Amazon SWOT Analysis analyzes, Amazon’s popularity is well-known across the world. Amazon has more than 300 million active customers as well as 100 million customers across the globe. As the world’s most popular internet-based retailer Amazon is awash with achievements with a staggering profit, as well as great launch campaigns. Amazon is the world’s leading online retailer and its success has spurred other physical, brick, and mortar retailers to have an online presence. It is often referred to as the online equivalent of Wal-Mart because of its reach and global footprint as well as its aggressive pricing strategies.
Did you know?
When Amazon began, did you know that the bell rang in the office following each purchase? In time, the bell was taken down due to the volume of sales.
Amazon can leverage on several opportunities in the emerging markets and can ensure that its global supply chain of networked warehouses deliver substantial value for itself and its stakeholders. Further, Amazon has to rethink its business model of operating at close to zero margins and the fact that the company has not returned a decent profit in the last five years gives it much room for improvement.
Jeff Bezos laid the foundations for Amazon back in the year 1994. The company was initially set up as an online store, but then morphed into an online giant that sells all kinds of products starting from A to Z exactly as the logo of the company.
This can only be achieved through a firm with extensive knowledge, experience and innovative strategies. To determine the strengths of the company potential, weaknesses, opportunities and threats, it is necessary to conduct a SWOT analysis by Amazon.
Amazon At A Glance – Amazon SWOT Analysis
Company: Amazon.com, Inc.
Founders: Jeff Bezos
Year of establishment: 5 July 1994, Bellevue, Washington, United States
CEO: Andy Jassy
Headquarters: Seattle, Washington, United States
Employees (Dec 2020): Almost 1 million people
Ticker Symbol: AMZN
Annual Revenue (Dec 2020): $386 Billion
Profit net income (Dec 2020): $21 Billion
Products & Services: Amazon.com | Zappos.com | IMDb | Junglee | Ring | Whole Foods Market | Amazon Web Services (AWS) | Blink | Alexa.com |
Company Website: www.amazon.com
Amazon SWOT Analysis
SWOT Analysis Of Amazon analyzes the brand based on its strengths weak points, weaknesses, opportunities, and threats. With Amazon SWOT Analysis it is clear that the advantages and disadvantages are internal factors, while threats and opportunities are external elements. Here we are going to talk about Amazon SWOT Analysis. Below Is The Detailed SWOT Analysis Of Amazon.
Amazon Strengths – Amazon SWOT Analysis
1. Strong brand name: Amazon makes up a significant part of the global e-commerce landscape, and its brand is recognized worldwide.
2. Brand valuation: Amazon is ranked second in Interbrand’s Global Brand Ranking 2020 (Apple is ranked first, and Google is ranked third), having a brand value of $200 billion.
3. Customer-focused: Amazon serves a vast number of consumers’ everyday needs at low pricing. As a result, it has become a customer-focused brand.
4. Differentiation and Innovation: Amazon regularly introduces innovative new products and services to its offering, from the drone delivery service to the Withing Aura smart sleep system. By doing so, they differentiate themselves from the competition.
5. Cost Leadership: The company avoids the overhead of operating physical retail shops by selling everything online. The economies of scale allow Amazon to control expenses and reduce inventory replenishment time. The company has established strategic alliances with various companies, including Evi Technologies, Thalmic Labs, Shoefitr, and The Orange Chef. This company’s low-cost structure is due to its value chain system.
6. Largest Merchandise Selection: Amazon has a diverse product mix that entices online shoppers to make the majority of their purchases from it rather than from other online shops. As of 2018, Amazon’s Amazon.com Marketplace had sold 562.3 million products.
7. There are many third-party suppliers: Because of the tremendous level of traffic on Amazon’s sites, a great number of third-party retailers have joined the Amazon platform to sell their products. According to Fulfillment by Amazon (FBA) data, over 2 billion items are available from third-party vendors.
