When should a retailer work with Amazon Web Services? – RetailWire
April 05, 2022
In February it was announcement that Best Buy has chosen Amazon Web Services (AWS) as its preferred cloud technology partner.
It wouldn’t be so newsworthy if it weren’t for the many retailers who avoid AWS or keep cloud service investments to a minimum. Anyone in the retail industry has at some point felt at odds with AWS because it provides fuel for Amazon retail.
Is it paranoia or a good strategy? Retailers in overlapping categories may reasonably be hesitant to do business with AWS. Others, where the competition is less clear, might not, especially when there is a favorable cost/benefit ratio. Either way, even knowing that there are technical and legal barriers between AWS and Amazon Retail, it doesn’t matter when the two are part of the same company.
Businesses in all industries cover themselves by working with many suppliers. This led to the problem of “spaghetti architecture”.
Even claiming a primary relationship with only one partner, there will be investments in others. Avoiding AWS only gives more power to Microsoft, Google and others at contract or renewal time.
It makes sense to change course when it makes financial sense in a world where basic cloud services come with relatively low switching costs.
But what about value-added capabilities that are worth building into your business on a deeper level?
Two compelling public examples for Amazon are its Goes technology and a new way of expected demand developed by Amazon for its 400 million products. Automation, labor shortages, margins and supply chain are topics that most retail CEOs face today.
Go technology is available Amazon tradenot AWS, and appears to have customer appeal beyond retail where any form of frictionless check-in or check-out experience adds value.
Meanwhile, the forecasting example stands as a great showcase of Amazon’s data science expertise leveraging AWS Cloud services. Unlocking similar value in your business likely requires outside help.
Is it possible to architect the same solutions using other clouds? Maybe, but sourcing the underlying services from Amazon or AWS may be the fastest path to value. It ultimately comes down to what is unique, differentiated, and consumable by your business given its expertise, resources, and priorities.
I suspect the decision hinges on whether a retailer’s executives have confidence that they hold a unique and defensible position with their customers. It’s a rare but ambitious state today for many retailers.
DISCUSSION QUESTIONS: Do retail executives have the knowledge and expertise to make decisions about cloud partners in the best interest of their business? What should executives consider when evaluating their cloud options?
“Retail executives have the knowledge and expertise to make the best cloud partnership decisions, but their choice can be clouded by unfounded fears.”