Photo: Walmart
Should Walmart restrict carriers from working with Amazon?
SC Digest Editorial Staff
Through a special arrangement, presented here for discussion is a summary of a current article from Supply Chain Digest.
Satish Jindel, president of SJ Consulting Group and ShipMatrix, caused quite a stir in late June when he told attendees at the SMC3 conference in Palm Beach that Walmart is sending veiled messages to trucking companies that carry its freight that if they do business with Amazon too, it may not want to work with them anymore.
“Walmart would prefer to do business with carriers that are not doing business with Amazon,” in part due to concerns about their ability to handle high volumes of deliveries during peak times, Mr. Jindel afterwards told the New York Post.
Jindel added that Walmart began having these conversations with carriers over the past 30 days or so, and that he has talked directly with some of those carriers.
“These developments, if true, are likely to have significant implications for US transportation companies as Amazon and Walmart remain two of the largest users of truckload capacity,” wrote Deusche Bank industry analyst Amit Mehrotra in a research note based on the news.
However, a Walmart spokesman denied that the company has had discussions with trucking companies about high-peak delivery times or about Amazon, adding that “it would be illegal for us to tell them who they can do business with.”
Walmart also sent an e-mail to Heavy Duty Trucking magazine that “This report is false.”
The news came a week after The Wall Street Journal reported that Walmart was also telling its technology vendors that they cannot run any of their software on Amazon’s AWS Cloud platform.
Part of that demand may be related to just not wanting to even indirectly generate revenues for Amazon, but Walmart spokesman Dan Toporek added, “It shouldn’t be a big surprise that there are cases in which we’d prefer our most sensitive data isn’t sitting on a competitor’s platform.”
The Journal also reported that other large retailers also have requested that service providers move away from AWS, according to technology vendors that work with retailers.
- Walmart Denies Telling Carriers It Doesn’t Want Them Hauling Freight for Amazon – Supply Chain Digest
- Walmart escalates war of words with Amazon – New York Post
- Wal-Mart to Vendors: Get Off Amazon’s Cloud – The Wall Street Journal
- Consultant: Walmart Doesn’t Want Its Carriers Hauling for Amazon – Heavy Duty Trucking
Discussion Questions
DISCUSSION QUESTIONS: Should Walmart be seeking preferential treatment from carriers that includes limits on working with Amazon? Do you see Walmart and other retailers asking technology partners to stop using Amazon Web Services for their cloud-computing service needs as a different issue?
Poll
BrainTrust
Phil Masiello
Founder and CEO, CrunchGrowth Revenue Acceleration Agency
Roy White
Editor-at-large, RetailWire
Amazon Web Services and the issue of carrier limits when working with Amazon are two completely different issues.
There are many reasons why Walmart and other businesses should be extremely cautious about having their sensitive, competitive data residing on AWS cloud servers.
The business of hauling freight is an independent contractor decision that does not involve sensitive data or security. Walmart has the volume and resources to compete for carrier space. It is the smaller retailer who will be squeezed out during peak holiday seasons.
Typical Walmart. Typically predatory tactic.
Walmart is looking for any edge it can get to compete with Amazon. It is quite clear that they cannot beat them on customer loyalty or service.
It is one thing to not want your data on an AWS server. That argument makes sense. But where I choose to put my data is not Walmart’s business. And telling a vendor what trucking companies they can use is ridiculous.
I have sold on both Amazon’s and Walmart/Jet’s marketplaces. Rather than focusing on these trivial issues, maybe Walmart should focus on creating a better experience for vendors and sellers. Their marketplace is terrible to operate on.
I have been a customer of both Amazon and Walmart/Jet. Rather than focusing on these trivial issues, maybe Walmart should focus on delivering a better experience for the consumer. It took them 12 years after the launch of Prime to offer free two-day shipping. That says it all.
On the AWS front, this makes perfect sense. AWS is the main profit engine for Amazon. So why would Walmart — or any other retailer for that matter — want any of their systems or data to be run on a competitor’s platform, helping fund the competition? This seems sensible. Other retailers should pay close attention and start inquiring about whether their vendor systems, like the POS or OMS, are on an AWS cloud.
