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Walmart Counts on the Cloud in E-Commerce Battle With Amazon

 

Walmart boxes on conveyor belt for
Photo credit: Walmart

As the saying goes, imitation is the sincerest form of flattery.

Walmart has been building out sprawling server farms that host vast amounts of customer data in an internal cloud network in an effort to execute change more quickly while improving customer service. Amazon long has been the leader in leveraging the cloud to achieve an edge in e-commerce and big data. Overall, retailers commonly subscribe to cloud services rather than investing significant capital expenditure to build their own.

Walmart’s pricey, five-year investment is showing signs of success and today accounts for 80 percent of the company’s total cloud operations, according to a Reuters article. E-commerce sales were up 50 percent as reported in the retailer’s most recent earnings call. What’s more, the retail giant can use that constant stream of data to optimize inventory and manage pricing, adjusting on the fly as necessary and enabling real-time changes in physical stores. Also on the store side, cloud-hosted data has helped to accelerate the process of returning an e-commerce order to a physical location, Walmart’s head of cloud operations Tim Kimmet told Reuters. What’s more, insights gleaned from cloud data help the company keep items ordered via voice assistants in stock and ready for purchase.

[Read more on Walmart: Walmart Prioritizes Profits Over Low Costs Online]

The internal-cloud strategy also aims to keep a tight lid on customer data, reducing the risk of a breach or other compromising attack. According to the 2016 BDO Retail RiskFactor Report, 100 percent of surveyed retailers indicated the risk of a cyberattack as a potential risk to their business, up from 26 percent in 2007. Target and Home Depot have suffered devastating attacks in recent years with bottom-line impacts of $150 million and $19.5 million, respectively.

Walmart CTO Jeremy King told Reuters that the company leans on its six-server internal cloud to tweak more frequently the software that powers its e-commerce site. Instead of just 100 updates each month, now Walmart can make as many as 170,000 improvements, fixing bugs and implementing new features to optimize the user experience.

Though it’s making progress, Walmart still has a long way to go in catching up to Amazon online. It owns 3.6 percent of the domestic e-commerce market, according to eMarketer—a far cry from Amazon’s 43.5 percent. But as customers continue to shift their spending from bricks to clicks, investments like Walmart’s bet on owning its cloud will likely pay greater dividends by enabling an expansion into new services and improved products.