Get in touch!

Advisement? Consulting? Speaking? Your thoughts? Let's talk.



What if Walmart Leveraged a Radical Partnership Tactic to Thwart Amazon?

Amazon, especially after the Whole Foods acquisition, is viewed by pundits and analysts of every stripe, as unstoppable and unconquerable. The premise is not new, yet many behemoth companies have been in a similar position only to be unseated from their dominance. Two examples are General Motors and Sears. So why would Amazon be the exception that can never be toppled from on high?

Amazon subsidizes the cost of its e-commerce business by way of its commercial cloud computing platform Amazon Web Services (AWS). It also brings in well over $1 billion from its Amazon Media Group (AMG) advertising division. Without the $12 billion+ AWS cash cow, it might not be able to carry out commerce operations in the manner that it does—essentially unprofitably.

AWS is so crucial that like Achilles’ heel if it’s revenue stream was wounded significantly, Amazon would likely have to adjust merchandising to a more conventional P&L model, damaging sales considerably.

This “partnership” concept seems far-fetched, unlikely, and fantasied, but each company has a profound stake in turning back Amazon.

Walmart has an increasingly gladiatorial relationship with Amazon even though they largely serve different consumers. The retail giant could decide to take on AWS by undercutting it, especially now that Amazon has announced a new AWS pricing structure that might soften the service’s profitability. Walmart wouldn’t build their own cloud service, rather, they would back an existing competitive offering, lowering its cost to a threshold that users find far too reasonable to resist. Maybe half the cost? Walmart’s recent demand that its vendors give up AWS signals that it knows the implication of the service and that attacking it (symbolically so far) is fair game.

It begs the question “Who would be partner to such an idea?”

Fifty-five percent of product searches start on Amazon. That’s a significant hit to Google’s core business: ad supported search. On its own, the tech giant has reason to counter its revenue depletion by slashing Google Cloud Platform fees to impact AWS and trigger its net effect. But if Walmart backed Google’s cloud for the purpose of stopping the Amazon commerce freight train, forcing Amazon to be more reliant on merchandise profitability, both parties’ respective interests would reap considerable gains.

This “partnership” concept seems far-fetched, unlikely, and fantasied, but each company has a profound stake in turning back Amazon. Yet, they are already working together selling Walmart products via Google Home. Plus, they could effectively form a federation of sorts, by cheaply servicing the web serving needs of many thousands of retailers and m/e-commerce merchants who feel similarly about Amazon. And, uniting merchants under the Google Home banner just might crack open the opportunity Google is desperately seeking to topple Alexa.

Untold billions of dollars, tens or hundreds of thousands of jobs, and the future of retail and m/e-commerce are at stake. Radical partnership? Not at all.