Walmart seeks preferential treatment from everyone. That should not be a surprise. The question is the nature of what that entails.
IMHO there is a big difference between saying we don’t want data that relates to our business on AWS and we don’t want you hauling for us if you also haul for them. One is justifiable and the other is not.
Is our economy going to be a post-WWII economic structure? The keiretsu approach to Japanese commerce in which sourcing, partnership and commerce were directed within a group of companies served Japan’s economic development well. With the exception of Mitsui, all keiretsu were dismantled as part of the McArthur plan after WWII. The 500+-member Mitsui enterprise (which included firms such as Toyota and Sharp) was able to argue that commerce was conducted at arms length and that firms in the group operated with greater separation than others. Mitsui continues successfully today. Product/service buyers will always influence suppliers to their advantage in a free market economy, and astute suppliers will handle it well and grow.
Raise your hand if this surprises you!
I don’t believe it’s legal for Walmart to do so. As to comments that AWS is a bad idea but trucking is OK, I think the real context that needs to be considered is that many retailers are in a fight for their lives with Amazon. Why should they give away any revenue to support Amazon’s success?
I have had a run in with Walmart before and this is how they operate. I could elaborate but, needless to say, they are bullies and think they can still get away with making outrageous demands of these trucking companies. Amazon is now the 800lb. gorilla and Walmart is pouting, so let’s see who caves first. The fight for the retail dollars is down to three or four players and something has to give.
It makes sense that AWS shouldn’t be a site in which Walmart data might reside. That said and ethics aside, the answer to the other question, whether or not technology (or others ultimately) suppliers to Walmart should be working with Amazon, boils down to whether or not a supplier wants to work with Amazon or Walmart. For decades, Walmart has been making serious demands on its suppliers. Yes, it did help them but, at the end of the day, suppliers had to meet these demands or go elsewhere. The reward was doing business with the largest retailer in the world with growing sales and increasing numbers of stores. The other side of the coin was loss of a huge business and possible bankruptcy. Now, however, there’s a choice, and the weight of the trends currently would appear to favor Amazon. For a supplier, looking to the medium and long term, the right decision may well be to stiff Walmart and follow the increases in sales and scale by going with Amazon.
Walmart loses this battle on all counts — including using AWS (eventually).
Wrong battleground. Wrong battle plan.
Walmart likes to exert influence. This should surprise no one that they would try to use their influence on their transportation providers. It’s a slippery slope and hopefully it truly is a false report or Walmart will ultimately suffer the consequences for this.
On the other hand, with respect to AWS — the real question is, why do ANY retailers support using AWS directly or indirectly through their technology suppliers? Why feed the beast its most profitable business?
Walmart put the trucking issue to bed with a denial and an admission that doing so would be illegal. They would lose badly in attempting such a scheme.
The more interesting issue is AWS. Data sensitivity is a bonafide concern, and Walmart’s move can encourage other retailers to follow suit with their technology vendors.
I hope Microsoft Azure is listening, as they can grab business with value-added solutions for retailers, such as customer history machine learning for better service and recommendations, better kiosk and tablet support for associates, and less time maintaining servers than AWS requires.
I’m sorry but this seems not like a retail issue as much as a legal one: restraint of trade and anti-trust violations. Of course this is — politically speaking — an excellent time to engage in such behavior (or at least that’s my perception of it) and the disingenuous claim will be offered up that everything is “voluntary,” but regardless, there’s nothing here for anyone outside of Walmart to support.
If Walmart thinks these moves, which may be illegal, will negatively impact Amazon, they are mistaken. This is not the way to compete, nor the way they will slow Amazon’s growth.
To put information like this out into the general market without indisputable evidence is a corporate integrity decision. Professional marketing and consulting individuals and companies have no business in hearsay presentations. Amazon and Walmart combined are not anywhere near being half of the national retail market. And as for the world market they are hardly significant.
A better perspective might be to demonstrate the risks and how to’s for small and medium businesses to service companies that may be over 10% of their revenue and resources and 20% of the net profits. I have experienced this dilemma firsthand early in my career and the solution was not so clear as one might think, but we did solve the problem and grew the company past the point of critical impact.