AMAZON

Content:
 Introduction
 Amazon’s main strategies
 Competitors
 Swot Analysis
 Conclusion

Introduction
Amazon.com, an American multinational technology company, based in Washington and found
by Jeff Bezos in 1994 is the global leader in e-commerce and it was the first company to
introduce the concept of selling goods on the Internet. Beside e-commerce, Amazon.com focuses
on cloud computing, digital streaming, and artificial intelligence. It is considered one of the Big
Five companies in the U.S. information technology industry, along with Google, Apple,
Microsoft, and Facebook. It is considered that the company is “one of the most influential
economic and cultural forces in the world”.
History
Amazon was founded by Jeff Bezos in Bellevue, Washington, on July 5, 1994. Initially
Amazon.com started as an online bookstore and its success led Amazon to diversify into other
products. In 1998, the company began selling music and videos. The following year, the
organization also sold video games, home-improvement items, consumers electronics, games,
jewelry, software, and toys.
In 2002 the company started Amazon Web Services (AWS), which provide data on Web site
popularity, Internet traffic patterns and other statistics for marketers and developers.
In 2006, the company started Fulfillment by Amazon which manage the inventory of individuals
and small companies selling their belongings through the company internet site.  In 2012,
Amazon bought Kiva Systems (now Amazon Robotics) to automate its inventory-management
business, purchasing Whole Foods Market supermarket chain five years later in 2017.
Amazon’s main strategies
Strategy is the direction and scope of an organization over the long term, which achieves
advantage in a changing environment through its configuration od resources and competences
with the aim of fulfilling stakeholder expectations.
Amazon, since its formation in 1994, has had to deal with numerous changes in environment
such as: Year 2000 problem known as Y2K problem in the digital world in 1999-2000, the
economic markets after September 11, 2001 attacks on the World Trade Centre in New York ad
2008 economic crisis. Despite these, in trying to achieve advantage over its competitors, Amazon
focusses of its Business Level Strategy as well as its Corporate Level Strategy. The main
emphasis of Amazon’s main strategies lies within its “customer-centric” approach by serving its
three distinct groups of customers.
 Consumer customers: Amazon provides a wide range of merchandise, low prices, and
convenience to its customers
 Seller customers: Customers selling their products through Amazon’s fulfillment
facilities
 Developer customers: Amazon’s technology infrastructure enabled the users to create any
type of business
Business Level Strategy
It refers to a set of commitments and actions that company uses to gain a competitive
advantage by exploiting core competencies in specific product market. This competitive
advantage can be gained through three generic strategies: Cost Leadership, Differentiation
and Focus. Amazon.com operates using a Hybrid Business Strategy which combines two of
the above three strategies depending on the Business sector it is operating within.
A good example of using the best Hybrid Strategy, was within the period 2009-2012 when
the e-book reader was very popular. Amazon.com created their own e-book reader called
Kindle of which an estimated ‘200 million units have been shipped worldwide since 2009
and another 1 billion was predicted to be ship by 2018. The Hybrid strategy used towards this
was the Cost Leadership and Focus strategy. Despite the innovative Kindle receiving the
Reader’s Choice award for the best e-book reader 3 years in a row, Amazon has kept the cost
of this device affordable, hence sticking to their core emphasis of providing low-cost
products to their customers in trying to achieve customer satisfaction.
Within the Business Level, Amazon focuses on innovative technology, along with keeping
the cost low plays a vital role in keeping itself a step ahead of its competitors. Amazon is also
able to offer differentiation through innovative products whilst keeping the cost down of
products such as Kindle which has helped Amazon to stem its authority among its
competitors even further.
Corporate Level Strategy
Customers, sellers, and developers are all focused around the vision of growth that the
founder and CEO of Amazon, Jeff Bezos, yearned from the beginning. The customer focus is
mainly based around E-commerce. Ansoff Matrix consideres that there are 4 main strategiesc on
the corporate level, namely: Consolidation, Product Development, Market Development, and
Diversification. Amazon managed to adopt all these strategies in lifetime. Within 2009-2012,
Product Development has been a major part of Amazon’s strategy in the form of the e-book
reader Kindle, when the company created a new product and launched it into an already existing
market.
Also, Amazon used PESTEL Analysis which is a framework used to monitor the micro-
environmental factors that have an impact on organization such as: political environment
(European Union, World Trade Organization), economic environment, social environment
( Social Networking), technology, environment(issues that can be take into consideration are :
Global Warming, Pollution Control, Conservation of energy, Use of environmentally friendly
ingredients, Use of recyclable and non-wasteful packaging, Corporate Social Responsibility) and
the last one is legal environment.
Competitors
Amazon is the most dominant online store in existence today and every e-commerce store owner
needs to face the reality that they are competing with Amazon.
The E-commerce competitors for Amazon are the following:
Online stores - The ecommerce industry is growing at an exponential rate. In fact, retail
ecommerce sales worldwide are expected to reach $4.8 trillion by 2021.
Niche E-commerce Stores - Amazon is obviously very good at what they do. But in terms of
knowledge and quality, they can’t compete with smaller niche shops that are experts in a
particular industry.
Walmart - Walmart is another global giant. While Walmart is best-known for its physical
department stores, this retail giant also has a significant presence online. Behind Amazon,
Walmart is the second most popular online store in the United States in terms of ecommerce
revenue.
Alibaba - Alibaba is a China-based online retailer. This international giant specializes in
wholesale selling online, which is a differentiation factor compared to Amazon.
Otto - Otto is a European online retailer. The company is best known for innovation throughout
the years to keep pace with the times. At its core, Otto is a trading company, meaning that it sells
products from other brands on its ecommerce platform.
eBay - This website was a pioneer in consumer-to-consumer selling through an online
marketplace. Over time, eBay has evolved and become more than just a way for consumers to
buy and sell their own new or used merchandise.
Also, there are other competitors such as: Flipkart, Rakuten, Newegg etc.

