When should a merchant work with Amazon Web Services? – RetailWire



In February it was time announced that Best Buy has chosen Amazon Web Services (AWS) as its preferred cloud technology partner.

This wouldn’t be as newsworthy if many retailers weren’t either avoiding AWS or keeping investment in the cloud service to a minimum. Everyone in the retail industry has at some point felt conflicted with AWS as it provides fuel for Amazon retail.

Is this paranoia or sound strategy? Retailers in overlapping categories may be quite suspicious of working with AWS. Others, where the competition is less clear, may not, especially if there is a favorable cost/benefit ratio. In either case, knowing that there are technical and legal barriers between AWS and Amazon retail might not matter if both are part of the same company.

Companies in all industries protect themselves by working with many providers. This has led to the problem of “spaghetti architecture”.

Even if you claim a primary relationship with a single partner, there is investment in others. Avoiding AWS only gives Microsoft, Google and others more power at contract or renewal time.

It makes sense to change course if it’s financially beneficial in a world where standard cloud services come with relatively low switching costs.

However, what about skills with clear value that are worth embedding more deeply into your organization?

Two compelling public examples for Amazon are its walk Technology and a new way forecast demand developed by Amazon for its 400 million products. Automation, labor shortages, margins and supply chains are issues that most retail CEOs are grappling with these days.

Go technology is available from Amazon retailnot AWS, and appears to appeal to customers beyond retail, where any form of seamless check-in or check-out experience adds value.

In the meantime, the forecast example is an excellent showcase of Amazon’s data science expertise in utilizing AWS cloud services. Unleashing similar value within your organization will likely require outside help.

Is it possible to develop the same solutions with other clouds? Maybe, but it’s possible that sourcing the underlying services from Amazon or AWS is the quickest path to value. Ultimately, it depends on what is unique, differentiated, and can be leveraged by your organization based on its expertise, resources, and priorities.

I suspect the decision depends on how confident a retailer’s executives are that they have a unique and defensible position with their customers. This is a rare but desirable condition for many retailers today.

DISCUSSION QUESTIONS: Do retail executives have the knowledge and experience to make cloud partner decisions in the best interests of their business? What should executives consider when evaluating their cloud options?

brain trust

“Retail executives have the knowledge and experience to make the best cloud partner decisions, but their choices can be clouded by unfounded fears.”


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