What: Amazon extends its retail media technology to competitors, offering access to its USD 50 billion advertising business while raising concerns about data privacy and market control.

Why it is important: This development signals a potential power shift in retail media, where Amazon's technology could become the industry standard, similar to AWS in cloud computing, fundamentally altering how retailers approach their advertising strategies.

Amazon's latest venture into offering its advertising technology to other retailers represents a significant strategic move in the retail media landscape. With a commanding 75% share of retail media ad spend according to eMarketer, Amazon's proposition combines access to its massive advertiser pool with sophisticated technology infrastructure. The offering has already shown promise through beta partner iHerb, which shares 1,200 advertisers with Amazon. Despite the apparent advantages, including access to battle-tested technology that powers Amazon's USD 50 billion advertising business, the proposition raises significant concerns about data control and competitive dynamics. Major retailers like Walmart, Target, and Kroger have historically avoided Amazon's AWS cloud hosting due to competitive concerns, highlighting the industry's wariness of dependency on Amazon's infrastructure. However, the success of Instacart's Carrot ads platform demonstrates how potential competitors can become valuable infrastructure partners when the value proposition is compelling enough. The initiative particularly appeals to mid-sized and smaller retailers seeking to accelerate their retail media aspirations without significant infrastructure investment.

IADS Notes: Amazon's bold move to offer its advertising technology to retailers comes at a pivotal moment in retail media's evolution. As noted in March 2024, the industry was already on track to reach USD 100 billion in US revenue by 2027, demonstrating the sector's explosive growth potential. This timing is particularly significant given Walmart's aggressive counter-strategy, which saw its advertising business grow by 30% in August 2024, leveraging its vast physical network to challenge Amazon's dominance. The broader industry response was evident in October 2024, when major retailers like Boots and Co-op expanded their retail media networks, suggesting a growing appetite for independent solutions. However, the transformation isn't without its challenges – research from July 2024 indicated that while retail media networks could potentially double retailers' margins from 1.7% to 4.3%, success heavily depends on having the right technology infrastructure and dedicated teams. This context makes Amazon's proposition both appealing and concerning for potential partners, particularly mid-sized retailers seeking to accelerate their retail media capabilities without significant infrastructure investment.

Amazon wants to sell its ad-tech to retailers. Is it a Trojan horse?