Walmart Partners With Microsoft to Take On Amazon

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Standing in long check out lines at Walmart may soon be a thing of the past!

Walmart has found a new friend in its ongoing battle to keep rival Amazon.com at bay.  On Tuesday, Walmart announced a five-year deal with Amazon cloud rival Microsoft Corp., and according to an analyst the two make a logical team.

Walmart will be able to access Microsoft’s leading cloud and AI technology to try to help its online and in store sales. In the past few months, Microsoft has been demonstrating technology that would enable retailers, like Walmart, to automate shopping, and eliminate the need for cashiers and checkout lines in stores.

Similar technology was recently unveiled by Amazon at their Amazon Go fully automated store in Seattle, where customers are able to scan their phones when they enter the store, and are automatically charged for items in their carts through cameras and sensors as they leave.

“Walmart’s commitment to technology is centered around creating incredibly convenient ways for customers to shop and empowering associates to do their best work.”  Walmart CEO Doug McMillon says in a statement.  (Source:  USNews, “Walmart Partners With Microsoft to Battle Amazon”)

Walmart also made a statement that they plan to move a major portion of Walmart.com and samsclub.com to Microsoft Azure.  Microsoft is currently Amazon’s lead competitor in cloud computing.

When you consider the fact that both Microsoft and Walmart have a common enemy in Amazon,  it makes sense for the two companies to align.  Microsoft and Walmart also both have complementary strengths in the retail business, analysts feel the two companies are a natural fit.

Of course its possible that Amazon may choose to license their Amazon Go Technology to different up and coming retailers, but Berenberg analyst Dusan says an Amazon Walmart partnership would be a longshot.

“Walmart was never going to partner with Amazon for obvious reasons, and Microsoft is the second largest provider of could solutions in the world,” Milosavljevic said on CNN.

A partnership with Microsoft could definitely aid Walmart in achieving its goal of 40% annual e-commerce revenue growth.

“We increasingly believe that Walmart’s US business will benefit near-term from the discount store cycle that we expect over the next five to ten years,”  Ohmes says.  “We believe Walmart ‘s omnichannel transformation in the US will continue to gain momentum and support more sustainable and predictable positive same store sales  and traffic at US super centers.”

Bank of America has a buy rating and $98 price target on Walmart stock.