AMAZON – OVERVIEW
Amazon is a prominent e-commerce website with a market capitalization of more than 1.6 Trillion Dollars as of July 2021. Amazon allows people and businesses to offer and showcase goods for sale online in addition to becoming an online marketplace. That is the world’s largest online seller by sales, with some more than $232.89 billion in 2020. Amazon is a well-known online store that is accessed by both households and corporations, and it is available in several nations and cultures. The Amazon Kindle, as well as the Amazon app store, is two of its most popular items. Finally, Amazon provides corporate and personal technology and infrastructural solutions. Here, we’ll know Amazon Swot Analysis.
Jeff Bezos founded Amazon in 1994 in Seattle, Washington, and it began as a simple online bookstore. The business has grown from a modest beginning becoming the world’s biggest online retail store and among the wealthiest corporations. Not only has it increased its product and service offerings, but has also joined the online streaming industry, the cloud computing sector, and very lately, the financial industry. Amazon is not just the world’s most expensive online store, but it is also the world’s most successful shop overall, having eclipsed Wal-Mart in 2015. This is also the world’s fourth most valued corporation after Apple, Microsoft, and Alphabet.
To gain market dominance, Amazon has almost always adopted minimal profitability access to traditional product portfolios, and this approach has paid off handsomely for Amazon because they have grown to monopolize several of the sectors in which they engage. Amazon has storefront websites in more than a dozen nations and ships to virtually every place on the planet. It also hosts the online store of companies including Sears Canada, Marks & Spencer, and Lacoste.
It also owns several subsidiary companies, including Zappos, Diapers.com, Goodreads, IMDb, and others. Amazon is notable for using technical innovation and enormous size to disrupt possibly the best businesses. By brand finance, that is the largest e-commerce marketplace, AI assistant supplier, live-streaming network, and cloud computing platform. Amazon is the world’s most profitable Internet firm. That is the United States’ second-largest investor and one of the world’s most expensive corporations. Amazon has the greatest worldwide brand worth as of 2020. Amazon’s subsidiaries Amazon Prime Video, Amazon Music, Twitch, and Audible provide a range of downloaded and streaming material.
Amazon includes a publication division called Amazon Publishing, a movie and music studio called Amazon Studios, and a data storage division called Amazon Web Services. It makes Kindle e-readers, Fire tablets, Fire TV, and Echo gadgets, among other things. Ring, Twitch, Whole Foods Market, and IMDb are among the companies it has acquired throughout the years. Metro-Goldwyn-Mayer, a movie and music studio is now being purchased by Amazon. It has also been chastised for tactics such as excessive technological monitoring, a hyper-competitive, and demanding work environment, tax evasion, and anti-competitive activity.
SWOT ANALYSIS
Amazon’s business is categorized into three primary geographical locations: North America, which accounts for 60% of sales, International, which accounts for approximately 30%, and Amazon Web Service (AWS), which accounts for the remaining 15%. 70% of Amazon’s income comes with its e-commerce channels, 10% from Whole Markets distribution centers, and more than 5 percent from its subscription services, which include Amazon Prime membership, eBooks, online streaming, and others. We’re doing a comprehensive SWOT Analysis right now to figure out where the firm stands in 2020 and beyond.
STRENGTHS
1. Advancing their strategies and services for a better future.
Amazon’s business model includes creativity, which improves efficiency and productivity and helps the company to grow into new industries. The firm emphasizes investing in technology for its fulfillment facilities to assist workers in picking and packing goods as quickly as possible. Workers may choose many products as well without spending time going around because the placement of the products is determined by collecting information on the possibility of their being bought together. Machines efficiently assemble and tag shipments before transferring them to commercial vehicles. Amazon Robotic, a business focused on creating robots and improving automation, is owned by the corporation. Amazon is putting drones to the test to increase its delivery speed.
2. Amazon’s e-commerce dominance is aided by an international supply chain.
The company presently runs 175 fulfillment facilities worldwide, 110 of which are in North America, where it holds, wraps and distributes products to millions of consumers every year. Goods are loaded onto trailer trucks and delivered to the sorting center once they have been packaged. Amazon operates its shipping containers and aircraft, as well as partnering with UPS, FedEx, and the US Postal System. Amazon mostly employs its shipping service for Prime membership shipments because that can manage the arrival date, as guaranteed. Amazon’s comparative advantage stems largely from its usage of Information Technology and e-commerce as a flexible and easy-to-implement infrastructure that keeps the firm forward of its rivals.
