Walmart vs. Amazon has been the biggest retail cage match to watch over the past few years, with both companies seeking to outpace the other through pricing, store innovation and major acquisitions. It appears the stakes of the rivalry have been ramped up yet again, from an unlikely corner — cloud storage.
In an interview with Reuters, two Walmart execs revealed that the retail behemoth operates six giant server farms — each larger than ten football fields in size — and 75 micro clouds.The cloud initiative took Walmart close to five years to build and cost “millions” of dollars, according to the report. Walmart’s cloud network doesn’t rent capacity to third-party businesses like AWS, but investment signals that the retailer is prioritizing the collection of customer data.
Using data gleaned from millions of transactions, Walmart sped up the process by which customers can return online purchases to their local stores by 60%. The retailer uses the cloud data to stock items frequently ordered by customers via voice shopping devices such as Google Home. Additionally, Walmart can adjust prices at its physical stores almost instantly across entire regions.
Walmart’s online renaissance has often been tied to its post-Jet.com acquisition spree and the installation of Jet.com CEO Marc Lore as head of U.S. E-Commerce, but it’s apparent the cloud systems also are paying dividends for the retailer. The retailer, which has sought to understand newer types of shoppers, particularly more niche audiences, gains the opportunity to collect more customer data, all while keeping this information off of external servers.
Walmart still only accounts for 3.6% of U.S. e-Commerce sales, according to eMarketer, while Amazon has a dominant 43.5% share.
Whether Walmart opens up its cloud network to third parties in the future is up in the air, but if it did so, the move would add another revenue stream and further diversify the Walmart brand. AWS generated $18.34 billion in revenue in 2017 and has garnered 26% of the cloud market, according to estimates from the Jefferies Group.
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