Amazon is the Enemy, but AWS Shouldn’t Be

Amazon is the second largest retailer worldwide, so, naturally, other retail companies view them as a competitor. Yet, as retailers research new tech vendors, they discover many use Amazon Web Services (AWS) for cloud computing. Therein lies the dilemma: if retail companies choose a vendor built on AWS, are they indirectly enabling Amazon, their competitor?

This article disproves myths regarding AWS, explaining why using AWS may actually hurt Amazon more than help them.

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Myth #1: Using AWS means Amazon can access my data

Many companies object to AWS for fear Amazon (the retailer) could access their data and use it for insights or ad retargeting

AWS, in fact, ensures your data is protected from even Amazon itself. Here’s how:

1. AWS encrypts your data: Beginning at the server level, when AWS receives data, it automatically encrypts it into non-human language.
2. You get the keys: AWS gives you the key to your data. No one, not even AWS employees, can retrieve your plaintext KMS keys except for you.

AWS offers more encryption details here, but to summarize, Amazon cannot access or monetize any customer data stored with AWS.

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Myth #2: It doesn’t matter what cloud service my vendor uses

Many tech solutions use AWS for a reason: to provide a top-tier offering. Simply put, AWS is the best cloud provider. Their system offers speed and compatibility that Azure, Google, and others can't provide. Such benefits include:

1. Performance: As the first cloud platform, AWS has years of experience over competitors. Their servers are provenly faster than Azure and others.

1. Reliability: Because AWS has dozens of global data centers, even if one goes down, the others are there to back it up. There is an extremely low risk of lost data or downtime.
2. Flexibility: With hundreds of services, AWS allows businesses to scale and improve their product easily. The breadth of services is unmatched by any competitor. For instance, their auto-scaling feature ensures uptime during traffic spikes at low costs. If retailers need more computing during certain seasons (like Black Friday), AWS automatically scales as needed just for that period.

While Google Cloud, Azure, and others provide solid options, AWS is the industry leader. Automatically excluding vendors who use AWS could lead to selecting an inferior solution. And, ultimately, Amazon benefits if you choose the lesser option, as we touch on next.

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Myth #3: Amazon benefits when I use AWS

Handing any money to Amazon (the company) feels like enabling a competitor, even if the money funnels through both a vendor and a subsidiary (AWS).

But, ironically, Amazon could actually benefit more from you choosing a vendor not on AWS.

To beat Amazon, you need to siphon traffic and customers away from them. You have to innovate, differentiate your product, and provide better user experiences. This involves using both the best tech and vendors out there.

If you’re debating cloud solutions in general, for example, building on AWS means you’re using the same cloud services as Amazon.com.

Rather than compete on commoditized features (cloud storage), you could use the best technology available (AWS) and save your efforts for building differentiating features to best Amazon the retailer.

This is especially true for vendors. Given scale economics and reserved instances, your vendor is likely securing good discounts from AWS already, so the amount you’re incrementally giving Amazon via this vendor is negligible. But if this solution is driving growth that is helping you compete with Amazon, this hurts Amazon much more than the incremental AWS fees will help.

For instance, imagine you’ve added a customer service chat bot to your site, powered by a third-party vendor who uses AWS. After launching it, sales increased by 1% thanks to real-time attention. What do you think Amazon would prefer: your AWS fees or your incremental sales?

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Myth #4: No major Amazon competitor uses AWS

Large Amazon competitors (and likely many of your competitors) use AWS. To name a few:

• Netflix: Netflix, Amazon Prime Video’s biggest competitor, uses AWS for nearly all of their computing and storage needs.
  
  According to their VP of Engineering, Netflix chose AWS, "because it provided us with the greatest scale and the broadest set of services and features.”
  
  Indeed, after migrating to AWS in 2016, Netflix reported faster load times, higher engagement, and 8x as many streaming members.
  
  Netflix knows that beating Prime isn’t going to happen on the back end; it comes down to providing a better product and user experience. Using the same cloud tools as Prime means competing on a level playing field.

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• ‍Otto Group: A large online retailer, Otto is a direct Amazon competitor. With 500 million yearly site visits, though, Otto depends on AWS’s infrastructure.
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• As Otto explains, “We aren’t hosted by our biggest competitor, and we never felt that AWS is positioning themselves that way. In our experience, it’s perfectly possible to be both competitors in the e-commerce market and technology partners.”
• Neiman Marcus: Niemans is another Amazon competitor. Switching to AWS, however, didn’t help Amazon nearly as much as it benefited Nieman Marcus. In fact, with AWS’s tools they can now launch new products 50% faster than before.

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Final thoughts

We understand your concern about tools built on AWS.

But it’s important to compete with Amazon where it counts: your retail platform. Even if using AWS technically helps Amazon’s bottom line in a circuitous way, what’s more important is front end innovation and driving revenue growth.

The best way to beat Amazon is to build a differentiated, innovative product. This may involve having to use vendors powered by AWS. While not ideal, the long-term benefits of more sales nonetheless hurts Amazon more than your AWS fees help them.