From selling books online to aiming the Moon, the Amazon Leader Jeff Bezos has come a long way with his Brain Child, Amazon.com Inc. No wonder Amazon hits the all-time best spikes in the Net Revenue of 280.52 billion USD in the year, 2020 (1). According to Wikipedia (2), Amazon.com is an American multinational conglomerate technology company based in Seattle, WA with a happy team of 840,000 employees worldwide. Being the largest Online Retail Store in the world, Amazon.com is the first pick for almost half of the customers who are shopping online (3). This company has been the show-stopper from the very beginning.
SWOT Analysis of Amazon Inc
The SWOT or internal and external strategic analysis of Amazon Inc. represents the key factors behind the company’s success and the true potential of impacting lives. The detail of the analysis is given as follows:
Strengths of Amazon.com: The Evolution behind the Revolution
Brand Impact: Amazon.com is the World’s Largest Online Retailer with almost 310 million consumers (4). Almost covering every possible services a certain consumer needs, Amazon.com is the “Biz King”. Big companies to small businesses, everyone being able to sell their products in this platform has been the key factor behind Amazon’s success.
Satisfactory Global Employee-Customer Relations: With a gigantic team of 840,000 employees; 310 million Active and Happy Customers worldwide, Amazon.com is the prime example of satisfactory employee-customer relationship. Complex, yet brilliantly planned execution of all the services are the strongholds of the company’s advancements. Almost 5 out of 10 Customers chose Amazon.com over others competitors.
Revolutionary Products & Services: Amazon.com has been growing at lightning speed from the word GO! Even if it started as an online book store, Jeff had been eying to sell almost everything. Jeff’s vision and his team’s effort has been rewarded with revolutionary services like Amazon Prime, AWS, Alexa, Kindle, AmazonWireless and Amazon Studios (5).
State of the Art Logistics and Distribution Facilities: 243.5 million sq. ft. space of Amazon’s distribution and fulfillment facility can easily cover almost 4,228 football fields! An enormous fleet of trucks, planes and ships, Amazon.com is one of its kind in distribution. With this support and Logistics, 2-day Delivery feature of Amazon Prime has surpassed 100 million consumers! (6)
Weaknesses of Amazon.com: Flaws of the Finest
Even the moon has spots. As it goes, the fittest in the clan has some weaknesses. The Weakness of Amazon.com are described as follows:
Product Failure: Amazon was cruising sky high when they launched Kindle Fire Tablets. This success lead the company to develop similar products in smaller form-factors; Fire Phones. Fire Phones wasn’t much of a hit because of the lack of versatility in the app options, rigid user interface and underrated form-factors. (7)
Fluctuations of Margins: Amazon.com has always been in the lime light for their unusual business policies. As the company invests majority of the profits back in the business, the gain smaller profit margins, skeptical in some sectors. Such act causes the company to eventually lose their pennies and face cut-offs in certain extends. (8)
One-Sided Focus: Speaking of the World’s Largest Retailer “Online”, Amazon.com is no doubt the ruler. But the company available only “Online”! For this one-sided focus, Amazon.com is losing potential customers who are comfortable buying an item walking into a store rather than ordering it by seeing it on the computer/mobile screen.
Strict Employment Policies
“You can work long, hard or smart, but at Amazon.com you can’t choose two out of three,” Mr. Bezos wrote in a 1997 letter to shareholders, according to NYT. You probably guessed how strict Amazon.com is. Higher expectations sometimes can be suffocating to the employees who are serving your company. (9)
Opportunities for Amazon.com: Where Jeff should rethink
A great Leader is the individual who strives for the best, to be the change he wants his followers to make. Certainly Jeffery P. Bezos is one of the most influential Leaders in the globe. But there are specific opportunities where Amazon.com and Bezos need a good modulation. The opportunities where the company should be focusing on is given as follows:
Build Hands-On Stores and Experience Centers: We won’t deny the fact that Amazon.com has some experience center for Alexa, Echo and Smart Home Autonomous Systems. But people will be more influenced and involved if the company decides to build more Hands-On Store in different cities and countries. This will allow then to capture the market entirely.
