In B2C and B2B supply chain environments, the term “Amazon Effect” has meaning, mostly all of which revolves around how to best compete against this online juggernaut. Sometimes, tactics can get a bit nasty, with strong gestures sent, even if it involves one of the most prominent collections of global brands. The field of competition has become much more acute.
Supply Chain Matters has provided many examples of the implications of the Amazon Effect, the latest being an April commentary reflecting on how a price war among Amazon and Wal-Mart was manifesting itself for high stakes control of fulfillment and distribution among major CPG brands. Similarly, other food and consumer goods manufacturers have become so cognizant to the threat of Amazon in their respective markets, that they have taken under action to secure their control of customer and other mission critical information.
Thus, it should be little surprise that Target recently announced that the retailer would be scaling back on its use of Amazon Web Services (AWS), Amazon’s cash generating business. Like other department store and now grocery store retailers, Target is experiencing the ongoing threat of Amazon, and the recent $13 billion of Whole Foods by Amazon adds to that threat. According to a recent business network CNBC report, Target is aggressively moving its E-Commerce, mobile business, and operations activities away from AWS, through the end of this year and possibly into 2018.
We have observed similar reports from major retailers and consumer goods manufacturers who have been queering their tech vendor base for any reliance on AWS for fulfillment or data management tasks. Ironically, many brand-name retailers are hosting their online fulfillment presence on AWS while some of their suppliers have been featuring select merchandise on Amazon. In June, The Wall Street Journal reported that Wal-Mart was instructing its technology support vendors to not host applications on AWS. The buzz in the Cloud hosting community is that many retailers and consumer goods manufacturers are knocking on doors.
The obvious benefactors to this new iteration of the Amazon Effect are Microsoft, Google, IBM, Oracle, and SAP. Similarly, ERP and specialty vendors catering to growing midsized manufacturing, retail and distribution businesses are likely viewing an opportunity to gain additional customers in the current environment where anything but AWS may be the criteria.
Bob Ferrari
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