
The cloud battle takes aim at the financial advantage AWS gives Amazon. While the company’s global retail business operates on thin margins, they are offset by the enormous profits AWS generates.
In the first quarter, AWS posted $890 million in operating income, accounting for 89% of overall operating income, even as AWS’s $3.66 billion in net sales accounted for just 10% of the company’s total.
Walmart tried to rival Amazon Prime memberships by introducing ShippingPass, which resembled Prime’s two-day shipping. Even though Walmart’s membership was priced at $49 — half the price of Prime, the plan failed to launch and was nixed.
Earlier this month, Amazon announced it’s offering Prime service at a discounted price for people on government assistance programs. The online retailer’s latest move is an effort to reach low-income households, which is a strike at Walmart.
The company claims they fear that Amazon will see confidential information related to Walmart’s business, but to anyone who understands how AWS is implemented, this sounds more like an excuse.