Amazon Business Analysis: SWOT Analysis Of Amazon

Strength:

1. Shopping at Amazon rather than physical stores became a habit to customers because of superior customer service, lower prices, high convenience, wide variety of selection and instant gratification due to variety of add-on services like prime fast deliveries, prime video and prime music.

2. Using personalization to make relevant recommendations and a clear checkout process that many now imitate.

3. Their focus on customer experience, “Customer Obsession” as they call it is shown by the way they consistently outperform other retailers.

4. Being the world’s leading online retailer, Amazon derives its strengths primarily from a three-pronged strategic thrust on cost leadership, differentiation and focus. This strategy has resulted

Amazon had to build a product or a service for the problems company suffered or to attract more customers. As they built products and services from scratch, they spent millions of dollars in research and development which was vain in few ventures.

2. In recent years, Amazon as part of its diversification strategy has been “spreading itself too thin” meaning that it has allowed its focus to waver from its core competence of retailing books online and allowed itself to venture into newer focus areas. While this might be a good strategy from the risk diversification perspective, Amazon has to be cognizant of losing its strategic advantage as it moves away from its core competence.

3. As Amazon offers free shipping to its customers, it is in the danger of losing its margins and hence might not be able to optimize on costs because of the strategy.

4. Considering the fact that Amazon is an online only retailer, the single minded focus on online retailing might “come in the way” of its expansion plans particularly in emerging markets.

5. One of the biggest weakness and something that has been often commented upon by analysts and industry experts is that Amazon operates in near zero margin business models that have severely dented its profitability and even though the company has high volumes and huge revenues, this has not translated into meaningful profits for the

The other opportunity which Amazon has, is in terms of expanding its global footprint and open more sites in the emerging markets, which would certainly give it an edge in the uber-competitive online retailing market.

Threats:

1. One of the biggest threats to Amazon’s success is the increasing concern over online shopping because of identity theft and hacking which leaves its consumer data exposed. Therefore, Amazon has to move quickly to allay consumer concerns over its site and ensure that online privacy and security are guaranteed.

2. Because of its aggressive pricing strategies, the company has had to face lawsuits from publishers and rivals in the retailing industry. The obsessive focus on cost leadership that Amazon follows has become a source of trouble for the company because of the competitors being upset with Amazon taking away the business from them.

3. Finally Amazon faces significant competition from local online retailers who are agile and nimble when compared to its behemoth type of strategy. This means that the company cannot lose sight of its local market conditions in the pursuit of its global