Introduction
Amazon the online retailer started life on July the 5th 1994. They initially started off as an online book company, offering books at a more competitive price then their high street rivals. This had a major impact on the book industry and led to a number of small retail book stores closing down. Amazon went on to diversify into electronics, household, DVD, e-readers , online streaming and now groceries. Its market capitalisation is $1.6trillion dollars. In this article we will complete a short SWOT Analysis of Amazon.
The SWOT Diagram below shows the summary of a SWOT Analysis for Amazon the online retailer
Strengths
Well established brand with good recall rates
Wide variety of products
Large market share
Operates in 13 countries
Strong expansion strategy
Amazon market place buyers and sellers can sell second hand products. Amazon market place is a rival to Ebay
Good at meeting local needs but forming a global strategy
Great use of IT systems to give it a competitive edge
Amazon Prime video streaming service
Amazon’s artificial intelligence, Alexa
Huge financial resources to finance new projects. (for example from 2017 five billion dollars will be spent by Amazon on its streaming service as it tries to take on competitor Netflix)
Excellent CRM sytem that allows Amazon to offer a personalised service to it’s customers. Hugh data on customers allow Amazon to sell related items to the end user
Low cost player. Amazon focus on reducing costs by carefully selecting their suppliers. Their large distribution centres allow for economies of scale
Weaknesses
Slow entry in to the food market
Bad press about the small percentage of tax being paid compared to its profits
Behind Netflix with their Amazon Prime streaming service
Amazon Fire smartphone, remember that? Was a massive flop
Opportunities
Further expansion through buying up small start ups that have a niche in the market
Prototype Brick businesses being established to compete against high street rivals. Such as Amazon stores AmazonGo grocery stores, where consumers pay for their products via an app instead of paying at a checkout
Amazon have the opportunity to expand into Australia having just announced their entance into the australian market in December 2017. Amazon plan to start selling witihin Austriala in April 2018. Poor infrastructure and the slow uptake of ecommerce have kept Amazon out of the market.
Threats
A wide product variety means a greater degree of competition
Competition from brands such as Ebay and other local established firms
There is a possibility that Netflix maybe taken over by a rival who may expand Netflix and hinder the growth of Amazon Prime’s streaming service