Target leaving AWS in wake of Whole Foods acquisition
Thu 31 Aug 2017
In the aftermath of the Amazon acquisition of Whole Foods, finalized this week, Target is reportedly considering a move away from using Amazon Web Services for cloud and data center services.
According to CNBC, Target intends to leave AWS entirely by the end of this year, moving e-commerce, mobile apps and operations away from Amazon. Target joins other retailers, notably Wal-Mart, in selecting alternative providers for cloud and technology services.
With the web company’s latest foray into the brick-and-mortar retail arena, companies like Target and Wal-Mart appear to be fighting back, refusing to finance their biggest rival by spending budgeted IT money on the purchase of cloud and web services from Amazon.
Amazon has become the major rival of most traditional retailers, with astonishing growth and profitability in a time of declining returns for retail stores. In just the past two years, Amazon’s market value has been increasing dramatically, in part due to the success of AWS in the field of cloud services. In this same period, U.S. retailers are facing what has been called a ‘retail apocalypse’, with one of the largest waves of store closures in decades affecting well-known mall anchor stores such as Sears, JCPenny, and Macy’s.
Additionally, not only has Amazon surpassed Wal-Mart’s market capitalization, it has more than doubled it in the past two years.
Notably, the two retailers that are reportedly moving away from AWS; Target and Wal-Mart, are those whose strategy combines traditional big-box retail with grocery services. This might explain why the Whole Foods acquisition has provided the impetus for these retailers in particular to move away from AWS, as Target and Wal-Mart are now competing with Amazon on a different retail front.
AWS is still the industry leader in cloud services by far, with over a million customers in 190 countries, providing $12 billion in revenues last year alone. AWS still maintains a relationship with other retailers including Nordstrom, LuluLemon, Under Armour, and others. However, AWS competitors including Microsoft Azure, Google, and Oracle are reportedly beefing up their offerings in cloud services for the retail industry in order to make the most of this potential opportunity.
A spokesperson for Target said that they “currently use multiple cloud service providers and will continue to do so,” noting that the company policy prevents discussing the particulars of vendor relationships.