A Short Note on SWOT Analysis of Amazon

Amazon is tremendously popular all across the world. It has about 200 million premier subscribers and a global user base of over 310 million active users. Amazon, as the world’s largest online retailer, has a long list of successful launches, record earnings, and accomplishments.

Founded by Jeff Bezos in 1994, Amazon initially started with Amazon Kindle (an online bookstore). However, it quickly revolutionised the e-commerce industry and became a leading online retailer, offering practically anything from A to Z, as its logo suggests. It is currently a multibillion-dollar American tech conglomerate with holdings in artificial intelligence, digital streaming, cloud computing, and e-commerce.

A SWOT analysis of Amazon can assist in understanding the business situation of this online retail behemoth.

SWOT Analysis of Amazon

Strengths

• Amazon’s competitive edge is largely due to its use of information technology and e-commerce as a flexible and simplistic system that keeps the business ahead of the competition.
• As the world’s largest online retailer, Amazon’s skills originate primarily from a three-pronged strategy highlighting distinctiveness, cost leadership, and focus. As a result of this method, the company has realised profits, and its shareholders have benefited greatly.
• The SWOT analysis of Amazon in India shows that one of Amazon’s key features is that it has top-of-the-line awareness of buyers across the world and India, and this understanding has allowed it to penetrate new territories that were earlier off-limits to several e-commerce opponents.
• Amazon has been able to accomplish better customer fulfilment thanks to its excellent distribution and logistics skills, providing it with an edge over its rivals.

Weaknesses

• As part of its diversification strategy, Amazon, in recent years, has been stretching itself too thin, which implies it has diverged its focus from its core business of online book sales. While this may seem like a good risk diversification strategy, Amazon must keep in mind that as it goes away from its core competency, it could alienate its strategic advantage.
• As Amazon offers free shipping to its customers, it runs the danger of losing money. Therefore, it will not be able to reduce expenses.
• Because Amazon is largely an online store, its single focus on e-commerce may disrupt its expansion goals, especially in emerging markets.
• Industry analysts and experts have pointed out that one of the business’s primary problems is that it depends on relatively close margin business strategies, which have severely impacted its profitability. Despite having high quantities and sales, Amazon is still not able to earn a profit.

Opportunities

• Given that people are concerned about security and privacy while shopping online, Amazon stands to gain a large amount of market share by implementing its online payment system. Furthermore, having its payment gateway would have resulted in profit margins increasing.
• Instead of functioning as a platform for third-party items, Amazon could also sell more products directly. In other words, rather than merely selling and stocking items made by its suppliers, it may increase the number of products available through its brand.
• Amazon may increase its product listing by carrying more products than it does now, placing it in a better and more stable position to earn more revenue.
• The SWOT analysis of Amazon reveals that the fourth opportunity for it is to expand its global footprint and open new sites in emerging markets, giving it a huge competitive edge in the uber-competitive digital retailing business.

Threats

• The most danger to Amazon’s success is cybercrime. Hacking and identity theft are major concerns for the organisation. Customers’ sensitive information, such as credit card details and home addresses is stored by Amazon. A data breach would disclose the personal information of its customers. Amazon must immediately address customer issues on its website. It should ensure that internet security and privacy are protected, as thieves are continually developing new attacks.
• Amazon’s pricing policies are aggressive. Multiple lawsuits have been filed against the corporation by competitors and publishers all around the world. This is owing to their cost leadership approach, which competitors have criticised as being unfair at times.
• Local internet shops compete with Amazon because their strategies and operations are more fluid and agile. This implies that, even if Amazon is pursuing a worldwide strategy, it must remain aware of local market realities.

What Should Be Amazon’s Strategy?

The SWOT analysis of Amazon reveals its current business position. To address the threats and strengthen its market position, Amazon must make a few modifications to its strategy.

To advance in the future, Amazon must improve its presence in important business areas, reduce weaknesses, seize opportunities, and counter threats. Some steps that it can take based on the SWOT analysis of Amazon are:

• The organisation will have to increase competitive advantages, promotional activities, and marketing efforts to consolidate market dominance.
• It must strategically handle global controversies. To avoid unfavourable publicity, Amazon must overcome tax difficulties and properly manage the features of its app and e-commerce platform.
• It should expand its limited reach by opening physical stores outside of the United States. This will increase brand awareness and market reach.
• It should strengthen its strategic entry into developing nations, where there is development potential.
• It should strengthen its competitive advantages and widen the distance between itself and its main competitors.
• Technology measures must be taken to address cybercrime concerns and counterfeit sales.
• It must improve network security technologies to safeguard consumer rights.

Conclusion

Every organisation must keep tabs on its strengths, opportunities, threats, and weaknesses to stay ahead in business. The SWOT analysis of Amazon may serve as a guide and a roadmap for the corporation to follow. The major takeaway from this SWOT analysis of Amazon Kindle is that if the company wants to be competitive in the future, it needs to focus on profitability rather than volume alone. In India, the SWOT analysis of Amazon reveals that it must find ways to compete with smaller merchants and expand its reach into smaller cities.