Wal-Mart into the cloud to narrow the gap with the Amazon

Walmart Inc. One of the strongest hurdles to compete with Amazon in the field of e-commerce is its six giant cloud networks.

These facilities, which have spent millions of dollars on Wal-Mart and took nearly five years to complete, are beginning to pay off. The retailer’s online sales in the past three consecutive quarters has been very hot, far more than the industry growth.

Thousands of proprietary servers are driving this growth, and enable companies to handle the data of countless customers internally.

Most retailers rent the computing power they need to store and manage these data. But Wal-Mart’s decision to build its own internal cloud network shows its ambition to grab a bigger share of online shopping. It also reflects the company in the follow-Amazon, the use of cloud-driven big data to promote digital sales.

The move helps Wal-Mart maintain its competition with Amazon in terms of pricing and tight control of critical nodes such as inventory. In an interview with the company’s San Bruno, California and Sunnyvale campus in California, Wal-Mart executives said such efforts are making Wal-Mart lock shoppers with more personalized products and better services .

Tim Kimmet, director of cloud operations at Wal-Mart, said: “It’s a lot different than how fast we can grow our e-commerce business.” For example, Wal-Mart is using the cloud Data to store frequently ordered items from customers using voice-over-shopping devices such as Google Home.

In addition, such a network is still helping the retailer improve its in-store operations. Using data collected from millions of transactions, the company’s process accelerated by 60% and items purchased online by consumers were returned directly to local stores. Moreover, Wal-Mart can adjust the prices of all its stores in a timely manner.

Jeremy King, Wal-Mart’s CTO, told the media: “We are now in a position to make changes faster,” he added, adding that Wal-Mart can now make over 170,000 changes per month to software that supports its site , But before the change is less than 100 times.

Of course, according to eMarketer, a market research firm, Wal-Mart, the world’s largest offline retailer, has only 3.6% of the U.S. e-commerce market, while Amazon has a market share of 43.5%.

However, as the retail industry in the United States is experiencing a huge impact, Wal-Mart’s cloud computing efforts are significant and data-based decisions make it more important than ever to understand how shoppers shop.

Wal-Mart’s third-quarter online revenue rose 50% YoY, which helped it announce its most robust quarterly earnings increase since 2009.

Kerry Liu, chief executive of Rubikloud Technologies, which offers artificial intelligence services to retailers, said: “The wrestling between Wal-Mart and Amazon has been on the rise and cloud computing is the latest frontier.”

Cloud plans are just one of several steps Wal-Mart has taken to upgrade its e-commerce business. The company expanded its online offering by acquiring smaller e-commerce retailers. Wal-Mart offers a two-day free delivery service for orders of $ 35 or more, and recently also required suppliers to supply them with products for $ 10 or more to help them make money online.

But Wal-Mart’s decision to build a network that does not rely on a single third-party cloud technology provider enhances its ability to understand shoppers, who are now shopping at stores or via desktops, mobile devices and applications. Right now, about 80% of Wal-Mart’s cloud networks are built by themselves.

Tim? Kimome, director of cloud operations at Wal-Mart, said that security is another important factor behind this effort, allowing retailers to better protect customer data. This confidentiality extends to its six “giant clouds” or gigantic server farms, as well as 75 “micro-cloud” locations. However, the company declined to disclose the location of these “micro-clouds.”

To date, Wal-Mart shareholders seem to support the company’s cloud strategy. The company’s share price has risen 49% over the past year, while the S & P 500 index rose only 14% over the same period, and this is in stark contrast to the entire retail decline.

However, some investors are worried that if the market conditions change significantly, Wal-Mart’s practice will make the company more difficult to shrink. Some of those investors told the media they want to see Wal-Mart commercialize excess capacity, as rival Amazon did.

According to estimates from the investment bank Jefferies Group LLC, Amazon’s cloud computing service AWS achieved revenue of $ 18.8 billion in 2017 and has a 26% share of the cloud market.

Charles Sizemore, founder of Wal-Mart, a venture capital firm that runs Sizemore Capital Management LLC, said: “Wal-Mart is very good at following Amazon’s innovations and now they have to find a way to make The cloud business you are building can make a profit like AWS. ”
Tim? Kimmei, Wal-Mart’s cloud director, said the retailer is not currently offering cloud services to other companies, but he does not rule out that it will become the company’s revenue driver for the future.