|Type of paper:||Essay|
|Categories:||Company Business Amazon SWOT analysis|
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An Overview of Amazon’s Strengths, Weaknesses, Opportunities, and Threats
Within less than two decades of its inception, Amazon.com Inc went from a small-scale online bookstore to an international retail giant. The company’s continued evolution and high valuation make for an excellent case for a SWOT analysis.
SWOT Analysis of Amazon: Strengths
Brand name and valuation are among the biggest of Amazon’s assets. The company is present across 180+ countries, and the valuation is second only to Apple according to the Interbrand’s Global Brand Ranking of 2020. The company’s customer base exceeds 300 million worldwide, and returning customers make for over 50% of the purchases. User-friendly interface and dedication to research that results in targeted customer insights translate into brand recognition and loyalty, along with increased sales numbers.
Exceptional selection of products offered through Amazon warehouses and third-party retailers, along with the lowest prices, is another strong suit of the company. In addition, through superior distribution systems and a well-oiled logistics approach, Amazon can deliver orders fast and offer free shipping to the majority of customers.
Amazon retains its position on the market through large-scale purchases, such as IMDB.com, Zappos, and Whole Foods. And despite its overwhelming leadership in online retail, Amazon keeps evolving and branching into new industries and niches. The company also runs the Amazon Prime streaming service and Amazon Web Services (AWS) division that offers cloud computing services. And Amazon-developed products, like Alexa or Kindle, along with the line of everyday essentials, remain ever-popular due to their low cost and superior quality while at the same time promoting upsales, including Kindle books or voice-operated purchases through the smart speaker.
Amazon SWOT Analysis: Weaknesses
Considering the company’s success, its business model is desirable and easily imitated. Therefore, the retail giant may face increasing competition on the market and may fall behind if it does not continue its evolution. Furthermore, considering Amazon operates on minimal margins, the company is known to lose money on certain products and segments by keeping the prices as low as possible. This presents a weakness in the company’s long-term strategy.
Another drawback stemming from Amazon’s strengths is the declining merchandise quality. As the number of products skyrockets, the company can no longer evaluate the quality of every item on offer, resulting in unhappy customers and a worsening reputation. The failed product launches (such as Fire phone) add insult to injury.
Amazon is not free of legal troubles either. A few years ago, the company was at the center of a tax evasion scandal across Japan, the US, and the UK. In addition, the European Union accused the company of breaking antitrust legislation by using third-party data against its competitors. In case the company is found guilty, the fine may reach $28 billion. Additionally, Amazon’s German employees went on strike in 2020 due to unsafe working conditions. The company has been known to treat the workers poorly despite increasing the minimum wage to $15 per hour.
Another weakness in Amazon’s business model is the limited offline store presence. While the online model enables the company to reduce overheads, at the same time, it limits the customers’ choices when buying products without return possibilities.
SWOT Analysis of Amazon: Opportunities
Amazon’s opportunities stem from highlighting strengths and reducing weaknesses. For example, the company could pursue its acquisition strategy to gain entry into new markets and strengthen its position as the top online retailer. In addition, expanding the in-house production of everyday necessities, such as the Amazon basics line, is another opportunity for future growth and expansion.
As logistics and distribution systems are at the core of Amazon’s value proposition, the company should keep investing in emerging disruptive technologies. Examples include the delivery drones and self-driving vehicles. The latter can be used for both purchase deliveries and as a fleet for a proprietary on-demand taxi service. In addition, electric rickshaws can be an eco-friendly alternative to combustion engine vehicles in India.
Developing countries present new market opportunities for Amazon, but the cost of the expansion and entry into the new economies should be carefully weighed against potential earnings. The same care should be taken when considering the opportunities for the expansion of Amazon showrooms and offline stores.
Amazon SWOT Analysis: Threats
Like any business, Amazon is threatened by strong competition. While eBay and Walmart are vying for the retail customer, Disney and Netflix are fighting the streaming wars, and Uber and Tesla are far ahead in the autonomous driving category. At the same time, digital-native businesses are attacking Amazon’s spot at the top of the eCommerce ranking. Moreover, considering the economic recession throughout the pandemic years, Amazon struggles with reduced demand as much as other retail businesses.
Legal threats include changes in local legislation and political unrest that can result in lawsuits, fines, and lost business opportunities. All the while, Amazon regularly deals with scandals surrounding exploitative labor allegations and environmental negligence accusations that damage the company’s reputation and spur the customers to look for other retailers.
The major digital threats to Amazon include cybercrime and fake products and reviews. The former may seem more dangerous for a company that hosts personal and financial data of millions of users. However, fake products and reviews that increased tenfold throughout the pandemic may pose an even bigger problem. As more customers get scammed, the company will continue to lose paying clients by the dozen.
Amazon is a globally renowned eCommerce leader with a strong brand, international presence, and a dedication to continued growth and development. However, Amazon SWOT analysis demonstrates that the company’s weaknesses and the threats to its domination stem from its strengths as well as a few unaddressed legal, logistical, and human resources issues. At the same time, the company has plenty of opportunities for future evolution that range from entering new markets to developing in-house products and branching into adjacent industries, like autonomous vehicles.
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Hill, C. W. L., & Jones, G. R. (2008). Strategic management: an integrated approach. Boston, Houghton Mifflin.
Wakefieldexpress.co.uk. (2016). Millions risking cybercrime by storing card details on sites such as Amazon and Tesco. [online] Available at:
Wingfield, N. (2017). Amazon Wants to Crush Your Store With Its Technology Might. NewYork Times, [online] p.BU1. Available at:
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