3. In non-core industries, such as smart-home devices and service contracts, the company is the dominant player.
In 2019, Amazon had a 12.8 percent share of the US home automation market, thanks to the high selling of Alexa, which will pave the door for additional premium service products. In 2020, Amazon has sold more than 100 million Fire TVs, a gadget that converts conventional TVs into smart TVs, opening the path for Amazon to enter the $148 billion TV entertainment industry. Prime Videos customers are increasing in number and expenditure as the Amazon environment develops amongst families. Amazon also leads infrastructure-as-a-service as more business owners migrate to cloud technology, and the growing work-from-home trend guarantees Amazon has a steady income stream.
4. Focusing more on customers
Most likely, you place your buy-through with a friend’s account who has an annual Amazon Prime subscription. That is because their stated mission is to become the world’s most customer-centric company. In keeping with this concept, the firm offers extremely low prices and a hassle-free purchasing experience. Bestseller goods, brand ratings and reviews, and a flawless application encounter are just a few of the Amazon elements that provide customers with a lot of happiness. As a result, it is the preferred option for people around the world. Amazon effectively satisfied the need for certain items by manufacturing products through its brand using information from sales orders.
5. The brand name attracts consumers.
Because of its worldwide distribution systems, Amazon maintains a significant footing and strong brand recognition in 19 countries. Second, in India, this was strengthened by the purchase of a small share in Competing Stores, which owns one of the country’s major offline shops. In 2020, Amazon’s worldwide brand equity (according to Interbrand’s Annual Brand Manager Rankings) will be US$ 200.6 billion, second only to Apple. The firm is also the third-highest in terms of year-over-year value growth, after only Netflix and Chanel. It is one of the biggest brands in the world which delivers at your doorstep, so everybody likes it.
WEAKNESSES
1. Losing key strategies and missions due to lack of focus on one thing.
Amazon has become a behemoth, distributing its energies too thinly over too many businesses, perhaps resulting in inefficiencies, diseconomy of magnitude, and commercial failure in some areas. Amazon began as an online bookstore and has since expanded into e-commerce, streaming server, media production, logistics, hardware development, grocery, game streaming, cloud provider, and a variety of other areas. To enter a new market, Amazon generally buys an established company, decreasing the amount of money available to expand current operations. Because various sectors demand different approaches, the company’s basic strategies and vision may be lost.
2. Winning companies by losing profits
To grab a share of the market and strangle tiny rivals, Amazon is ready to sell at breakeven perhaps at a deficit, with a razor-thin profit income. For example, Amazon is offering the Fire TV at a breakeven gross margin to get access to the lucrative connected-TV advertisement sector. Even though the company’s margins have improved in recent years, this loss-leader approach is unsustainable. One of Amazon’s major flaws, as noted by researchers and industry professionals, is that the firm works on relatively close profit marketing strategies, which have significantly harmed its sustainability, even though the company has large volumes and earnings.
3. In Europe and other growing regions, there is underrepresentation.
Germany and the United Kingdom account for only 7.9% and 6.2 percent of revenue, respectively, compared to 61 percent in North America. Its business strategy appears to be having difficulties in Europe, particularly with the distribution center. Considering the number of people living in Europe who believes in E-shopping, Amazon should surely think about its strategies and focus a lot on the advertisement to increase its reach in European countries.
4. Failures and Mistakes in Product Development
Improving shopping journeys, the convenience of purchase, and timely delivery frequently results in the quality of product and the accuracy of quality promises being overlooked. Fake ratings and reviews are common on Amazon, and this has a negative influence on the brand’s reputation. A small number of goods marketed under the Amazon Simple label are considered to be of poor quality. It can easily destroy the name of the brand in front of the potential buyer, therefore they must avoid delivering faulty products.
OPPORTUNITIES
1. The cloud is going nowhere in the distinct future and Amazon should take advantage of it.
Amazon, together with Microsoft and Google, is one of the most well-known cloud services. Following the recognition of cloud computing versatility, portability, and budget, more companies, from medium to big, are migrating to it. In 2020, the work-from-home trend provided a large portion of service providers’ income, and this trend is expected to continue for the near future.
2. The online grocery business is expected to develop rapidly.
Grocery is the largest retail category, although e-commerce penetration is the lowest. Shoppers are ordering food digitally more frequently as a result of the epidemic, providing Amazon a chance to reconnect as conventional businesses play hang. Amazon is now the most popular service, with 62 percent of e-marketer people polled in the United States saying they use it, trailed by Wal-Mart and Target. Although this tendency may fade as customers gain confidence in their ability to explore in-store, users of such services are eager to buy pantry essentials and packaged items online.
