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Online retailer Zulily picks Amazon, an e-commerce rival, for cloud-computing deal

UPDATED: Tue., June 12, 2018, 8:06 p.m.

At online retailer Zulily, product stylist Jacey Frango prepares children’s clothing to be photographed in this 2014 file photo. (Mark Harrison / Seattle Times)
At online retailer Zulily, product stylist Jacey Frango prepares children’s clothing to be photographed in this 2014 file photo. (Mark Harrison / Seattle Times)

Online flash-sale retailer Zulily says it has nearly finished putting the bulk of the software it uses to run its business on the cloud-computing infrastructure of Amazon Web Services.

The announcement – the latest in a series by AWS meant to tout its momentum, as the leader in rented computing power and software services tries to fend off rivals Microsoft and Google – reads like many prior examples, including Ryanair, Shutterfly and Cox Automotive.

But Zulily’s move stands out because the company, which sells items from baby clothes to perfume in daily flash sales, competes directly with Amazon’s core online retail businesses.

There are reasons some companies are cautious about such a move.

Large retailers like Target and Kroger are said to be avoiding Amazon’s cloud. AWS is already the Seattle company’s most profitable business unit. Why spend money to help a rival? Some caution that running software on Amazon’s servers runs the risk of tipping off the company’s retail groups to trends or other insight that might give them a competitive advantage.

So what does Zulily think about putting its critical business information in the hands of the dreaded Amazon?

“We’re not,” said Luke Friang, Zulily’s chief information officer. “We’re putting it on AWS’ servers. So we don’t see it that way.”

Amazon says it largely runs AWS as a separate business, with its own chief executive and separate technology and sales teams. To land customers, AWS executives guarantee they don’t examine corporate records and other sensitive information stored on their servers.

“I would lie if I said the question didn’t come up,” Friang said. But AWS allayed those concerns for him years ago, he said. When Zulily started its search for a cloud-computing provider last year, “we didn’t even think about it.”

Increasingly, companies of all sizes are turning to giant cloud-computing providers to run their software. The efficiency of giant server farms working for many customers at once can make the option less expensive than owning and operating a corporate data center, and rented computer power from the likes of Amazon can ramp up and down quickly without wasting resources during down time.

That flexibility has long been a consideration for Zulily, which launches sales each morning that it broadcasts to its users, a process that requires sudden, intensive software use.

Most of the software Zulily uses was built in-house, Friang said, including the tools that catalog and store product photos, and inventory and customer tracking programs. The company, founded in 2009 and purchased in 2015 by home-shopping giant QVC, has long run those programs from servers operated by other companies instead of its own.

“Just about everything that’s critical to the business is technology that we build,” said Friang, who, prior to joining Seattle-based Zuiliy worked for Drugstore.com and Costco Wholesale’s e-commerce business.

Last year, the company decided to centralize most of its services, previously split between Rackspace and Google Cloud Platform, onto a single provider, kicking off a search that included consideration of AWS, by far the market leader in cloud-computing services, as well as Microsoft and Google.

Amazon, he said, offered the widest variety of services, and the most useful tools. Zulily started moving applications to AWS in September, and aim to wrap up the transition later this month.

Zulily won’t be an exclusive Amazon shop. The company runs Microsoft’s Office 365, the cloud-based variant of its productivity suite, and will continue to use Google Cloud Platform for some data services and analysis and prediction tools.

But the move to AWS had caused Friang to start using some Amazon services, including security software, that he hadn’t considered using previously. “We are going to be exploring quite a bit over the next six months or so,” he said.