Amazon.com is one of the few tech companies in the world with the most diversified business model. The company is running many businesses like E-Commerce, entertainment, intelligent devices, AI, robotics, retail stores, cloud computing, amazon branded products, and so on…
Even though Amazon is the world’s largest internet company by revenue and King of E-Commerce, it has some strengths, weaknesses, opportunities, and threats to look carefully to survive in the long term. Let’s drive into swot analysis of Amazon.
Did You Know?
Amazon has an organizational site called Amazonsmile, which donates 0.5% of the purchase price of products when we shop via smile.amazon.com.
SWOT Analysis Of Amazon:
SWOT Analysis of Amazon discusses the company’s strengths, weaknesses, figuring out how the company is planning to expand, growth strategies which we call opportunities and threats. As one of the largest E-Commerce companies globally, it has several strengths, weaknesses, opportunities, and threats.
S For Strengths ( Internal Factor )
As an essential component of SWOT, a company’s strength is its asset to plan its expansion. Amazon.com has several strengths that make them one of the largest E-Commerce companies in the world:
- Firm Brand Name: Amazon has a powerful and positive image across the global market.
- Diversified Business: After Microsoft, Amazon has a substantial and most diversified business model. we already mentioned the businesses above
- Innovative Technology: Major strength for amazon is its newer technology adoption very quickly and creating world-class innovative technology like physical AI assistant ( Alexa ). that’s why Amazon is rank among the top 10 most innovative companies in the world by Forbes.
- Local Marketing: One of the main reasons most people trust Amazon is its marketing Strategy Go Global & Act Local. Amazon adopts the culture of the market it enters.
For Example: When amazon entered India, they were already two big local grown-up boys like Flipkart and Snapdeal. To tackle the competition, amazon launched a Cash on Delivery Strategy, the first in e-commerce history that helped them beat their Competitors and stand in 1st place in India.
- Excellent Delivery System: Amazon has the most robust delivery system in the E-commerce space with 1 million delivery partners and world-class fully automated fulfillment centers.
- Strategic Acquisitions: Acquisitions of companies like IMBD, Zappos, and others helped Amazon achieve its position today.
The acquisition is not about just acquiring companies. It’s about how we are using it strategically. Amazon has excelled in it.
W For Weakness ( Internal Factor )
Everybody has positive and negative sides; likewise, Amazon has its weaknesses. Though Amazon remains an E-Commerce king, they are much weakness that may become a nightmare to Amazon’s growth.
- Profitability: Even though Amazon earns double what Google’s parent company Alphabet earns, its profit percentage is not more than 10%.
Company Name Revenue ( 2021 ) Profit for 2021 ( % ) Amazon $419.130 Billion $26.903 Billion ( Less than 7% ) Alphabet ( Google's Parent ) $196.682 Billion $51.363 Billion ( More Than 30% )
- Product Flops: Even though Amazon sees its most successful journey in its Era, Amazon faced many failures. Some of its failed products are Fire Phone and Kindle.
- In not Taking Care of Employees: Recent days, Amazon is getting trouble from lawmakers, the Press, and Governments for its treatment of Employees.
- Physical Stores: Even though Amazon is one of the world’s largest E-Commerce companies, they don’t have a concrete basement like Walmart or Jiomart in India. Even now, customers prefer Retail stores over Online stores due to privacy, product quality other concerns.
- Using Third-Party Data: Like Amazon is facing troubles from Tax avoidance and employees. It is also facing problems from governments and its sellers for using their data to create their products getting more orders.
- Tax Avoidance: Amazon faces a lawsuit from various countries like Japan, the US, and the UK to bypass the taxes. Once Then President Of the US Donald Trump also Criticized Amazon over Taxes.
- Debt: Amazon is still struggling in developing nations, India, and others to profit. Which is ultimately resulting in Debts.
O Stands For Opportunities ( External Factor )
- Global Expansion: Even though Amazon is growing exponentially, it has more markets to enter and build its brand. Example: Africa & Asia market.
- Partnership: Amazon needs to partner with more local companies to expand its retail industry dream.
- Self Driving Tech: Amazon has acquired a US-based self-driving startup called Zoox Inc for around $1 billion in 2020 to tackle competition from tesla and Google Waymo and automate its delivery system across cities for a good user experience.
- Electric Rickshaws in India: Amazon’s CEO Jeff Bezos himself launched electric rickshaws in 2020 to positively impact the customers.
- Acquisitions: Amazon should acquire companies creating AI tech for E-commerce services for a good user experience.
- Expanding Physical Stores: Amazon recently opened its fully automated physical store in the UK called Amazon Go which doesn’t even have Cashier, which was first in the retail market, but the point is that It should open at least 3,000 stores across the world by the next 3 to 5 years.
- Other Niches: Amazon should focus on growing its Food and grocery delivery market where its Competitors are already leaders like BigBasket in groceries and Zomato, Swiggy in Food.
T Stands For Threats ( External Factor )
- Government Regulations & Antitrust Case: Nowadays, Government aims to destroy the monopoly in any industry by announcing newer laws to encourages newcomers in the market.
- Increasing Competition: Amazon has many competitors in various segments like Flipkart, eBay in E-Commerce, Microsoft, Google in the cloud, Target, Walmart in Retail, and Google in AI virtual assistant. There were only a few they are many to go.
- Security Tech: due to increasing cybercrimes, customers are scared of their data exposure, which ultimately affects Amazon and other e-commerce stores. They should develop tech to swipe out cybercrimes.
- Fake Reviews: Amazon has a massive amount of fake reviews on the products listed on its network. During the pandemic, it was even worse for the customers to find quality products that should take care of by e-com companies for a good user experience.
Fake Review Controversy: In 2021, Amazon has asked Apple to remove the phony review detector app from its App stores; later, apple agreed to remove it, which create a spark in social media.
Also, Know About The Major Competitors Of Amazon in Detail.
SWOT Analysis Of Amazon Key Takeaways
The SWOT analysis of Amazon highlights where the brand currently stands and its threats in this era. Following the detailed analysis of Amazon, Here are Few Important Key Points.
- Amazon is the most valuable internet company in terms of revenue.
- Amazon has the most diversified business model.
- Significant Market share in Cloud computing, E-Commerce, and Virtual assistants.
The SWOT analysis of Amazon highlights where the brand currently stands and its threats in this era. Following the detailed analysis of Amazon, we have few suggestions from Business Mavericks:
- Expanding into unpenetrated markets
- Needs to Increase market share in already expanded markets
- Built more Retail stores or Partnerships with local retail stores.
- develop a strategy to increase profitability at least by 30% to 40%