8. Think Globally and Act Local strategy: Amazon has benefited the most from this strategy. Local supply chain companies are Amazon’s partners to help it compete with domestic e-commerce rivals. The company offers services tailored to meet local demands and fits into the culture of the country.
For example, India has created a market campaign called “Aur Dikhao” to encourage people to look for more items.
9. Numerous acquisitions: Amazon has reported huge profits from several successful acquisitions, including Zappos.com, Woot.com, Junglee.com, and IMBD.com.
10. Involved in three important companies: Amazon Marketplace, Amazon Web Services (AWS), and Amazon Prime are three key businesses of Amazon that collaborate and support one another. They produce significant earnings and benefits for the organization as a whole.
11. Market Leader: Amazon is without a doubt the market leader in the online retail industry, with a market value of over $1 trillion and annual revenues over $386 billion.
12. Logistics and distribution systems: The logistics and distribution systems employed by Amazon are extensive. It even has set charges for various delivery periods. As a result, it provides consumers with dependable, secure, and timely commodities and supplies.
13. Raising the minimum hourly wage to $15: Amazon is one of the first retailers to raise the minimum hourly wage to $15. Target pays $12 an hour, Walmart pays $11 an hour, and Costco pays $14 an hour. 12. Market Share: According to eMarketer, Amazon controls 38.7% of the e-commerce market. Amazon is used by about two out of every five people. To put Amazon’s domination into perspective, Walmart, which is in second place, has only 5.3 percent of the e-commerce industry.
14. Supply Chain: According to RBC Capital Markets, Amazon has worked with 1300 companies across 400 delivery stations in the United States, employing 85,000 people. Amazon’s extensive supply network, combined with innovations like drone delivery, maintains the company’s forefront of e-commerce.
15. Diversification: In addition to e-commerce and digital streaming, Amazon is also a major player in cloud computing, artificial intelligence, and artificial intelligence. According to Canalys, Amazon’s cloud platform AWS has a 32.4 percent market share. According to Forbes, Amazon’s streaming network Amazon Prime Video has a 52.9 percent penetration rate.
16. Board of Directors: The board of directors of Amazon includes a former Starbucks COO, a former dean of the MIT Schwarzman College of Computing, a former chair and CEO of MTV Networks, and a former CEO of PepsiCo. General Keith Alexander, a former National Security Adviser, joined Amazon’s board of directors this year. Amazon’s tagline is “Work hard. Have some fun. Create history.” With the clout that Amazon’s board of directors possesses, it’s only natural that the company is expanding the boundaries of 21st-century commerce.
Amazon’s Weaknesses – Amazon SWOT Analysis
1. A simple business model that can be copied easily: Retail businesses that are online have become very commonplace in the digital age. Thus, resembling Amazon’s model of business for competing companies isn’t that difficult. Certain companies are offering Amazon the boot. This includes Barnes & Noble, eBay, Netflix, Hulu, and Oyster etc.
2. Margins are slipping in a Few Areas: in a handful of regions, like India, Amazon has faced losses. Free shipping for customers could be one of the factors that expose the risk of losing profits in some markets.
3. Product Failures and Product Flops: Its launch of the Fire Phone across the US was a huge failure , and its Kindle fire device failed to expand well.
4. Tax Avoidance Controversy: Tax avoidance across Japan, UK and US has created negativity for Amazon. President Trump has criticized Amazon regarding taxes through social media.
5. A limited brick-and-mortar presence: Amazon has very few physical stores. This makes it hard for Amazon to make customers to purchase items that aren’t available through online shops.
7. Consumer safety is declining: As the range of products offered expand, it’s becoming more difficult for Amazon to check each product and guarantee the highest levels of security. In the past, U.S. Environmental Protection Agency (EPA) recently required require Amazon to take down the vast majority of harmful pesticides and dangerous products that are available on its platform.
