SWOT Analysis for Amazon
For a company or an organization to effectively move forward and expand their territories, they have to use the SWOT analysis technique. Multi-billion dollar companies employ their strategies based on the SWOT analysis, a result of which is their success stories. The best case study for the effectiveness of the SWOT analysis is the SWOT analysis for Amazon.
SWOT analysis is a technique used in assessing the current position of a business or an organization to introduce new strategies. During the assessment, an organization can figure out what is working well for them and what is not. The aftermath of the evaluation is the betterment of a business or an organization. The SWOT analysis for Amazon gives a better understanding of the concept.
What is a SWOT Analysis?
SWOT is an acronym that stands for:
S – Strength
W – Weaknesses
O – Opportunities
T – Threats
Strengths
The analysis of the strength of an organization picks out what the organization in excelling at. Moreover, the strength analysis helps organizations in figuring out what differentiates them from other competitors in the market. The organization should be able to figure out what advantages they have over other organizations in the same field. An organization should ask the following questions when analyzing the strength:
- What does the organization do better than others?
- Are there any unique resources that the organization can draw on that others cannot?
- What do other people and organizations see as the organization’s strength?
- Are there factors that scale the organization ahead of other organizations in the same field?
- Can the organization point out any successes? If yes, what are the successes?
- What are the assets available in the organization; equipment, customers, technology?
When analyzing the strengths, it is essential to keep in mind that an aspect is considered as strength if it brings an advantage over companies. For example, if all competitors in the market are delivering high-quality goods, then the production of high-quality products is not strength but a necessity.
Weaknesses
The analysis of the shortcomings of an organization helps the management discover the unpleasant underlying truths. Just like the strengths, weaknesses are also an essential aspect in the study of a company or an organization. The flaws highlight what elements to avoid as well as the improvements in practices. While analyzing the weaknesses, an organization should ask the following questions:
- What gaps do other people or organizations point out in the organization?
- How are your competitors doing better than your organization?
- Why are your competitors better than your organization?
- What can your organization do to scale above other competitor organizations?
- Is the organization lacking anything?
- Does the organization need any improvements?
- Are there gaps within the organization’s team?
Opportunities
Opportunities are the chances and opening for growth. They do not just happen; you have to claim them. Opportunities always arise from avenues outside the organizations and require a keen eye to notice them. Take note of anything that might increase the organization’s ability to compete. When analyzing the opportunities available, ask the following questions:
- Are there open opportunities to expand the growth of the company?
- How can the developments in the market be of any help to the organization?
- What are the changes in social trends?
- How can the changes in lifestyle and population profiles help the organization?
- Is there a way in which the organization can turn the strengths into weaknesses?
Threats
Threats are factors from without the organization that negatively affects the organization. Sometimes organizations do not have control over their occurrence, but they could always strategize how to reduce their impacts.
- What are the factors that influence the organization negatively?
- Who are the potential competitors in the market?
- What unique strategies are your competitors implementing?
- Do the organization’s weaknesses expose the organization to some threats?
- What are the possible challenges that your organization face?
- Is your organization vulnerable to small changes in the market?
Benefits of SWOT analysis
The SWOT analysis is a tool used by organizations to maximize their potential using the available resources. The SWOT analysis is an essential tool in setting robust strategies for an organization. An organization might think that they have all it takes to succeed until they look into the SWOT analysis. The analysis forces one to look for new directions that would be of benefit to the organization.
The SWOT analysis helps organizations get a better understanding of their strength, weaknesses, possible hazards and lacking resources. This way, companies or businesses can reduce the chances of failure. Moreover, the SWOT analysis gives organizations the platform to distinguish themselves from other competitors. The SWOT analysis for Amazon highlights how much the technique can be of help to an organization.
What is Amazon?
Amazon.com, Inc. is an American multinational online retailer with headquarters in Seattle, United States. The company is one of the most popular online stores worldwide, which offers products and services on e-commerce, digital streaming, cloud computing and artificial intelligence. Due to its massive influence on the world economy, Amazon is as part of the Big Four tech companies alongside Apple, Google and Microsoft.
