Target is plotting a Big Move away From AWS as Amazon Takes Over Retail

Target is struggling to compete with Amazon in retail, but finds other ways to defend itself.

The discount retailer reduces the use of Amazon Web Services, according to sources familiar with the matter, as the company aims to better control its infrastructure and stop financing its main rival. The purchase of Whole Foods by Amazon is the latest sign of the growth depth of the e-commerce giant in all forms of retail.

Microsoft Azure is one of the cloud providers competing with nab Target Business Cloud, sources said, who asked not to be named because the plans are confidential. Google and Oracle are strengthening their cloud offerings.

Like all big box stores, Target is disturbed by Amazon, which is selling more and more expensive and faster. Target's annual revenues are lower than five years ago, although the company sold its credit card and pharmacy business during this period, and the shares lost 23% market value in the last 12 months.

On Monday, Amazon finalized its $ 13.7 billion purchase of Whole Foods and instantly reduced store prices by more than 30 percent in fruit and organic meat. From electronics and household items to toiletries and grocery stores, Amazon is developing its inventory.

While there is little that Target can do to hamper Amazon's dominance in retail, the appearance of other cloud sellers allows the company to spend its computing and storage funds elsewhere. According to a source, Target plans to aggressively change e-commerce, mobile development and operations away from AWS until the end of the year and possibly until 2018.

A spokesman for Target said the company does not discuss the details of its dealings with vendors, but added that "we are currently using several cloud service providers and will continue to do so." An Amazon rep declined to comment.

Target hinted at its plans in October when the company said it had adopted an open source system called Spinnaker that Netflix has built to enable development teams to customize their clouds. A key component is that "Spinnaker was built to work with multiple public clouds compared to just one," Target said in an article posted on its website.

Target is not the only major retailer targeting AWS. The Wall Street Journal reported in June that Wal-Mart told its technology vendors not to run applications in the Amazon cloud and that for its own infrastructure the company uses a combination of servers and on-site services provided by Microsoft and others.

"If I use Azure or Google, I would go right after these guys," said John Vrionis, a partner at Lightspeed Venture Partners who supports the startup infrastructure. "I'm sure they could pack a convincing migration plan and these segments are probably very thirsty for it."

However, AWS has not yet seen a mass exodus.

In the second quarter, AWS controlled 34 percent of the cloud infrastructure market, covering Microsoft, IBM and Google combined, according to Synergy Research Group. Brands and stores such as Brooks Brothers, Nordstrom, Nike, Under Armor and Lululemon are AWS customers, although sources say that many retailers are considering other cloud providers.