SWOT Analysis of Amazon

Introduction

Amazon is a famous company established in the year of 1994 by Jeff Bezos in the United States of America. The company deals in cloud computing, electronic commerce and digital streaming for attracting a large customer base. It is considered to be one of the major four firms all over the world. In this article we have conducted a SWOT analysis of Amazon, to assess the strengths, weaknesses, opportunities and threats.

Strengths

There is a need to delve deep into the strengths or core competencies of the company so that a profound idea can be developed about the position of the company. According to Amazon, it is inferred from the analysis that the company indeed has a strong financial position, brand name and public image. It has been ranked in the second position after Apple and Google. According to Davis, the company has a strong and wide customer base which has helped in building Goodwill over the period. Innovation and differentiation are also considered to be the major strengths of Amazon that will have to be taken under consideration.

Based on the SWOT analysis Amazon, the company is focusing intently on the differentiation strategy to develop some of the best and unique products. Cost leadership is yet another strategy that will have to be taken into account in this regard. Amazon does not have to make an expenditure for opening up and maintaining physical stores. Thus it can reduce the cost of operations to a large extent and hence charge low from the customers. It helps in attracting a wide range of customers from different avenues so that higher revenues are earned. It has also focused on the use and applicability of artificial intelligence for catering to the needs of the customers. All of these aspects has formed a strong Amazon business model, which has enabled the company to maintain its leadership position.

Weaknesses

It is necessary to identify some of the major weaknesses of Amazon that have to be reduced effectively by leveraging on the core competencies. The evaluation of the company has clearly shown that the Amazon organizational structure and business model can be imitated easily at the current juncture. According to Owler, there are some major rivals of Amazon such as eBay and Netflix that have already imitated the business model of Amazon. The company is also found to be losing on its profits over the period. The profit margins are decreasing at the current times probably due to its free shipping business. Failure and defects in some of the products have also been the major weakness of the company. According to Rubin and Cheng for instance the launch of the Fire phone has been a debacle for Amazon in the recent past. It has made the company lose a large part of its profits. The company also does not have enough physical stores which can be another issue for Amazon. Owing to a limited number of stores the scope of attracting the customers is also decreasing to some extent. Based on the SWOT analysis Amazon, customer safety is also at stake in Amazon as there are several products offered by the company which are not duly guaranteed by them. It is difficult to vet these wide ranges of products because too many products are available in the market. Moreover, the company is also leveraging intently on too many distributors which is also posing a problem for Amazon. Lack of support from the supervisors and employees may lead to tremendous problems in this regard.

Opportunities

It is necessary to delve deep into the opportunities that can be explored by Amazon over some time. It can strive to expand and reach out across the developing countries in Asia and others. It will help in increasing the overall customer base. The technological measures, as well as Amazon’s operations management, can be duly used to eliminate counterfeit sales. Effective organizational policies will also help the company attract a higher number of customers and increase the overall sale. According to Kocher backward integration can be another opportunity for Amazon as it will help in the expansion of in house brands such as Amazon Basics. The company will thereby be able to create higher levels of differentiation among the products and enhance the competitive advantage. Amazon is also planning to launch new electric rickshaws all over India.  An increase in the number of these transports will help Amazon delve deep into the market across India. SWOT analysis for Amazon has also revealed that, the company has the scope to develop more exclusive products so that the demand gaps of the customers are narrowed as much as possible. It will help the customers get larger exposure to meet their daily requirements in various domains. It also has the opportunity that acquires more e-commerce companies which will be able to reduce competition. There is a high level of competition in the e-commerce industry thus acquisition can certainly make the market less competitive in the long run.

Threats

Multiple threats are prevailing in the industry which also has to be taken into account at the same time. Intense competition is one of the major threats in this regard. Amazon competitors are already dominating the e-commerce industry. Some of the rivals ate eBay, Flipkart and others. There is always a need to revive the strategies to compete with the rivals in the best possible way and get the best results. Several controversies have also plagued the image of the company. From the SWOT analysis of Amazon it has been found that in the year 2010, it was found that the company had been alleged to be selling some kinds of controversial books which tainted the image of the brand. Strikes and lockouts are also the major threats appearing from the employees. The employees tend to be organizing strikes and lockouts in the protests against the working conditions of the company. It implies that the employees can indeed create trouble for Amazon shortly if they are not dealt with properly.

Imitation is yet again a major threat to the company. Amazon strives to keep its business as much innovative as possible. However, it is found in a lot of cases that the business model had already been imitated by various other companies. It has made the competition more aggressive and cumbersome in the meantime. The economic recession all over the world and especially in the United States has indeed affected the business of Amazing to a large extent. SWOT analysis Amazon suggests that the consumption expenditure has declined to owe to recession and made the business suffer. The allegations related to fake as well as counterfeited products are also increasing. The fake reviews about the company have also made the customers turn away from the company. The customers have already become doubtful about the image of the company and the quality of its products.

Conclusion

The SWOT analysis Amazon has revealed that the company has a strong public image and brand loyalty. Multiple loyal customers are patrons of the brand. However, certain issues have tainted the company to a large extent. The fake news and allegations of counterfeited products are the major problems. Moreover, employee strikes and lockouts have to be taken under consideration as well. There are however opportunities to emerge in the developing countries and attract a stronger customer base.

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