Walmart Inc. WMT -0.08% agreed
to use Microsoft Corp.’s MSFT -0.62% cloud
technology to power functions that could include algorithms for purchasing and
sales-data sharing with vendors, the two companies said, deepening a
partnership between two ofAmazon.com Inc.’s AMZN -1.29% most
powerful rivals.
The five-year deal, announced Tuesday, pairs Amazon’s
largest retail competitor with its closest challenger in cloud computing.
Walmart has warmed recently to working with technology companies, as it fends
off Amazon’s retail ambitions and expertise in data.
The shared rivalry with Amazon “is absolutely core to
this,” Microsoft CEO Satya Nadella said in an interview.
“How do we get more leverage as two organizations that have
depth and breadth and investment to be able to outrun our respective
competition,” Mr. Nadella said.
Walmart plans to deploy Microsoft’s machine-learning,
artificial-intelligence and other services to help employees, for example, pick
products that go on shelves and optimize the performance of freezers and other
equipment. The retailer is aggressively cutting costs as it invests in growing
sales online, and it is using tech to analyze its operations, an area of
Amazon’s expertise.
Some
retailers have been loath to use Amazon’s technology, in large part because
its cloud unit provides the majority of Amazon’s operating income, said Ed
Anderson, an analyst with market-research firm Gartner Inc. Microsoft’s Azure,
second in market share to Amazon Web Services, has developed into a viable
cloud-infrastructure alternative for many, he said.
Walmart has developed its own massive cloud-computing
operation, in part to analyze rafts of product and sales data, an area of
Amazon expertise. But Walmart has been expanding its use of Azure since it 2016
acquisition of Jet.com, which built its business on the Microsoft tech.
“We are moving fast, and we are looking for partners to
help us do that,” said Marc Lore, Walmart’s head of U.S. e-commerce and founder
of Jet.com.
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The Microsoft deal is the latest example of Walmart
collaborating with Amazon’s tech rivals. The retailer
agreed last summer to list its products on Google Express, the
online-shopping marketplace of Alphabet Inc.’s Google,
enabling voice-ordered purchases on Google Home products that compete with
Amazon’s Alexa service.
Now, Walmart and Microsoft will look into new ways to use
the retailer’s trove of customer and product data, with Microsoft engineers
embedded in Walmart offices to help. Those efforts include discussing plans to
jointly work on a new system to share product-sales data with suppliers, said
an executive familiar with the plans. Currently, consumer-goods companies learn
how their products are selling at Walmart through the system known as Retail
Link.
Walmart isn’t using Microsoft in at least one key area:
cashierless stores, Mr. Lore said. Walmart is working on developing them. It is
a niche where Amazon
has an early lead with its Amazon Go location in Seattle.
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