Cloud investment powers Walmart e-commerce business

Reuters correspondent Nandita Bose reports that retail and e-commerce company Walmart has invested heavily in its six server farms in the last five years for taking on

Walmart’s online sales have grown in the last three consecutive quarters. Powering that increase are thousands of proprietary servers that enable the company to crunch almost limitless customer data in-house.

Most retailers globally including India’s Flipkart rent the computing capacity they need to store and manage such information. Global cloud companies include Amazon Web Services (AWS), Google, Microsoft, Alibaba, among others.

Walmart’s decision to build its own internal cloud network shows its determination to grab a bigger slice of online shopping, in part by imitating Amazon’s use of cloud-powered big data to drive digital sales.

Walmart invests in technology to target online shoppers with more customized offers and improved services.

“It has made a big difference to how fast we can grow our e-commerce business,” said Tim Kimmet, head of cloud operations for Walmart.
Walmart network operations center in CaliforniaWalmart is using cloud data to stock items frequently ordered by customers via voice shopping devices such as Google Home.

The network is helping the retailer improve its in-store operations as well. Using data collected from millions of transactions, the company increased the process by which customers can return online purchases to their local stores by 60 percent. Walmart can adjust prices at its physical locations almost instantly across entire regions.

“We are able to execute change faster,” Jeremy King, Walmart’s chief technology officer, said. Walmart can now make over 170,000 monthly changes to software that supports its website, compared to less than 100 changes previously.

Walmart, the world’s largest brick-and-mortar retailer, holds just a 3.6 percent share of the U.S. e-commerce market compared to Amazon’s 43.5 percent, according to digital research firm eMarketer.

Walmart’s online revenue climbed 50 percent year-over-year during the third quarter, helping it post its strongest-ever quarterly growth since 2009.

Walmart has stored information in smaller internal data centers for years. It uses public cloud storage for non-critical data. Most retailers rent server capacity offered by companies such as Amazon Web Services, Alphabet Inc’s Google, Microsoft and IBM.

The strategy of Walmart to build a network that is not reliant on a single third-party cloud technology provider has transformed its ability to understand shoppers. About 80 percent of Walmart’s cloud network is now in-house.

Amazon Web Services (AWS) generated $18.34 billion in revenue in 2017 and has garnered 26 percent of the cloud market, according to estimates from Jefferies Group.