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SWOT Analysis of Amazon

You may have been surprised by how Amazon has fared all these years. The company is undoubtedly and statistically the biggest online retailers the world over. Amazon sells diverse apparel, electronics, furniture, and a myriad of other items. There’s even a belief that if you can’t find what you seek to purchase on Amazon, then have in mind that what you’re looking for doesn’t exist.

SWOT Analysis

This Amazon SWOT analysis seeks to help interested persons understand the hidden things about the company. You will figure out the strength, weaknesses, opportunities, and threats the company has enjoyed and endured since its inception. If you require such information, then you have arrived at the right place. Continue reading to get useful information!

SWOT Analysis of Amazon: Things You Need To Know About The Company

Every company in existence started with the aim of becoming the biggest brand in the world. Unfortunately, many were not able to achieve this feat, and a look at their SWOT analysis will reveal the reasons this didn’t happen.

Amazon is one of the myriads of online retail stores that started with a mission. That mission was to become the world’s biggest online retailer, and that the company has been able to achieve within a few years in business.

Amazon launched its first website in 1995. The company started in the garage of its owner, Jeff Bezos, and didn’t start with a record fund as most brands did. Today, the company is rated the leading e-commerce brand the world over, not by accident but a clear roadmap which the head of the company has been following. Let’s not forget Amazon is also rated as the leading cloud player. These, together with the company’s ever-increasing prime membership, are major contributing factors to the company’s continued growth.

Now let’s focus on the company’s SWOT Analysis.

Amazon’s Strength

Amazon is where it is today, thanks to its strengths. These include key growth factors such as a strong focus on innovation and technology, global presence, a wide array of products, strong financials, and global presence. Let’s look at each point briefly;

1. Strong Focus on Innovation and Technology

When it comes to funding its R&D (research and development), only a handful of companies can match Amazon. The company invests billions of dollars in research every single year, and the figure keeps rising yearly.

Amazon’s number one focus is to provide customer satisfaction. The e-commerce giant understands that customer satisfaction can lead to repeat patronage. AI is one of the technologies the company is seeking to explore, to take customer experience and the e-commerce business to another level.

2. The Company’s Global Presence

Whether you are from the African continent, Europe, America, and Asia, distance is no barrier for Amazon. The company does have a professional and one of the most effective logistics and delivery systems among the myriads of e-commerce store the world over.

Amazon also runs a robust affiliate marketing program where internet marketers from different parts of the world get compensated for setting the company’s product. The transparency of their affiliate program has endeared it to many internet marketers.

3. The Wide Array of Products

Amazon doesn’t only enjoy a steady rise in the number of third party merchants. The company also does offer a wide variety of products that keeps increasing now and then. The company offers products in different categories such as electronics, music, hunting gears, and furniture, among others.

4. Strong Financials

Another strength Amazon has is its financial strength. The company’s net income keeps circling between a region of $2 to $3 billion and profits keep increasing year after year. With such financial gains achieved annually, it can only get better for the e-commerce giant.

5. The Alliance Between Marketplace, Amazon Web Services, and Prime

Amazon is intruded in three businesses:

  • Amazon Marketplace
  • Amazon Web Services 
  • Amazon Prime

All three Amazon offerings support each other and generate maximum gain that would not be achieved if the businesses operated separately.

Amazon’s Weakness

Amazon’s weakness is numerous, though the company’s consistent rise and position as a leading e-commerce store keep on overshadowing its weaknesses. These include massive product failure, controversy on tax avoidance, and imitable business model. Let’s look at each of the vulnerabilities.

1. Massive Product Failure

Amazon might have been successful in selling other company’s products, but haven’t been able to replicate the same achievement when it comes to their products. The company’s Fire Phone launch that took place in the United States of America was a complete failure. Growth projected for the Amazon Kindle fire device was never attained.

2. Controversy on Tax Avoidance

Amazon’s tax avoidance issue isn’t projecting a positive image for the company. It has been found guilty of such crimes in regions like the UK, the US, and Japan.

3. Imitable Business Model

The company’s business model is so easy for anyone to copy. And as a consequence, any business person can study their model and provide an e-commerce platform that can make the new business a customer favorite. Some e-commerce platforms are already causing Amazon some sleepless nights. These include companies like Netflix, eBay, and Hulu, among others.

Amazon’s Opportunity

1. Opportunity to Diversify

Amazon isn’t just a leading e-commerce brand. It’s also doing fine as a big cloud player, which shows their diversification prowess. So, it’s safe to say that Amazon can diversify into any sector or new technology to achieve faster growth.

2. Buying Other Businesses

Amazon has the financial capacity to buy off some of the biggest and most successful companies in the world. And the company has already started taking advantage of this opportunity to boost their resources. In 2018, it acquired Ring for a whopping sum of $1 billion.

Amazon’s Threat

1. Facing Massive Competition

Diverse companies are competing with Amazon for the number one spot in retail and cloud business. Examples include brands like IBM, Microsoft, Alibaba, among others that are well-placed financially and have the technical workforce. This threat is also intensifying in the e-commerce sector, as other online retailer outlets are repositioning their businesses to attract a vast percentage of the customers.

2. Overdependence on The American Market

Amazon makes a considerable profit from its North American customers, compared to any other parts of the world. But it can’t continue to fish in one place alone. The company must re-strategize to penetrate and replicate her success in other markets successful.

So that’s it about the SWOT analysis of Amazon. If you are seeking to kick-start such e-commerce business or gain knowledge, you will find this post more useful.

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About Sonia Kukreja

I am a mother of a lovely kid, and an avid fan technology, computing and management related topics. I hold a degree in MBA from well known management college in India. After completing my post graduation I thought to start a website where I can share management related concepts with rest of the people.