Kroger Plans To Avoid Amazon In Web Service Transition

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The grocery store chain Kroger is moving its IT services into the cloud.

However, the company plans to skip the tech giant Amazon and instead rely on the cloud computing services of Google and Microsoft to do so, according to Chief Information Officer Chris Hjelm. The company will avoid Amazon due to the Seattle firm’s recently-announced acquisition of the grocery store Whole Foods, making Amazon a competitor to the grocery store.

After purchasing the health-based Whole Foods market, Amazon immediately dropped prices at the store in a bid to make it more appealing to customers.

“For obvious reasons competitively, it doesn’t make sense for us to do a ton to help grow that business for them,” Hjelm said according to CNBC. Kroger began utilizing Microsoft Azure and Google Cloud in previous years, Hjelm said, and already has some ongoing business using AWS. But the recent acquisition of Whole Foods means Kroger will not be utilizing any more of their services, Hjelm said.

Companies like Walmart and Target are joining Hjelm in avoiding using Amazon services in order to avoid aiding Amazon, which has become a major competitor for both general stores and specialized stores, according to CNBC.

Amazon Web Services has seen a massive increase in sales this year. The service’s income has risen from just over $3 billion in sales in the third quarter of 2016 to nearly $4.5 billion in the third quarter of 2017, according to Geekwire. Many companies are offering Django to AWS deployment and the market is proliferating

AWS currently holds 34 percent of the market share of cloud infrastructure, with Microsoft trailing behind at 12 percent and Google, in fourth place, handling just 6 percent of the market, according to CNBC.

In a statement, an Amazon representative said shoppers aren’t interested in retail battles behind the scenes, claiming Amazon is unconcerned about the announcement from Kroger.

Kroger would not disclose what systems it was moving to the cloud, but Hjelm said the company had split several millions roughly evenly between the two companies.

He said Kroger is using Google’s services for e-commerce and big data-based plans such as smart pricing, which prices items based on demand, availability and competition. Azure is primarily used to develop digital shelf technology to help Krogers shoppers in stores receive information on their smartphones, Hjelm said, according to CNBC.

Kroger also announced Tuesday that it would be partnering with Instacart to deliver groceries from Ralphs stores directly to customers, according to Forbes. The move is expected to increase Kroger’s competitiveness in light of Amazon’s Whole Foods acquisition.