Flexible Employment and Tax Policies: A company can gain sky heights if it has an army of happy employees. And Amazon.com cannot be an acceptation. Good Employee-Relations is a mandatory stuff. Amazon.com has always been a company that is reportedly accused of “aggressively avoiding” Global taxes. This margin of error is needed to be solved. (10)
Reduce Low Margin Possibilities: Low Profitability has been rather a potential set-back for the company as it produced extremely low margins in the recent years. Because it tends to spend more and more money they can get their hands on. This might be proven to be vulnerable as the market is getting more competitive. (11)
Easy Pre-requisites for more Market Shares: We cannot deny the fact that Amazon.com has been the forerunner in acquiring more and more market shares by buying small businesses and subsidies over the years. But easier negotiations and pre-requisites can offer the company to gain such heights that it has never seen before.
Threats for Amazon.com: Amazon Vs. Amazon
When you are the best, your biggest enemy is you. But if you can outrun your former self then you will remain the best, always. The biggest threats for Amazon.com is the company itself. The threats which can be chaotic for the Company are given as follows:
Vast Array of Competitions: Like it or not, Amazon.com is not a unique idea anymore. As the time runs by, companies with higher ambitions are gaining momentum to catch the king of the market. AliExpress, Walmart, Otto, JD, eBay, Flipcart, Rakuten, Newegg are some of the giants who are also running in the marathon. (12)
Rigid Business Policies: A former executive once said, “That’s how we earn our success—we’re willing to be frugal and egoless, and obsessed with delighting our customers.” Such rigid and bold policies can be fruitful and fatal at the same time. Denying Federal taxes can also be a potential threat to the company. (13)
Tax Denials: Amazon.com is the 2nd Company to shatter the 1 trillion US Dollar Company record in September 2018. Yet it paid 0 USD as federal tax in 20119/20. This might be beneficial for Amazon.com from a financial perspective but is a not ideal for the company as well as the government. (14)
Workspace & Working Condition Controversies: Amazon.com is recognized for being extremely strict and productive as per the working areas and facilities are concerned. But several employees raised complaints against the company in recent years and also in this Pandemic about the working conditions. Yet Amazon.com has not released details of this occupational hazards or occurrence. (15)
Bottom Line
Every modern day company is evolving day by day, learning from their mistakes, executing trails and errors and Amazon.com is no acceptation. They are learning every day, innovating stuffs and executing new ideas just to be more efficient and grab the eyes of every consumer. Efforts of being and maintaining the rank of being the best is the forte of Amazon.com and Jeff Bezos. With the vision of gaining the unthinkable, Jeff Bezos and his army is aiming the space to be the new future of mankind. Visionaries like these are the change that the world needs, the world expects.
Related: SWOT Analysis of Google Inc & SWOT Analysis of Microsoft
References used to support this analysis:
1. https://www.statista.com/statistics/266282/annual-net-revenue-of-amazoncom/
2. https://en.wikipedia.org/wiki/Amazon_(company)
3. https://muchneeded.com/amazon-statistics/
4. https://etaileast.wbresearch.com/blog/amazons-engaged-buyers-drive-social-media-revenue
5. https://en.wikipedia.org/wiki/List_of_Amazon_products_and_services
6. https://www.ttnews.com/articles/rise-amazon-logistics
7. https://www.cbinsights.com/research/corporate-innovation-product-fails/
8. https://www.nytimes.com/2019/10/24/technology/amazon-earnings.html
9.https://www.beckershospitalreview.com/hospital-management-administration/9-key-issues-with-amazon-s-corporate-culture.html
10.https://www.theguardian.com/business/2019/dec/02/new-study-deems-amazon-worst-for-aggressive-tax-avoidance
11.https://www.forbes.com/sites/greatspeculations/2014/12/11/heres-why-amazons-profitability-is-so-low-part-1-of-2/#6aa284f1689c
12.https://www.bigcommerce.com/blog/amazon-competitors/#top-ecommerce-competitors-for-amazon
13. https://www.newyorker.com/magazine/2019/10/21/is-amazon-unstoppable
14. https://www.businessinsider.com/amazon-not-paying-taxes-trump-bezos-2018-4
15.https://www.bostonglobe.com/2020/05/17/nation/amazon-workers-mass-file-federal-complaints-about-unsafe-conditions/
16. https://cookersworld.com/best-egg-holders/
Hey Guys! My name is Richard Andrew. I am a contributor to the Strategy Watch. I have finished my graduation with a major in Economics. My interest areas are Economics, Financial Analysis, Stock Analysis, and Business Strategy.