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For Amazon, Consequences Of Touching A Raw Nerve

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Amazon has created crises for retailers

Reports that Wal-Mart (WMT) is trying to stoke a revolt against Amazon’s (AMZN) Amazon Web Services (or AWS) highlight the risk of stepping on too many toes. Amazon, which first turned the world upside down for bookstores, has steadily worked its way up the retail ladder to the point that it has made victims of many legacy retailers.

Retailers such as Wal-Mart, Target (TGT), and Best Buy (BBY) aren’t happy with what Amazon has done to them. Because of Amazon, their sales have plummeted, and they have had to close stores and retrench workers—and the future still looks bleak. Amazon’s delivery infrastructure expansion, with plans to use drones to deliver packages, could leave many of these retailers gasping for breath.

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Amazon could rattle package transporters

Amazon’s delivery network expansion could also rattle shipping companies such as FedEx (FDX) and United Parcel Service (UPS), which currently move a lot of Amazon orders.

Trying to undercut lethal competitor

The Amazon-Whole Foods deal may have led Wal-Mart and others to say they have had enough of Amazon’s disruption. As retailers worry about what to expect in grocery competition as Amazon and Whole Foods unite, Microsoft (MSFT) sees the possibility of losing a major cloud customer. Whole Foods uses Microsoft’s Azure cloud. Amazon could switch it to AWS once the deal is closed. As the above chart shows, Amazon is the dominant public cloud vendor, according to Synergy Research Group.

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