Amazon started as an online store for books. Later on, the store revolutionized into an online market place for software, video games, electronics, furniture, food, toys and apparel. It is by far the largest internet retailer in 2020 with revenue of more than $280 billion. This article will improve your expertise on an Amazon SWOT analysis paper.
Facts on Amazon
Name: Amazon.com, Inc.
Date founded: 5th July 1994
Founder and CEO: Jeffrey P. Bezos
Headquarters: Seattle, Washington, the United States
Services provided: Internet (Amazon Video & Amazon Web Services), retail stores (Amazon Prime, Amazon Marketplace & Whole Foods), consumer electronics (Fire TV, Fire tablet, Kindle e-readers, Echo devices & Ring)
Revenue: $ 280.522 billion (2019)
Profit: $11.588 billion
Main competitors: eBay, Inc., Apple Inc., Alibaba Group, Facebook Inc., Wal- Mart Stores, Microsoft Corporation, Alphabet(Google Inc.) Inc., Netflix Inc., International Business Machines Corporation, The Walt Disney Company, among other retail, internet, video entertainment and consumer electronics companies.
The number of employees: app. 789,000 (2020)
How to Purchase on Amazon
Amazon online store has made shopping quite easier. To buy goods and services from Amazon, you first have to create an account through the company’s website. After creating your Amazon account, you simply purchase an item by adding it into a shopping cart. You also have complete the purchase by entering your billing and shipping information and finally clicking the confirm button.
What is Amazon’s Mission Statement?
Jeff Bezos, the founder of Amazon, has frequently mentioned that his leadership decisions are usually based on Amazon’s mission statement. Moreover, he has acknowledged that the mission statement is primarily focused on customer satisfaction.
The mission statement of Amazon is: “We strive to offer our customers the lowest possible prices, the best selection, and the utmost convenience.”
Amazon’s mission statement and vision statement contribute significantly to the company’s success stories. The success of the multi-billion-dollar company is hugely attributed to the strict measures taken towards fulfilling the mission and vision statements.
In the analysis of the mission statement, the company is keen on promising the customers some attainable goals. The company promises on low prices of goods and services, the best selection of the products offered, as wells utmost convenience to the customers. Consequently, Amazon manages to satisfy their customer’s needs and demands by fulfilling the mission statement.
Analysis of Amazon’s Mission Statement
Amazon’s mission statement is an asset to the company. The statement is beneficial to the multi-billion dollar retail store in the following ways:
- The prices of goods and services: The price component is Amazon’s primary selling strategy. The promise to deliver products at the lowest possible price increases the attractiveness of the online market store. Several online shoppers are likely to shop through Amazon due to promised affordability of goods and services.
- The best available selection: the mission statement also clarifies that customers can choose their preferred products through their full range of collection. A customer becomes comfortable in shopping through Amazon since everything is literally ‘under one roof.’
- Utmost convenience: Amazon is geared towards delivering goods and services at the customers’ satisfaction. The company focuses on the delivery of products via online purchasing. Hence, through the mission statement, customers can evaluate the quality of the services offered by the company. Customers are always keen on the convenience aspect when purchasing goods through an online system.
What is Amazon’s Vision Statement?
Amazon’s vision statement: “To be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online.”
The company’s vision statement highlights the primary goal of the organization; to become the best online store in the world.
Analysis of Amazon’s Vision Statement
The goals of the company, through the vision statement, are also a significant asset that is contributing to the company’s success. The company aims at:
- Global outreach to customers: the company envisions reaching all its customers at whatever location on the planet earth. The organization is aiming at expanding its territories and probably hoping to become the largest international e-commerce market.
- Customer-centric company: through the vision of the company, it is clear that Amazon is keen on customer satisfaction. They acknowledge that the customers are the most significant stakeholders in the online business, and therefore, their satisfaction is paramount. Generally, Amazon accepts their social responsibility of maintaining a good relationship with the customers.
- The wide variety of goods and services: the corporate is also strategizing on expanding the range of products available on their e-commerce market. The efforts to expand on the available products contribute greatly to the attractiveness of the company to its customers.
What is Amazon’s Strategic Plan?
Amazon is the largest online store and probably a pioneer in the e-commerce business. The corporate was initially started as an online bookstore that later revolutionized into being the world’s leading online market. The company has managed to expand its territories, from a bookstore to an online store that sells nearly anything that can be purchased online. Moreover, Amazon has greatly expanded by using a combination of local portals and global delivery systems.
