Amazon’s influence is extensive globally. With a total aggregate of 310 million active users across the world, Amazon has become the leading internet store in the world. Amazon came into existence in 1994 by Jeff Bezos. This was once an online store for selling books but has now evolved into a leading online retailer that sells items of different varieties from A to Z.
Amazon is the leader and pioneer of online stores. It has recorded many achievements. The success of Amazon with the introduction of e-commerce has led to many other stores following this same step. The likes of Walmart, eBay, and other competitors are following the steps of Amazon.
If you are willing to know the major strengths, weaknesses, opportunities and threats of Amazon, kindly read through this post. In this short article, we are going to walk you through the SWOT analysis of Amazon, including some internal information you need to know about the success of this company.
Summary table on Amazon’s SWOT analysis
| Topic | Key Points |
|---|---|
| Amazon’s Strengths |
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| Amazon’s Weaknesses |
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| Amazon’s Opportunities |
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| Amazon’s Threats |
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Having known this, let’s dive straight into the major Amazon SWOT.
Amazon’s Strengths
In order for Amazon to maintain its position as the world’s largest online retailer, the firm relies on a strategy that emphasizes cost leadership, distinctiveness, and narrow view. The firm has enjoyed the benefits of this strategy, and its stockholders have gained value from the firm.
As a result of its maximum utilization of information technology (IT) and e-commerce platforms to promote its products, Amazon has a significant edge over its competitors.
Amazon’s prominent brand awareness among customers all over the world is one of the company’s most valuable assets. Because of this, the company has been able to move into new areas that most e-commerce businesses couldn’t reach before.
The corporation has indeed been able to achieve greater client fulfilment because of its improved logistics distribution capabilities. This has led to Amazon earning a competitive edge over its competitors.
Amazon’s Weaknesses
The weaknesses of a firm are related to different aspects in which an organization performs poorly when compared to its other competitors. These are the variables that enable rivals to get an advantage over one another in the market. The following items fall into this category on Amazon.
Competition
Despite the fact that Amazon’s business has relatively minimal operating expenses, the company faces intense levels of competition. Amazon’s successful business strategy has served as a blueprint for a number of other successful internet retailers.
Some have also adapted the business model in order to address the shortcomings of the organization and achieve a position of superiority in the market.
Nowadays, many stores are switching to an online mode of selling their products and e-commerce strategy. For this reason, Amazon’s competitors are becoming stronger than they used to be.
Poor Profit Margins
In order to maintain its position as a market leader, Amazon is forced to sell its items at low margins. However, this results in a loss in the profitability of the firm.
Customers have come to associate the brand with affordable goods of superior quality. Although Amazon generates enough revenue to avoid incurring losses due to sales, its competitors bring in far more revenue than it does.
Local Competition
As was previously said, Amazon’s expansion plan is one of the company’s strengths. Despite this, there is still strong competition from other alternatives.
Customers in the majority of nations have their own regional online retail businesses, and they prefer shopping at these stores over multinational brands like Amazon.
For example, Amazon expanded into China, but most Chinese customers chose to shop on Alibaba instead.
Free Shipping
Free delivery is a feature that Amazon provides to its consumers. Although increasing one’s sales volume might be beneficial, the idea may also reduce the profit. Truly the business has very slim profit margins, offering free shipping might not be the best decision among the available alternatives.
Opportunities for Amazon
Amazon’s great performance can be attributed to its capacity to innovate. From 118 in 2010 to 2054, Amazon has been granted more than twice as many patents. Amazon’s ingenious culture has resulted in a number of new developments.
Podcasting
Just recently, Amazon included a podcast service as part of its Amazon Music service. The purpose of this new initiative is to reduce the market share held by Apple and Spotify. Amazon is now the leading distributor of podcasts.
Package De6+
The United States Postal Service, United Parcel Service (UPS), and FedEx have all anticipated that Amazon’s delivery network will monopolize their industry over the next ten years. This year, Amazon intends to establish 1,500 delivery hubs around the United States, mostly in cities and suburban areas.
Amazon Fresh
This is the latest business launched by the corporation, enables customers to purchase easily both in-store and online and offers consistently low prices. The introduction of Amazon Fresh locations has the potential to completely transform the company.
The first of this kind from the company is now available for business in California and Woodland.
Food Industry
Amazon’s move into the food delivery business is another avenue for the company to capitalize on its experience in supply chain management. The most popular food delivery service in India, Zomato, is worried that Amazon might try to get into this lucrative market.
Amazon can prevent the sale of fake goods by making both technical and organizational rules.
It was discovered that Amazon had been selling fake versions of the My Critter Catcher product. This was one example of the sale of fake goods. The price of the item was decreased by one dollar as compared to the original price.
Threats
It is obvious that the greatest threat to Amazon’s prosperity is the growing fear of online shopping due to identity fraud and hacking, which exposes user data.
So, Amazon needs to act quickly to calm customers’ worries about its website and protect their security and privacy online.
Because of how aggressively the company sets its prices, publishers and other retailers have sued it.
Amazon’s intense emphasis on cost leadership is becoming a source of problems for the corporation. This is as a result of competitors’ displeasure with Amazon stealing their business.
Lastly, Amazon faces substantial and strong competition from online merchants who are more flexible and adaptable than Amazon. And example of a big retail company is Target, Walmart, eBay, Home Depot, which can present Amazon with challenges in the future.
FAQs
What is SWOT in Amazon?
The acronym SWOT stands for an organization’s weaknesses, strengths, opportunities, and threats. As the global leader in e-commerce and cloud technology, Amazon must capitalize on its strengths while minimizing the financial impact of its flaws.
What are the success factors for Amazon?
Amazon’s core success factors are price, selection, and delivery.
Conclusion
Reading the article above would have given you the right insight into Amazon’s strengths, weaknesses, opportunities and threats. If this post is helpful, kindly drop a comment below now with your own view about the SWOT analysis of Amazon.
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