End-To-End SWOT Analysis Of Amazon – The Largest Ecommerce Platform

About Amazon 

Well, we all know the popularity of Amazon is widespread all around the globe. It has around 300+ million active users all over the world and 100 + million subscribers. Being one of the top world online retailers, Amazon has achieved a lot of eye-popping profit and many targets with the success. 

Jeff Bezos was the founder of Amazon in 1994. They started with the online bookstore as a small motive to earn but soon converted to the top online retailer selling almost everything starting from services to product, everything just like its logo says and make their customers happy, and soon they make it a strong brand name all over the world.

 As we know that Amazon is an E-commerce platform and has active growth, but it also has some competitors which are increasing day by day in the growing market, also e-commerce has adopted a fashion brand on which amazon mainly focuses.

Products and Services of Amazon

Amazon is mostly famous for its e-commerce platform but there is more to it than what meets the eye:

• Amazon.com – Ecommerce Platform
• Amazon Web Services
• Amazon Alexa
• Amazon Prime Video and Music
• Amazon Kindle

Competitors of Amazon

Amazon being an online store faces competition from some of the top companies in the world. As the company has a variety of products it faces tough competition from the brands which provide their products in specific segments.  

Some of the top competitors of Amazon are-

• Flipkart
• Myntra
• Walmart
• Spotify
• Netflix

SWOT Analysis of Amazon

SWOT analysis is a framework used to identify a company’s strengths, weaknesses, opportunities, threats, and how the company can use them to be profitable.

A company can not control all the factors that it deals with, such as the outside threats and opportunities, but it can still grow by identifying its strongest assets and improving its efficiency by tackling its weaknesses.

Let us now start going through each aspect of the SWOT analysis of Amazon.

1. Strengths of Amazon 

Strengths are the internal factor of any company it helps us to know the advantage of the company due to which they are being competitive in the market, it also includes the operation and the positions or you can say its a reason why the company is doing so well 

• Brand Name: As we know that Amazon is one of the leading brands in the world having a successful brand image and it shows the wealth of the company, having a large number of subscribers with great popularity plus strong financial performance.
• Consumer Trust: Around 89% of consumers are likely to shop on Amazon and for a huge group of the public, Amazon is the priority when it comes to online shopping, that’s the trust which the company has built with their customers by providing them with a smooth online shopping experience.
• Go Global and Act Local strategy: The company has globally expanded in more than 200 countries and all its operations and decisions related to the product and services allow it to grow more international sales and strengthen the company position.
• Superior Logistics and Distribution Systems: Amazon uses its resources such as distribution facilities, information systems in a very efficient and effective way all over the location which makes their customers satisfied all over the regions. They ensure the secure and fast delivery of your product right at your doorstep and also have a return policy if the product got damaged due to some reason.
• Wide Variety of products: Amazon provides a very wide range of products and services, which fulfils the needs of every type of customer from a basic buyer to a premium customer. The company has a lot of variety under each category which helps them grab a huge customer base.

2. Weaknesses of amazon     

Weaknesses are again an internal factor and it shows the enigmatic aspect of particle control. They have made some critical issues that may hinder their growth.

• Employee Morale: An article by Verge states that the workers of the warehouse are unhappy with their work in the covid pandemic.The company has faced multiple accusations regarding the critical, insensitive, and unfair environment which demotivates the workers and can hamper the overall growth of the company.
• Quality Focus: Amazon mainly has its eye on optimizing product search, new offers, easy to buy, and have a good delivery speed as a result they don’t pay more attention to the quality of the product which is being sold on their platform. 
• Seller Relationship: Sellers on Amazon are upset because of the fast delivery demand, new development in the inventory store limits, and the increasing numbers of competition from Amazon’s private label of products.
• Increasing Competiton and Lower Margins: Amazon offers a free shipping facility over a certain order amount, which attracts customers but reduces the margins of the company. Due to the price war caused by increasing competition, Amazon’s margins are shrinking which is resulting in reduced profits.

3. Opportunities  

The opportunity of Amazon is an external factor that mainly focuses on what could a company do or at what position the company will stand on if they invest in it or just implement it. Innovation is a reason and creativity are a few of the reasons for the success of Amazon.

• Expand Operations in developing markets: Amazon has untapped growth opportunities in developing markets they can gain more consumers special in rural and semi-urban areas in India. Expansion of the distribution system into poorly connected geographic areas can be possible by a higher number of the warehouse at every place and more expansion of the delivery system
• Podcasting: Recently, Amazon has started taking interest in podcasting. In tandem with their Alexa and positive response from the public, this can be a new market for the company to take over – using its in-house technology and innovation.
• Helping small businesses: Recently Amazon has announced to help the small busy by selling their products to customers, the main vision behind this is to promote small and local businesses and fast track the growth of existing ones.

4. Threats of Amazon 

Another challenging factor for the company Amazon is a threat which is again external factors and out of our reach and a competitive environment that has a risk and threats to all types of businesses. 

• Online Security: Increasing cybercrime may affect the security network or the entire system of the company which may also affect the customer’s loyalty. This is an extremely important part for Amazon to work on this aspect of online security and their data management.
• Government Regulations: During the pandemic, the government has banned the sale of non-essential stuff from amazon for avoiding the movement of the delivery men, etc. – threatening Amazon’s growth both domestically and internationally. Amazon had a great loss of around 400 million just because of this policy.
• Competition: Amazon is a leading company that has gained a lot of marketing share by making their customers satisfied but now it’s a trend of e-commerce and every company is being digital just like Amazon and becoming its competitor in the market just like Walmart did with their new e-commerce platform.
• Fake/ Lack of reviews: The marketplace is cluttered with a wide variety of products in each category. Unfortunately, the lack of reviews and ratings has led to customers doubting the reliability of the platform. The company needs to work on their online reputation as its importance has increased tremendously over the years. If you wish to learn one of the most sought after skills in marketing, check out IIDE’s Online Reputation Management Course right now.

Now that we have had a detailed look into the SWOT analysis of Amazon, let us conclude our learnings in the section below.

Conclusion

Amazon is a market leader at present and is performing extremely well. The company is expanding significantly in new markets like the music and content industry which has given it new customers and strong customer retention. Interlinking Alexa, prime and normal delivery services is a very innovative technique used by the company to attract customers. It is innovating and advancing with the use of technology which is the coming future. Amazon needs to improvise its internal environment and review systems to sustain its top position. Overall the company is in a strong position and is expected to grow further.

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If you wish to learn more about the business models and strategies of other companies as well, head on over to IIDE’s Knowledge Portal to learn more!

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