Amazon must have carefully set their strategic plan to become the leading e-commerce market. The online store seems to be gaining much from the ever-growing technology. With the use of modern technology, Amazon.com has managed to benefit from the integration of internal resources and external drivers, which is the primary mode of delivery of goods. Because of this, many other companies are trying to imitate the model in a bid to become competitors with the billion-dollar company.
Analysis of Amazon’s Current Strategies
Amazon is scaling for concentric diversification. Through the corporate mission and vision statement, it is clear that Amazon is aiming at scaling height in physical and online purchases of goods and services.
The primary business strategy of the company is to offer the maximum value of goods at the lowest prices possible. This way, customers find themselves preferring Amazon to other online markets. The strategy is paying off since Amazon is currently the leading online store.
Another primary strategy of Amazon.com is offering discounted prices to their regular customers through Amazon Prime. Ideally, the approach ensures timely delivery of goods to the regular Amazon Prime members while waiving off shipping charges, state taxes as well as discounts on the prices of products. Consequently, the strategy eases the experience of the customers and increases the overall rating of Amazon. The approach has become part of Amazon prime strengths and weaknesses.
The sources of competitive advantages are major business strategies of the Amazon online retailer. The company focuses on technology, actualizing the economic scale benefits as well as levering the efficiency of integrating internal resources and external drivers. Consequently, these key factors aid in improving the effectiveness of the online system. Moreover, Amazon utilizes Big Data Analytics as a technique to map the behaviours of their customers. This way, they can figure out customer’s preferences, the most and the least purchased goods.
Amazon continues to attract customers by recommending products to their members based on their previous purchases. As mentioned earlier, Amazon maximizes the use of technology to satisfy their customer’s needs and demands. Being an online-based establishment, the company utilizes online systems to keep track of the browsing history which allows for the recommendation of products.
The ultimate strategy of Amazon.com
In general, the Amazon business strategy focuses on the convenience aspect as well as customer satisfaction. Amazon is keen on what the customer wants and where they want it to be without making a physical appearance to stores. Customer satisfaction is the primary driving force behind Amazon’s strategies. Therefore, the SWOT analysis for Amazon ensures that they deliver the ultimate approach to its consumers.
What is Amazon SWOT Analysis?
The SWOT analysis for Amazon tackles the strengths, weaknesses, opportunities and threats of the corporate. Here is the Amazon fresh SWOT analysis.
What are Amazon’s Strengths?
Amazon is scaling heights in e-commerce because of their competitive advantage over other online retail stores. Here are some of the strengths of the corporate as revealed by the SWOT analysis for Amazon:
The strength of the brand name
Amazon.com is a leading brand name in international e-commerce. The corporate has a strong and firm position in the market while enjoying a prestigious brand image.
The valuation of the brand
The Interbrand’s Global Brand Ranking in 2019 ranked Amazon at position 3, with a brand value of 125 billion US dollars. The corporate comes third after Apple (at the first place) and Google (position two).
Cost minimization
Amazon uses basic strategies to ensure that they minimize costs. For example, being an online store, Amazon does not incur the costs of maintaining physical stores. Moreover, the business strategies of Amazon ensure that it efficiently controls the costs and also reduces the inventory replenishment time. The corporate also maintains a strong value chain system that aids in cost minimization.
Oriented towards customer satisfaction
Amazon focuses on supplying the demands and needs of the customers at affordable prices. This way, the corporate can cater to the everyday needs of its customers.
Innovative ideas that set their standards above the competitors
Among the significant strengths of Amazon, is the use of creative ideas in the line of product and service delivery. For Amazon envisions the use of drones in service delivery. The input in innovations makes them stand out in the market.
Large selection of goods
Amazon.com bears a wide variety of products from which customers can choose their preferred products. This aspect attracts a majority of online shoppers.
The use of third-party sellers
The Amazon website is always experiencing high traffic volume. As a bid to aid in the traffic, several third-party sellers have joined the Amazon platform to sell their goods.