3. The television advertising industry is a lucrative new revenue stream for Amazon
The $148 billion high-profitability connected-TV ad industry, that Amazon is attempting to get into with its Fire TV device, may improve Amazon’s gross margin. According to e-marketer, there will be 203 million connected TV customers in the United States by 2020, giving Fire TV plenty of room to grow. With the growing membership of prime and its popularity among the people, Amazon is keen to work more for the people to give them content and capture the market like Netflix. Along with viewers, the advertisement will come hand-in-hand.
4. Backwards compatibility
Increase Amazon Fundamentals into additional categories, such as electronics and necessities. This will help customers remember the brand, provide a differential advantage with customer-demanded characteristics and aspirations (based on the customer insights), and improve profitability as you can also earn from the product instead of just getting the supply from the company.
5. Improving its online system and UI interface.
Amazon has the chance to grow up significantly by launching its online payment system, given the fact that customer worries about online purchasing in terms of data security are some of the top concerns on their minds. Furthermore, this would increase the company’s profit margins by allowing it to take advantage of the benefits of having its payment method. Secondly, simplifying its interface and making it easier for the user to operate it can make a difference in its reach considering its recent interface which is quite slow.
THREATS
1. Cybercrime is number one.
The most prevalent type of modern-day criminal conduct that puts website visitors in danger is data robbery. Additionally, the general population is unaware of the repercussions of fraudulent activity and hacking. Hackers could easily trick them into providing personal information such as bank account numbers. As a result of these occurrences, more consumers are opting for physical and in-store purchases rather than online transactions. Why is this case? It offers security as well as much-debated quality assurance. Amazon must quickly resolve this matter or else they will lose some potential customers who will buy from a store instead of their site. They should have end-to-end encryption facilities.
2. Litigation and strong competitiveness
More online shopping businesses have opened, and the epidemic has hastened the move to digital, making things even worse for Amazon. Amazon now official accounts for India’s total e-commerce sector, with just a few localized, provincial, and nationwide companies, such as JioMart, with the ability to challenge the behemoth. Because of the market’s intense competition, aggressive pricing wars have landed e-commerce businesses in legal battles with both sellers and competitors. Amazon has been playing a highly aggressive, yet self-destructive game or loses as a result of its compulsive effect on cost dominance.
3. Negative profiles and goods
The market is congested, with a broad range of items inside every sector, which has piqued the interest of the general public. Customers have lost faith in the site to make a trustworthy buy thanks to the shortage of proper testing in seller ratings and product information. Customers are most likely to reject or exchange more than 40% of purchase orders, resulting in twice the operational expense for the same pricing.
4. Governmental guidelines
The company is well-known for its pricing tactics and legal frameworks addressing fairness and anti-competitive behaviors. Unfortunately, the firm would not be profitable any time soon owing to litigation and significant costs, as well as limited activities due to various issues. As we all know, the firm is frequently held accountable for harm incurred by counterfeit goods supplied by third-party vendors. Furthermore, the federal government’s limitations on the sale of non-essential products resulted in a loss of approximately US$ 398 million. Companies like Amazon are bearing the burden of sustainable growth as government initiatives increase support for local merchants.
5. Local markets and online sites.
Lastly, Amazon confronts strong competition from smaller online merchants that are more flexible and quick than Amazon’s mammoth approach. The local market can have a huge impact on the minds of consumers as they get the chance to check the products before and then take them. Delivery also takes place in a day or two locally. Although Amazon has started a one-day delivery feature and 7 days return policy, it has no match to the retail stores in terms of services and delivery. This implies that, in pursuing its worldwide plan, the firm cannot lose perspective of its local market circumstances.
CONCLUSION
Amazon is expanding beyond its initial online store and into other rapidly rising businesses that will undoubtedly become successful with sufficient investment. Even though Amazon has adequate resources to dissuade competitors in any area in which it competes, the corporation must be on the lookout for prospective antitrust lawsuits from the Department of Justice. I hope you learned how well this analysis aids in understanding many elements of the business from this post. And what great discoveries emerge as a result of our efforts.SWOT analysis may provide a comprehensive picture of a company’s strengths, weaknesses, opportunities, and threats. And you will need this before you go any further with your assessment or project study. Only when you have a thorough understanding of the firm for which you work can you carry out well-informed projects and analyses based on corporate data. In this situation, Amazon’s SWOT analysis gives a useful illustration.
