Amazon SWOT Analysis

Amazon: A Leading Online Retailer

Amazon is an American based company dealing with cloud computing and online retail business. Amazon leads the world as an online retailer in selling books, movies music, electronics, housewares, jewelry, toys foods, furniture and many other goods and services either directly or as a middleman. The company has its operations organized into three parts which consist of Amazon Web Services (AWS), international and North America. Each part of the operation consists of customers who include developers, sellers, consumers, content creators, and enterprises. Further, the company offers services in advertisement and credit card agreements (Ratnasingham, 2016). Amazons success in its operations can be attributed to their four guiding principles including a focus on customers as opposed to competitors, long-term business goals, being passionate about invention and being committed to operational excellence (Rossman, Masters, Cancelosi, Miller, & Weber, 2016). In order to maintain the leading position, Amazon has to maintain annual analysis on its strengths, weaknesses, opportunities, and threats (SWOT). This analysis enables Amazon to discover its strengths which it uses to overcome weaknesses and threats that hinder the maximum use of the available opportunities in the market.

SWOT Analysis

Amazon success in the online retail business results from its notable strengths. Amazon enjoys some of the strongest brands in the e-commerce market. This strength has contributed to its rapid growth and especially during its early years in the market (Pratap, 2016). Also, Amazon boasts the highest amount of revenue in the online retail industry. This aspect enhances the company to invest in the development of new products and venture into new businesses. Additionally, Amazon has a wide range of products making it easier for customers to shop all they need on their website. This strength serves to support service attractiveness which is a requisite in maintaining success in any firm (Greenspan, 2018). Another strength of Amazon results from use of highly effective logistics and distribution systems. This aspect enables the company to have a better customer fulfillment gaining an advantage over its rivals. The use of IT (information technology) in e-commerce to develop platforms that are easy to use by the customers is a strength by Amazon Company making it ahead of its competitors. Lastly, the company enjoys top recognition worldwide from consumers globally. This strength has enabled Amazon to venture into new markets that were impossible to other e-commerce companies (Ratnasingham, 2016). This SWOT analysis indicates that Amazon has adequate strengths for continued dominance in the online retail business.

There are several weaknesses that limit the growth of e-commerce business in Amazon. First, the company has a business model that can easily be imitated. Many companies worldwide have come up with a similar e-commerce business that sells almost everything. The growth of such companies will lead to competition and can result in reduced sales in Amazon (Pratap, 2016). Additionally, the company has a near-zero profit margin model of business. Although the company has high numbers of customers and huge revenues, the effect is not reflected in profit margins of the company. Additionally, Amazon has most of its operations in developed nations ignoring the developing markets in developing nations. With the establishment of other firms in developed nations, it will be difficult for Amazon to enter the market and compete fairly with those companies (Ratnasingham, 2016). Another weakness results from its emphasis on online stores more than physical stores. This aspect limits the ability of the company to attract customers of products that are more sellable in offline stores (Greenspan, 2018). Amazon must, therefore, put emphasis on both online and offline stores to overcome the negativity of this weakness.

There are many opportunities available to Amazon that can be used to grow the e-commerce business. Amazon has the opportunity of owning more products rather than acting as a middleman. This will increase the profit margin by the company through owning the whole profit (Greenspan, 2018). Amazon should also utilize the opportunity of the developing markets. Penetrating developing markets before other large online retail companies will make the company gain root gaining an advantage over other companies. Additionally, the company can increase offline stores to tap customers of products that are more sellable through offline means. Lately, Amazon has been faced with the continued sale of counterfeit products. The company can use this opportunity to improve its policies and measures to address counterfeit sales. This can be done through product evaluation and development of an automated process for consumer reports (Ratnasingham, 2016). The SWOT analysis reveals many opportunities for Amazon growth.

Amazon faces several threats to its performance in the online retail market. One of the most notable threats is cybercrime which threatens almost every online retail company (Ratnasingham, 2016). Cybercrime threatens the safety of its operations and has also contributed immensely to its imitation by other upcoming companies. Therefore, the company must increase its network security efforts to counteract cybercrime attack against its operations. Aggressive competition from other large online retail firms is another threat to Amazon. Companies such as Wall Mart are constantly improving their presence in the online retail market.

Conclusion

The SWOT analysis reveals that Amazon has adequate strengths for its continued dominance in the online retail market. However, Amazon has several concerns that can negatively impact its continued dominance. Such concerns include its limited access to the developing markets and emerging competition from other large online retail firms among others. To maintain its lead, Amazon must increase its operations into the developing nations which provide opportunities for rapid growth due to speeding economic growth in those nations. Further, the company must be willing to increase offline stores which help increase product popularity and, market reach. Lastly, Amazon must develop stringent measures to counter cybercrime and sale of counterfeit products which increases trust from their customers.

References

Greenspan, R. (2018). Amazon.com Inc. SWOT Analysis & Recommendations - Panmore Institute. Panmore Institute. Retrieved 9 April 2018, from http://panmore.com/amazon-com-inc-swot-analysis-recommendations

Pratap, A. (2016). Amazon SWOT Analysis 2016 - strengths and weaknesses. cheshnotes. Retrieved 9 April 2018, from https://www.cheshnotes.com/2016/10/amazon-swot-analysis-2016/erences

Ratnasingham, P. (January 01, 2016). A SWOT Analysis for B2C E-Commerce: The Case of Amazon.com. International Journal of Cases on Electronic Commerce, 2, 1, 1-22.

Rossman, J., Masters, R., Cancelosi, C., Miller, R., & Weber, K. (2016). The Amazon way : 14 leadership principles behind the world’s most disruptive company. Washington: Clyde Hill Publishing.