SWOT Analysis
A SWOT Analysis assesses the strengths, weaknesses, opportunities, and threats of a business.
Internal Strategic Factors
So, I will begin with Amazon’s main strengths which are the following:
As a global E-commerce giant, Amazon has a strong position and successful brand image in the
market, so it is a globally recognized brand. Also, according to Interbrand’s Global Brand
Ranking 2019, Amazon is ranked at #3 position after Apple and Google, with a brand value of
$125Billion.
Amazon is a customer-oriented brand because it caters to many customers for everyday needs
at inexpensive prices. Also, its business strategies such as differentiation and innovation and
cost leadership are one of the most important strengths of this company which owns the largest
merchandise selection (an extensive product mix which attracts online customers to make their
majority of purchases from it rather than other online retailers. As of 2018. Amazon has
sold 562.3 million products in its Amazon.com Marketplace.).
Due to the high traffic volume on Amazon’s sites, a large number of third-party sellers have
joined the platform of Amazon to sell their own merchandises. The data from Fulfillment by
Amazon (FBA) reveals that there are more than 2 billion items available from third-party sellers.
Amazon develops partnerships with local supply chain companies that help it in competing
against domestic e-commerce rivals. It understands the local needs and launches its services as
per the country’s culture. (Go Global and act Local Strategy)
Also, Amazon has a large number of acquisitions( Whole Foods, Zappos.com, woot.com,
Junglee.com, IMBD.com, and many others have produced significant revenues and profits for
Amazon) it is involved into 3 key business: Amazon Marketplace, Amazon Web Services and
Amazon Prime.

With over $1 Trillion market capitalization and above $280 billion annual revenues, Amazon is

truly a market leader in online retail industry.
At the same time, Amazon uses highly efficient logistics and distribution systems. It even
has fixed rates for different delivery time periods. Thus, it executes reliable, secure, and fast
delivery of goods and products to the customers.
Now, I will talk about Amazon’s weaknesses:
The first weakness of this business is the fact that it is an easy imitating business model. A
few businesses are even giving amazon a tough time. These include Barnes & Noble, Netflix,
eBay etc.
Also, Amazon is losing margins in a few areas such as India because of its free shipping to
customers.
Tax avoidance is another problem for the company because in Japan, UK and US has sparked
negative publicity for Amazon.
At the same time, there is a very limited number of physical stores and this sometimes
hinders to attract customers buy things which are not sellable on online stores.
External Strategic Factors
 Opportunities

Amazon can gain the opportunity to penetrate or expand its operations in developing markets.
Also, by expanding physical stores, Amazon can improve competitiveness against big box retailers
and engage customers with the brand.

Amazon has the opportunity to improve technological measures and organizational policies to
reduce counterfeit sales.

More acquisitions of e-commerce companies can increase the company’s market share and
reduce the competition level.

Self-Driving Technology – Amazon recently acquired California-based self-driving startup Zoox

Inc for whooping $1 Billion. It can now leverage autonomous technology to exploit the increase in
demand for ride-hailing services or use it to improve its delivery network.

Threats
Government regulations can also threaten the business proceedings of Amazon in some critical
countries. Amazon does not ship to Cuba, Iran, North Korea, Sudan, and Syria.

Links to exploitative labor – Amazon is one of three retail giants facing scrutiny from the US
State Department for maintaining supply chains and labor sources associated with human rights
abuses. This exposes the ecommerce giant to reputational, economic, and legal risks.

Increasing cybercrime can affect the network security system of the company.

Aggressive competition with big retail firms like Walmart and eBay can give Amazon a tough

time in the future. In addition, now Amazon competes with the following companies:

 In Video Streaming Service: Apple TV+, Netflix, Disney+

 In Logistics: FedEx
 In Self Driving Technology: Tesla, Uber, Ford
Imitation is simple as many new entrants are coming up in the market usually with the
same business model of Amazon.
Fake Products – The increase in counterfeiting and fake products threatens Amazon’s profits.
The company recently filed a lawsuit against New York-based online retailer for
allegedly counterfeiting Valentino shoes, a luxury Italian shoe brand offered by Amazon. 

Economic Recession – Amazon is not immune to an economic recession. If economic uncertainty

worsens, it can impact Amazon’s sales. 

Fake reviews – Amazon has an overwhelming amount of fake reviews, and the problem has
worsened in recent times due to the pandemic. Product reviews are a critical indicator of quality
and authenticity, and customers rely heavily on reviews to make purchases.

Conclusion
Bibliography
A business analysis project for Amazon.com

https://www.ukessays.com/essays/marketing/a-business-analysis-project-for-amazon-com-
marketing-essay.php
Amazon (company)
https://en.wikipedia.org/wiki/Amazon_(company)#Merchant_partnerships
Amazon Strategic Analysis Report
https://ro.scribd.com/doc/161898963/Amazon-Strategic-Management-Analysis-Report
SWOT Analysis of Amazon 2020
https://bstrategyhub.com/swot-analysis-of-amazon-amazon-swot/
Competing with Amazon
https://www.bigcommerce.com/blog/amazon-competitors/#how-online-stores-can-compete-with-
amazon