Last Friday, the New York Times published an article covering new services being provided by Amazon’s Web Services. Amazon will begin granting small business access to their massive distribution centers around the country. Having become the masters in online order fulfillment, Amazon has decided to begin providing components of their existing infrastructure for a small fee. This is an addition to their existing system that was already enabling start up web ventures to reduce the growing pains that typical internet start-ups experience. When I met the Chief Technology Officer of Amazon at the Future of Web Apps conference earlier this year in London, he was heavily promoting the S3 services.
For those that are unaware of S3 or don’t understand the efficiencies gained by using the service, let me tell you, it can be a lifesaver. For example, start-ups that are fortunate (or unfortunate) enough to experience the Techcrunch or Digg effects (getting a massive onslaught of traffic from being posted on Techcrunch or having a popular Digg article) can also have their sites crashed from the sheer volume of visitors. As your site gains popularity, you can experience significant scaling issues (as Twitter is currently experiencing). Thanks to Amazon, many of those issues can be temporarily avoided by taking advantage of the S3 services.
Now, thanks to the new services that Amazon plans on providing, even the non-tech saavy individual can benefit from Amazon’s economies of scale. Although there are gains though, there is still a downside. As the article highlights:
Sellers are effectively paying to ship their goods twice. But the program is aimed at small online retailers who have filled up the space in their basements and attics but want to avoid buying and managing their own warehouses.
One has to wonder though if this is a good sign that Amazon has begun granting access to small businesses. Amazon is under the pressure of stockholders to produce consistent revenue growth, but as that begins to slow (although that wasn’t the case last quarter) Amazon has been forced to look in new places for revenue. Their target market? Small businesses. I wonder if this is a single occurence, or if it is a trend that will become more common as technology companies try to find new sources of revenue.