Tuesday, November 8, 2016

Protesting Amazon Web Services

            An article on Bloomberg Businessweek entitled “Don’t Let Your Data Sleep With the Enemy” by Sarah McBride caught my eye as I was scanning the news page. The author spoke mainly about Amazon and how its Web Service helps their e-commerce business. Amazon Web Services (AWS) is a subsidiary of Amazon.com and offers “a suite of cloud-computing services that make up an on-demand computing platform.”  McBride refers to this service as “the enemy” because the companies that use it are only helping to support Amazon.com’s e-commerce business, meaning that they’re helping their competitor. This issue is important because many companies in retail are struggling with the decision to keep buying servers with Amazon services or move their business to a different provider. I find it interesting that these companies are only starting to factor in that Amazon is a direct competitor into what services they want to use for their businesses as well as the fact they are trusting their competitor with their data. It is obviously more difficult to integrate to a different system, so the decision would have to be realistic for the company, but I do not see how choosing a different provider was not at the forefront of any company’s thoughts. As is mentioned in the article, Amazon “just knows how to do it,” but I do think it is important for online retailers to keep track of their competition, and Amazon could further undercut the market with the help of their Web Service. Also, the article briefly mentioned that moving to the cloud would allow companies to handle higher volumes of sales over times such as holidays. Holidays are a time that retailers should take advantage of because it is a time that sales are almost guaranteed. If they do not hold the capacity to handle larger sales volume, they lose out on opportunity, therefore not switching would become an opportunity cost. Once again, pros and cons must be weighed before simply switching, but frankly, the benefits seem to outweigh the risk. Especially because moving a business to the cloud could begin to slow Amazon down as a competitor in e-commerce.

            Although, Amazon Web Service is quicker and cheaper than a physical server farm, different cloud providers offer more in the long run and prevents Amazon.com from gaining extra profits and putting the data of a business in the hands of their competitor. Furthermore, there are much more options when it comes to cloud services that are preferable depending on what the company wants from a service rather than stick with AWS. Overall, I think that more and more online retailers will start to take notice of how the gap between Amazon.com and the rest of the e-commerce world will begin to inch farther apart. This will be the encouragement that they need to switch to other cloud providers that are not in direct competition with them and keep their data safe with a larger holding capacity.

2 comments:

  1. Without a doubt, Amazon and its subsidiary Amazon Web Services have taken the forefront of the e-commerce business over the past few years. Part of the reason they are so good at what they are able to do is because of the big data that it collects through customers who buy certain items, look at certain items, and search for different items. It seems that Amazon values the potential use of other company’s data more than other online retailers, so being able to get that data from manufacturers and retailers is a surefire way for Amazon to retain customers who use their service. This is due largely to the fact that the companies who use Amazon as a distribution channel are not guaranteed to sell their products through Amazon – another company that sells the same or similar products can get more views on their listed items through the data analytics given to Amazon by the original company!

    To combat this issue, some of the larger retailers have taken the more expensive route and create their own solutions for online retail and e-commerce. For example, I know Wal-Mart recently acquired Jet.com for billions of dollars in order to have a web platform that was just as capable and powerful as Amazon’s. By doing so, they get to keep all of their data to themselves, and don’t have to share that with Amazon.

    Personally, I think Amazon is so successful with this business model because they know exactly what data to collect and use for customers, and which data is irrelevant and unnecessary. I like to use Amazon again and again because like you said – “they do it just right”. For businesses that are smaller and just want to get their products sold to customers, Amazon is a great business to go through. These types of companies, however, are usually small and do not care about their data (in other words, they don’t give it any value). For bigger companies that are more evolved, this may not be the case, and that is where looking for another option other than Amazon comes into play. I think at the end of the day, the smaller businesses that give all of this big data to Amazon feeds Amazon’s ability to grow and become bigger and bigger, only proving that big data does indeed have a value if used correctly.

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  2. Evidently, Amazon can be recognized as some sort of monopoly when it comes to e-commerce. They have changed the game by offering various categories of clothing, home goods, school products, and much more all throughout the world. I believe that their incredible success and name recognition has allowed their subsidiary to become so successful as well. Many companies see that Amazon is very successful and therefore trust that they must be using their data as efficiently as possible to allow them to reach that level of success. Competitor companies place their trust in Amazon Web Services to collect the appropriate data and use it to their advantage to influence relevant customers. From the foreground this sounds like a very useful service however, the fact that Amazon now has the opportunity to withhold the data of their various competitors can be detrimental.

    I believe that although competitor companies are taking the right route by following in the footsteps of a powerhouse company, there are definitely better non business threatening options. There are various third party marketing companies that specialize in data collection and product marketing. The issue with going to "monopolized" companies is that there is always a competitive advantage. They are aware of the reality they this data holds great value that they can benefit off of in many different ways. Essentially, they get away with providing a service while simultaneously improving their business.

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