Global customized outreach
This is among the significant strategies that led to the success of Amazon.com. Amazon partners with local supply chain companies to deliver goods according to the local needs of the people. Consequently, the partnership helps in competing against the local e-commerce competitors.
Acquisitions of companies
Amazon enjoys the benefit of purchase of large bodies that strengthen their product delivery services. Amazon has successfully acquired Zappos.com, Whole Foods, Jungle.com, woot.com and IMBD.com, among others. The acquisitions significantly increase the profits and revenues of the company.
Incorporation of three significant businesses
Amazon incorporates Amazon Prime, Amazon Marketplace and Amazon Web Services (AWS) to deliver products by Amazon. All these three work together in realizing the profits of the corporate.
Market leadership
Amazon brags of the highest revenues in the industry. With over 200 billion dollar annual revenues, Amazon is the market leader in e-commerce.
Efficiency in logistics and distributions systems
Amazon utilizes its high efficiency in logistics and distributions to execute fast and secure delivery of goods.
What is Amazon’s Biggest Weakness?
SWOT Analysis for Amazon also reveals Amazon weaknesses. Here are some of the shortcomings of the billion-dollar company.
Imitable model of business
There has been an enormous increase in online retail stores that try to imitate Amazon’s model of business. As a result, the companies are slowly becoming threats to Amazon. These businesses include eBay, Barnes & Noble, Netflix, Oyster and Hulu.
Losing tracks in some of the business areas
Amazon has previously faced loses in some areas such as India. These might lead to losing of margins in some markets.
Negative publicity due to tax avoidance
Amazon has recently faced controversy over tax avoidance in the US, UK and Japan.
Product failures and flops
Some products launched by Amazon fail to be well received by consumers. For example, Fire Phone and the Kindle fire device was a failure.
Customer limitations
Amazon has minimal physical stores which hinder consumers from purchasing things that cannot be purchasable via online means.
Negative reports by workers
In July, a publication by Vox reported poor working conditions of Amazon workers. The publications reported timed bathroom breaks, poor air conditioning, and constant video surveillance. As a result of such claims, there is a negative effect on the brand name and overall reputation of Amazon.
What are Some Opportunities for Amazon?
The opportunities in the SWOT analysis for Amazon reveal the strategic capabilities of Amazon.
- Amazon can take the opportunity of dominating developing markets
- By using the popularity of their brand name, Amazon can take the chance of their large market to expand their physical stores
- The corporate has the chance to improve the measurement of product standards by using technology to reduce counterfeit goods. There is a previous case of sale of counterfeit goods that affected Amazon’s reputation.
- Amazon has the opportunity to expand by more acquisitions of online retailers. This way, the corporate can increase their shares and reduce competition.
What are Amazon Threats?
The SWOT Analysis for Amazon reveals Amazon threats. Here are the threats that undermine Amazon’s opportunities for growth.
- Threats due to controversies: A few controversies have dented Amazon’s brand image. For example, in 2010, a boycott arose due to the sale of a book called, “The Pedophile’s Guide to Love & Pleasure: a Child-lover’s Code of Conduct.”
- Threats due to government policies in some countries: Amazon does not ship products to Syria, Iran, Cuba, North Korea, and Sudan.
- An increase in cybercrime can affect Amazon’s security system
- There is an increase in competition from competitor companies such as eBay and Wal-Mart.
- Increasing imitation of Amazon’s business model threatens the dominance of Amazon.
How Amazon Can Improve?
According to the SWOT analysis for Amazon, there still needs to be improvements. The following measure can curb threats to Amazon Company.
- Amazon needs to check on their weaknesses, opportunities, and threats to ensure that they remain the leading e-commerce. These are the recommendations:
- Harmonize the market dominance by boosting marketing strategies such as promotions and competitive advantages
- Strategize on dealing with the controversies such as tax issues and negative publicities
- Strategize on increasing physical stores outside the United States to increase the popularity of the brand
- Ensure that they assess their competitors and enlarge the gap between them and their competitors
- Strategize on dealing with counterfeit related issues by enhancing cyber-security
Generally, Amazon.com uses its well-designed business model and strategies to beat their competitors. The SWOT analysis for Amazon also helps the corporate to implement more strategies in the business. By doing so, Amazon has managed to scale the heights in e-commerce by being the top leading online retail store
