The battle for the e-commerce market continues between Walmart and Amazon. As both are vying for every customer they can get, Walmart has decided to take a new strategy against the e-commerce giant. A warning to Walmart carriers has been issued. Do business with Amazon, and you may not be doing business with us in the future.
So the question is, is this simply a threat to divert carriers away from Amazon, or is there something else to it?
The Peak (Season) Concern
There certainly is a sense of pragmatism behind this threat. If carriers are hauling for both companies, then Walmart could lose out, specifically during peak seasons when freight volumes tend to spike.
Satish Jindel, head of SJ Consulting out of Pittsburgh says one of Walmart’s chief concerns is freight cyclicality and securing trucking capacity to move during busy seasons. “The genuine concern is that when [Walmart] needs 30 trucks from a company, that they get those 30 trucks instead of losing out because they are [working] for Amazon,” he says. The company is “protecting its ability to get capacity when they need it,” he says.
The company is ‘protecting its ability to get capacity when they need it’
This practice doesn’t stop with just Walmart’s carriers, either. The company has issued a similar warning to other suppliers. Typically those that make use of Amazon’s cloud storage capabilities.
The Possible Storm Among the Cloud
Why would Walmart be concerned with suppliers using the Amazon cloud? Well, would you feel comfortable storing data in a competitor’s server? In the cases of a supplier, having proprietary information in the digital hands of a competitor can be more than a little discomforting. To that end, Walmart warning stands: Use this service, lose our business.
In the cases of a supplier, having proprietary information in the digital hands of a competitor can be more than a little discomforting.
It’s not just the proprietary information that makes Walmart execs a little uneasy. In the wake of the Petya cyber attack in June, there are a number of companies who are getting more than a little uncomfortable with the idea of all their precious information being vulnerable. But just how vulnerable is the cloud? Based on the service interruption that happened only a few months ago, it might be more vulnerable than you would expect.
But just how vulnerable is the cloud?
“Amazon Web Services, by far the world’s largest provider of internet-based computing services, suffered an unspecified breakdown in its eastern U.S. region starting about midday Tuesday. The result: unprecedented and widespread performance problems for thousands of websites and apps,” says a article from Georgia based Newspaper.
While there was no reported leak of information from this outage, consider again the recent wave of cyberattacks. The Petya ransomware virus all but decimated the shipping industry including ocean carrier giant, Maersk Line. Given the amount of information that’s stored in the cloud, it’s reasonable to expect that a competitor might consider a use of the service to be a potential breach of trust.
Is Walmart being reasonable with their concerns
At the end of the day, the question is this: Is Walmart being reasonable with their concerns, or are they simply trying to put pressure on their carriers to steer them away from Amazon? While both sides of the argument can be made, the answer likely lies somewhere in the middle.