Amazon Web Services on how its cloud infrastructure enables retail

AWS executives Tom Litchford and Phil Thompson talk about embedding internal innovation in retail businesses

AWS executives Tom Litchford and Phil Thompson
AWS executives Tom Litchford and Phil Thompson

At Amazon Web Services’ annual re:Invent conference in Las Vegas earlier this month, the 13-year-old division of the ecommerce giant introduced a flurry of new technologies for its customers — a base that includes hundreds of retailers including Brooks Brothers, DXL, Instacart, Eataly, Tapestry, Neiman Marcus, Zalora, Shop Direct and Ocado.

One of those new services is called the AWS Retail Competency. It was designed in collaboration with the AWS Partner network, born of a keen understanding of retailers’ need for trusted technology and consulting solution providers as they interpret their individual cloud adoption journeys.

Its chief objective is to take some heavy lifting off retailers’ plates. AWS Retail Competency identifies and validates industry leaders with proven customer success and technical proficiency services including artificial intelligence, machine learning, voice, Internet of Things and visual recognition.

AWS Retail Competency is just one of several new services announced by the company as part of its growing cloud infrastructure market. AWS is Amazon’s main source of operating income and the company is fixed on continued growth: CNBC recently reported that Amazon’s cloud business now offers over 175 different services for customers to use, 35 more services than they provided just a year ago.

It’s also just one of the many topics du jour AWS will discuss at NRF 2020 Vision: Retail’s Big Show. Tom Litchford, AWS head of worldwide business development, and Phil Thompson, AWS worldwide tech leader, recently chatted with NRF about what differentiates AWS’s cloud infrastructure from the competition.

The retail group was started inside AWS roughly two years ago and has made continuous strides. “We tell potential customers we’re born from retail, built for retailers,” Litchford says. “AWS was built to run Amazon Retail and all the innovation we’re driving internally can be embedded inside other retail businesses, too.”

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On one hand I can see why retailers would want to work with AWS. On the other I can imagine them not wanting to partner with the competition. How have you managed to convince retailers to “keep their enemies close,” if you will?

Litchford: We’re working with thousands of retailers around the world and we’re enabling services at a pace that would be difficult to replicate without the AWS cloud. What we hear from retailers is a desire to get out of the business of running data centers. We’re helping them lift those enterprise systems into the cloud. And, in much the same way that running Amazon Retail in the cloud has enabled tremendous innovation, the same is true for companies using AWS. With the core retail data systems running in the cloud, it frees them up to explore more emerging technologies such as voice, computer vision, IoT, AR — the list goes on.

There are ways to use voice [shopping], for example, that are forward-facing and there are ways to use it behind the scenes for operational efficiency. In one instance we worked with a customer struggling to be sure all their sandwiches were being built properly. They were relying on older kitchen systems with traditional displays. We said, “Why don’t we just put headsets on the associates and let voice guide them?” It changed their business. That’s the kind of innovation we can make happen quickly.

Thompson: Because AWS is a platform, we have over 175 services available to users and we have thousands of tech partners that are running their SaaS platforms on AWS, yet retailers are often surprised to learn that. It’s entirely possible, for retailers using our cloud infrastructure to tap into the AWS Marketplace and — with just a few clicks — install these programs and start configuring.

To Tom’s point, retailers that are running their business-critical applications on AWS now can innovate on top of that and they’re going to save a lot on costs — something in the order of 30 to 50 percent.

How would you define the key pillars of AWS’s business?

Litchford: The first pillar would be the ability AWS provides retailers to obtain a complete view of the retail business with data. The second revolves around getting data out of silos and the third pillar would be transforming customer engagement.

Thompson: Our sweet spot is helping retailers to get better control over their data so they can derive better insights from that data. In retail, data is siloed in all sorts of systems around the enterprise. We’re helping them build a retail data lake, consolidating the data into a single source. From there, we help them migrate their traditional BI analytic systems and can begin applying AI and machine learning.

Retailers are asking us how to get better customer insights and better operational insights. In terms of customer insights, it’s really all about personalization. From an operational perspective, it’s about getting the information in a timely fashion — not learning on Thursday night about something that happened on Monday.

Can you provide an example of how the AWS cloud infrastructure can benefit a retailer?

Litchford: A good example might be the hundreds of retailers now running their ecommerce systems on the AWS platform. The primary benefit they get from working with us is what we call “auto scaling.” In most cases, retailers have provisioned a ton of hardware and software that sits in their data center. For the most part, it sits there idle for nine months of the year, but in mid-November, as we approach Black Friday and Cyber Monday, retailers start ramping up capacity. As the system get more and more taxed by the volume of people placing orders, it becomes overwhelmed and crashes.

The cloud takes care of that via auto scaling. We ramp up resources when retailers need them most and we ramp them down when you don’t. And, you’re only paying for the resources when you’re using them, which is where you’re getting a lot of the cost savings.

Thompson: Closely aligned with cloud scaling are microservices. For today’s retailer, building a solid foundation for continuous innovation means the rapid adoption of new technologies or microservices to align IT with the demands of the business.

Traditional monolithic architectures are hard to scale because as an application’s code base grows, it becomes complex to update and maintain. Introducing new features is very difficult and it often limits innovation. With microservices, each application runs as its own service and communicates with other services. These microservices are built around business capabilities, and each service performs a single function.

With retailers moving more solutions to the cloud, what will IT data centers focus on in the future?

Litchford: Retailers need to double down on what they’re good at. If it’s product, if it’s brand, if it’s marketing, double down on that and outsource the rest. From where we sit, we believe that we’re enabling the whole retail industry and we’re providing the tools to the retail industry to innovate.

Thompson: It really circles back to the third pillar and helping retailers to transform customer engagement. Last year alone we had 1,957 feature releases. We’re using our own services to build new services. We’re accelerating, we’re getting faster, we’re innovating more, and what’s interesting is that over 90 percent of this development is coming from customer requests.

Amazon is customer-obsessed, and we’re working closely with other retailers to develop services and application that will help them become more customer-obsessed.

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