8. Use of data that is unfair to data from third parties: Engaging in unfair trade practices can undermine trust and raises legal risks. Amazon is currently facing charges of antitrust throughout the European Union for collecting and making use of information from third parties to be competitive with them. If it is found to be in violation, Amazon can be fined up to 10 percent ($28 billion) of its 2019 annual revenues ($280 Billion)
10. Distributors are too dependent: Relying on distributors can expose Amazon to a variety of challenges. One of its main distributors (German Logistic Group – Deutsche Post DHL) can leverage its position to renegotiate terms.
11. Employees strike: Strikes could grind Amazon’s operations to a standstill. The strike was held in Germany, Amazon employees were on strike because of hazardous work conditions and halted operations at six of the distribution centers.
Amazon’s Opportunities – Amazon SWOT Analysis
1. Podcasting: Amazon recently integrated a podcast service into its Amazon Music platform. The new effort is intended to eat into Spotify’s and Apple’s market share as the top podcasting providers. This service would complement Amazon’s Alexa.
2. Package Delivery: The US Postal Service, UPS, and FedEx expect that Amazon’s delivery network will dominate their market in a decade. Amazon plans to create 1500 delivery hubs in towns and suburbs across the United States this year.
3. Amazon Fresh: Amazon Fresh, the company’s most recent venture, provides seamless in-store and online shopping as well as consistently cheap rates. Amazon Fresh outlets, the first of which is already available to select customers in Woodland Hills, California, might be a game-changer for Amazon.
4. Amazon’s Small Business Accelerator: Amazon has launched an $18 billion initiative to assist small firms in selling to customers. Logistics, tools, education programs, services, and people are among the areas in which investments are made. The goal here is to speed up the growth of existing merchants while also onboarding 100,000 new dealers on the site.
5. Food Industry: Amazon’s foray into food delivery is another way to exploit its supply chain expertise. Zomato, India’s top meal delivery service, has reservations about Amazon’s entry into this lucrative market.
Amazon’s Threats – Amazon SWOT Analysis
1. Counterfeits Goods: The government is putting pressure on Amazon to be held accountable for the harm caused by counterfeit products sold by third-party sellers on Amazon. A court has found that Amazon is accountable for the physical injury and property damage caused by an explosion triggered by a counterfeit battery sold on Amazon.
2. Government Regulations: During the first few months of the pandemic, the Indian government prohibited non-essential products on Amazon. The ban cost the company $398 million. Local retailers were also favored by government policies more than the e-commerce business. Such policy adjustments are and will continue to be a danger to Amazon’s domestic and international expansion.
3. Antitrust Investigations: During a hearing before a House Judiciary antitrust subcommittee, Congress expressed worry about Amazon’s monopoly and data-privacy rules. Members specifically questioned whether Amazon helps or hinders the success of other firms. Amazon is also being scrutinized by the European Union.
4. Quality Control: Statistica reported that third-party merchants accounted for approximately 53% of Amazon products sales in 2020. A congressional hearing featured comments by Amazon CEO Jeff Bezos implying that the company is selling stolen goods. Lack of accountability and oversight can result in the loss of trust.
5. Rivalry: Walmart launched the Walmart Fulfillment Service. With the advent of this product, third-party sellers now have an option to Amazon. Although the market share gap between Amazon and its nearest competitor is enormous, it is projected to narrow in the next years.
6. Labor exploitation: A US government investigation into Amazon’s supply chains and labor sources for violating human rights is one of three investigations the State Department is conducting. The eCommerce behemoth is put at risk as a result of reputational, economic, and legal liabilities.
7. Economic Recession: Amazon is not immune to a downturn in the economy. If economic uncertainty deepens, Amazon’s sales may suffer.
8. Phony reviews: Amazon has many fake reviews, and the problem has gotten worse in recent years due to the epidemic. Product reviews are an important sign of quality and authenticity, and shoppers strongly rely on them when making purchases.
Amazon SWOT Analysis Template
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