SWOT ANALYSIS: AMAZON
The company I am going to analyze is Amazon.com, Inc. Amazon is an American multinational technology enterprise based in Seattle. It mainly focuses on e-commerce, cloud computing, digital streaming, and artificial intelligence. people have commonly known it through its online shopping website. Its online shopping platform can be described as the world’s largest e-commerce platform. Its cloud computing service has been using by many people across every country. What kind of market or industry does Amazon involve in? Based on the company’s focus, Amazon’s market is mainly the e-commerce market and with few self-manufactured and retail brands. What is Amazon’s target market? Amazon has a variety of different markets depending on the different types of service. For e-commerce, its target markets are the buyers that looking to buy things online and sellers looking to sell stuff online on matter how big or small are they. For cloud computing, its target markets are people or companies who are looking for a cost-effective data storage service. For digital streaming, its target market is people for online entertainment such as movies, TV shows, gaming streams, etc. For artificial intelligence, its target market is ordinary people and perhaps government. It depends on what kind of product they need because Amazon has a variety of different artificial intelligence products. What are Amazon’s competitors? Its competitors are eBay, AliExpress, wish, Taobao, craigslist, etc.
Strong brand name support: As a global e-commerce giant, Amazon has a strong position and successful brand image in the market.
· Brand valuation
Support: According to Interbrand’s Global Brand Ranking 2019, Amazon is ranked at #3 position (after Apple at #1 and Google at #2), with a brand value of $125 Billion.
Support: Amazon caters to a large number of customers for everyday needs at inexpensive prices. This has made it a customer-oriented brand.
· Differentiation and Innovation
Support: Amazon frequently brings creative ideas and innovative additions to its product line and service offerings like ambitious drone delivery service and Withings Aura Smart Sleep System. This creates differentiation from other companies.
· Cost Leadership
Support: According to Business Strategy Hub, Amazon doesn’t incur costs in maintaining physical retail stores by selling everything online. With economies of scale, Amazon efficiently controls its costs and lowers its inventory replenishment time. The company has formed numerous strategic alliances with many companies like Evi Technologies, Thalmic Labs, Shoefitr, The Orange Chef, etc. It has a strong value chain system which also helps in maintaining a low-cost structure.
· Largest Merchandise Selection
Support: According to Business Strategy Hub, Amazon owns an extensive product mix that attracts online customers to make their majority of purchases from it rather than other online retailers. As of 2018. Amazon has sold 562.3 million products in its Amazon.com Marketplace.
· A large number of third-party sellers
Support: Due to the high traffic volume on Amazon’s sites, a large number of third-party sellers have joined the platform of Amazon to sell their merchandise. The data from Fulfillment by Amazon (FBA) reveals that there are more than 2 billion items available from third-party sellers.
· Go Global and Act Local strategy
Support: According to Business Strategy Hub, this strategy has benefitted Amazon the most. Amazon develops partnerships with local supply chain companies that help it in competing against domestic e-commerce rivals. It understands the local needs and launches its services as per the country’s culture.
· A large number of acquisitions
Support: The successful acquisitions of Whole Foods, Zappos.com, woot.com, Junglee.com, IMBD.com, and many others have produced significant revenues and profits for Amazon.
· An easily imitable business model
Support: Online retail businesses have become quite common in this digital world. So imitating Amazon’s business model for rival firms is not so difficult. A few businesses are even giving Amazon a tough time. These include Barnes & Noble, eBay, Netflix, Hulu, and Oyster, etc.
· Losing Margins in Few Areas
Support: In a few areas such as India, Amazon has faced losses. It’s free shipping to customers can be one of the reasons that expose the risks of losing margins in some markets.
· Product Flops and Failures
Support: According to The Street, Amazon has had to try to make other products other than AWS and Amazon.com. However, many have ended up as a failure. Such as the Amazon Fire Phone, it started on sale in July 2014. But Amazon soon removed the phone from its shelf in September 2015 because of the big loss of profit.
· Tax Avoidance Controversy
Support: According to Business Strategy Hub, Tax avoidance in Japan, UK, and the US have sparked negative publicity for Amazon. President Trump has recently criticized Amazon over taxes on social media networks.
· Limited brick-and-mortar presence
Support: Amazon owns very limited physical stores. This sometimes hinders to attract customers to buy things that are not sellable in online stores.
· limited penetration in developing markets
Support: Amazon took a big part of the e-commerce market in America. But Amazon didn’t take a big part in the world. there are many e-commerce companies like Alibaba, eBay, wish and others to compete with Amazon. There is a market that Amazon is hard to squeeze in such as China, Europe, India.
· Product quality issue
Support: although a lot of products that sell on Amazon are regulated and high-quality products. But, since Amazon allows all third-party seller to sell their products on Amazon, Amazon can’t determine whether the product is genuine or counterfeit.
· Seasonality of the business
Support: Amazon has a high seasonality business revenue. According to Amazon.com Inc’s annual report, the company generated 32%, 34%, and 31% of our annual revenue during the fourth quarter of 2016, 2017, and 2018, respectively.
· Expansion in developing markets
Support: there are many sites online that talk about future trends of e-commerce. According to Beeketing, one trend is global eCommerce retail sales will hit 4.9 trillion in 2021. This is a 256% growth rate from 2014 to 2021. Another trend is that the center of eCommerce is shifting from the western hemisphere. Even though Amazon is harder to squeeze into China’s e-commerce market. but it can take advantage of other Asian country’s e-commerce market. And other trends such as Ecommerce personalization will be a standard, Mobile shopping revolution, Voice commerce is on the horizon are all opportunities to Amazon. Because Amazon has already …………………….
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