Introduction
Amazon.com Inc, commonly denoted as (AMZN) is a leading global electronic commercial company and the most visited internet retail shopping destination internationally. The main headquarters of the company is in Seattle, Washington. Commercial icon, Jeff Bezos founded the company in the early 90s as Cadabra and later renamed it as Amazon.com. Amazon sells a variety of products, such as books, video, consumer electronics, music, household products and clothing (Mennen, 2010).
SWOT Analysis
The following is a detailed SWOT analysis of the company.
Strengths
Amazon.com, the U.S. largest internet retailer, commands three times the revenue of its close rival, the Staples Inc. It sells educating and entertaining media products. Amazon has had enormous acquisitions that resulted in the growth and faster delivery of purchased products. In the recent past, Amazon.com boasts on its strategy of rebuilding and investing in Research and Development, establishment of technology and innovative research centers.
Seven years ago, it invested $700 million to establish offices for customer services, fulfillment and software development centers majorly in America, Europe and Asia. Moreover, the viewers’ assessments and comments provide feedback for any adjustment aimed at increasing revenue (Bangs, 2002).
Weaknesses
For the past four years since 2006, Amazon’s profits were negative implying that they are not able to cover operational costs. Outsource delivery firms contribute to low earnings and Amazon Associates, their marketers, receives 40% of revenue for marketing efforts. There have been reports of price bias within the Amazon marketing strategies. For example, DVD prices are different on some buyers. This posed as a competitive and a divisive barrier in on-line trading.
In 2008, it received a lot of critics for inhibiting publishers from directly selling at a compromise from their websites. The reason behind was that Amazon does not prioritize on those customers with heavy purchasing power. It has also reduced most of its services to major customers. Recently, it attracted negative publicity due frequent tax avoidance in Britain and U.S.
Amazon is also under criticism for poor warehouse environment for staff, price discrimination and anti-competitive actions. Amazon sells products at zero margins to reap the market and do away with the competition. Though it is a tactical strategy in the short term, it reduces the profits in the long run (Madura, 2007). Competitors, on the other hand, will adapt by undertaking a differentiation strategy, thus losing customers.
Opportunities
There are plenty of opportunities for Amazon to invest and uphold customer beliefs that endorse the customer’s allegiance towards the company. Investing into technology is desirable for all their phases of interaction with buyers and suppliers which will augment the company’s reliability (Stubbs, 2011).
Ventures in carrying out will present an enlarged level of sincere customer services, therefore, meeting consumer prospects. Moreover, partnerships in the private and community division such as with the famous British Library, will offer the surrounding community with the essential services of being competent to search for historical books.
Amazon must initiate joint ventures, acquisitions and partnerships in order to increase the delivery time and efficiency. Amazon should consider partnering with other firms especially for the on-line retailing to promote seasonal stuff and attract new customers. Amazon can pursue niche clients by providing goods and services in diverse cultures and religions.
They can also open more online retail stores in those countries experiencing growing economies such as Asia and Europe so as to maintain growth levels. The company can consider releasing their own products and services and brands in its markets.
Threats
Amazon customers have to wait longer to take their delivery as compared with the time they can get from nearby retail stores. The enormous internet trade has attracted a lot of competitors making it difficult for Amazon to differentiate their services. Increasing delivery costs impacts negatively on the end user giving rise to poor reputation of the company. New alliances, networks and partnerships, shaped by the rival firms have strengthened battle for the market, thus increasing the marketing cost (Weber, 2010).
High delivery period and charge have a tendency to divert the present and potential customers to regional bookstores. This gives rise to loss of revenues on those customers opting for local retail stores other than shopping at the Amazon website. When a customer makes a transaction, personal bank details leak to unauthorized persons, therefore, posing a security threat leaving customers with an option to make their purchases on local bookstores.
Concerns, over how these global companies avoid the payment of taxes to various countries is on the rise. Therefore, the governments will have no other option other than make it mandatory the payment of taxes based on their incomes. In this instance, Amazon’s earnings would be drastically reduced (Weber, 2010).
Given its global size, Amazon will not evade the growing competition from its competitors. For example, alliance between e-books providers and Apple Inc posed a challenge to them on internal pricing strategies. Without such a strategic alliance, most content providers were powerless to compete versus Amazon’s bargaining power (Mennen, 2010).
Conclusion
In conclusion, there are mixed perception on whether Amazon will remain leading in internet retail or not. From above, it is clear that Amazon is in a strong position because of more strengths and opportunities than the weaknesses and threats respectively.
References
Bangs, D. H. (2002). The market planning guide: Creating a plan to successfully market your business, product, or service. Chicago: Dearborn Trade Pub.
Madura, J. (2007). Introduction to business. Mason, OH: Thompson/South-Western.
Mennen, M. (2010). Global Corporate Strategy – A Critical Analysis and Evaluation of Amazon.com. Munich: GRIN Verlag GmbH.
Stubbs, E. (2011). The value of business analytics: Identifying the path to profitability. Hoboken, N.J: John Wiley.
Weber, P. (2010). Abercrombie & Fitch – Marketing Analysis: A macro-environmental and competitive audit. Munich: GRIN Verlag GmbH.