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My guess is that they know that Amazon is using AWS profits to fund losses in the ecommerce business. If they can get some large retailers off AWS, that might r

by dkrich 9y ago

My guess is that they know that Amazon is using AWS profits to fund losses in the ecommerce business. If they can get some large retailers off AWS, that might reduce Amazon's ability to pour cash into ecommerce and hurt their margins. It seems that a lot of people forget that Wal-Mart dwarfs Amazon in sales volume for companies like Procter and Gamble so probably have more leverage over them than most think.

toyg 9y ago
But retail-oriented companies are just a percentage of the global market. I don't think Walmart really has the power it thinks it has. As a distributor, I'm sure they know very well how to bully their supply chain, they are used to being the biggest fish in their pond; but in the grand scheme of things, from an AWS perspective, that supply chain is not that massive. Every company doing business with Walmart could drop AWS tomorrow (if they even use it today, which is not a given, considering that their core businesses are likely not internet-first) and AWS would probably survive. Retail and manufacturing are just two sectors, there are plenty more.
- dkrich 9y ago
  Yeah, I don't disagree that AWS can survive without Procter and PepsiCo, but the point is that Wal-Mart is just trying to take a cut out of Amazon's bottom line (however large or small). This is becoming an all-out war between Wal-Mart and Amazon and I think Amazon feels more threatened by Wal-Mart than a lot of people think. For example, Amazon recently cut the minimum order size to $25 from $35 for free shipping in direct response to Wal-Mart reducing it's minimum to $35. My guess has been that Amazon wants to continue to add value to the Prime program in the hopes that they can start to ratchet up the cost or create different classes of Prime to try and extract more profit. The more steps that competitors like Wal-Mart take to pressure Amazon's ability to cross-subsidize and raise the price of Prime, the harder it's going to be for Amazon to extend its lead in ecommerce.

by dkrich 9y ago

toyg 9y ago

But retail-oriented companies are just a percentage of the global market. I don't think Walmart really has the power it thinks it has. As a distributor, I'm sure they know very well how to bully their supply chain, they are used to being the biggest fish in their pond; but in the grand scheme of things, from an AWS perspective, that supply chain is not that massive. Every company doing business with Walmart could drop AWS tomorrow (if they even use it today, which is not a given, considering that their core businesses are likely not internet-first) and AWS would probably survive. Retail and manufacturing are just two sectors, there are plenty more.

dkrich 9y ago
Yeah, I don't disagree that AWS can survive without Procter and PepsiCo, but the point is that Wal-Mart is just trying to take a cut out of Amazon's bottom line (however large or small). This is becoming an all-out war between Wal-Mart and Amazon and I think Amazon feels more threatened by Wal-Mart than a lot of people think. For example, Amazon recently cut the minimum order size to $25 from $35 for free shipping in direct response to Wal-Mart reducing it's minimum to $35. My guess has been that Amazon wants to continue to add value to the Prime program in the hopes that they can start to ratchet up the cost or create different classes of Prime to try and extract more profit. The more steps that competitors like Wal-Mart take to pressure Amazon's ability to cross-subsidize and raise the price of Prime, the harder it's going to be for Amazon to extend its lead in ecommerce.