Late last month, reports came out on an emerging row between Walmart and Amazon. The conflict in question began when Walmart instructed partners and suppliers not to run on Amazon Webservice (AWS) infrastructure. A spokesperson for Walmart more or less confirmed the story, citing the potential security risks of ‘sensitive data’ being stored on competitors’ platforms. Amazon responded curtly, questioning their rivals’ understanding of the degree to which AWS supports Amazon’s retail business. There’s little doubt that this spat has to do with Amazon’s purchase of Whole Foods, bringing the realms of e-commerce and brick-and-mortar one step closer to all-out battle. Mega-corporation slap fight aside, this piece of the ongoing saga of the War for Retail may in fact be even more salient to a struggle yet to come.
It’s been argued rather convincingly that one of the prime (sorry) keys to Amazon’s meteoric rise has been their ability to externalize the internal: spinning off the data and delivery services of their corporate infrastructure into businesses in their own right. Naively, the value is financial- after all, AWS represents about a tenth of Amazon’s revenue. But the bedrock value comes in the appraisal of the market itself. An internal Amazon service’s success or failure can be used as evidence of its competitiveness, freeing the company from much of the internal obsolescence that plagues long-lasting giants of its kind.
What does Walmart have to do with this? Therein lies the question. We know that Walmart has already released its cloud management platform, OneOps, to the public. OneOps obviously doesn’t constitute direct competition with the AWS juggernaut, although the ability to switch freely between clouds does dovetail nicely with Walmart’s new, ahem, preferences for their upstream partners. But there’s more to come. At this year’s Shoptalk, Walmart.com President and CEO Marc Lore revealed the company’s new tech incubator: Store Number 8.
One of the first seeds planted by the new initiative is Code Eight, dedicated to the creation of ‘highly personalized shopping experiences’ headed by Jennifer Fleiss, previously of fashion rental service Rent the Runway. The parallels to Amazon’s upcoming Prime Wardrobe couldn’t be clearer.
So the incubator isn’t purely internal, its goal being the promotion of handpicked, Walmart-funded startups intended to seize future innovations in retail, with the obvious subtext of bringing the fight to Amazon. But the difference is essentially academic: Store Number 8 will be working in the context of Walmart’s enormous distribution chain and national coverage. The flexibility and litany of benefits provided by AWS are already on the minds of the competitive thinkers at Walmart. With this new investment in cutting edge technology, services and channels, it’s only a matter of time before Walmart has a ‘friendly suggestion’ for where its suppliers should move to, rather than from.