Doing a SWOT Analysis ON APPLE COMPANY1)6-7 PAGES 2)MUST BE FOLLOW GUIDELINE 3 MUST BE FOLLOW SAMPLE PAPER A SWOT analysis looks at the strengths weaknesses opportunities threatsfor one or more fir
SWOT ANALYSIS: AMAZON
The company I am going to analyze is Amazon.com, Inc. Amazon is an American multinational technology enterprise based in Seattle. It mainly focuses on e-commerce, cloud computing, digital streaming, and artificial intelligence. people have commonly known it through its online shopping website. Its online shopping platform can be described as the world's largest e-commerce platform. Its cloud computing service has been using by many people across every country. What kind of market or industry does Amazon involve in? Based on the company’s focus, Amazon’s market is mainly the e-commerce market and with few self-manufactured and retail brands. What is Amazon’s target market? Amazon has a variety of different markets depending on the different types of service. For e-commerce, its target markets are the buyers that looking to buy things online and sellers looking to sell stuff online on matter how big or small are they. For cloud computing, its target markets are people or companies who are looking for a cost-effective data storage service. For digital streaming, its target market is people for online entertainment such as movies, TV shows, gaming streams, etc. For artificial intelligence, its target market is ordinary people and perhaps government. It depends on what kind of product they need because Amazon has a variety of different artificial intelligence products. What are Amazon’s competitors? Its competitors are eBay, AliExpress, wish, Taobao, craigslist, etc.
STRENGTH
Strong brand name support: As a global e-commerce giant, Amazon has a strong position and successful brand image in the market.
Brand valuation
Support: According to Interbrand’s Global Brand Ranking 2019, Amazon is ranked at #3 position (after Apple at #1 and Google at #2), with a brand value of $125 Billion.
Customer-oriented
Support: Amazon caters to a large number of customers for everyday needs at inexpensive prices. This has made it a customer-oriented brand.
Differentiation and Innovation
Support: Amazon frequently brings creative ideas and innovative additions to its product line and service offerings like ambitious drone delivery service and Withings Aura Smart Sleep System. This creates differentiation from other companies.
Cost Leadership
Support: According to Business Strategy Hub, Amazon doesn’t incur costs in maintaining physical retail stores by selling everything online. With economies of scale, Amazon efficiently controls its costs and lowers its inventory replenishment time. The company has formed numerous strategic alliances with many companies like Evi Technologies, Thalmic Labs, Shoefitr, The Orange Chef, etc. It has a strong value chain system which also helps in maintaining a low-cost structure.
Largest Merchandise Selection
Support: According to Business Strategy Hub, Amazon owns an extensive product mix that 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.
A large number of third-party sellers
Support: 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 merchandise. The data from Fulfillment by Amazon (FBA) reveals that there are more than 2 billion items available from third-party sellers.
Go Global and Act Local strategy
Support: According to Business Strategy Hub, this strategy has benefitted Amazon the most. 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.
A large number of acquisitions
Support: The successful acquisitions of Whole Foods, Zappos.com, woot.com, Junglee.com, IMBD.com, and many others have produced significant revenues and profits for Amazon.
WEAKNESS
An easily imitable business model
Support: Online retail businesses have become quite common in this digital world. So imitating Amazon’s business model for rival firms is not so difficult. A few businesses are even giving Amazon a tough time. These include Barnes & Noble, eBay, Netflix, Hulu, and Oyster, etc.
Losing Margins in Few Areas
Support: In a few areas such as India, Amazon has faced losses. It’s free shipping to customers can be one of the reasons that expose the risks of losing margins in some markets.
Product Flops and Failures
Support: According to The Street, Amazon has had to try to make other products other than AWS and Amazon.com. However, many have ended up as a failure. Such as the Amazon Fire Phone, it started on sale in July 2014. But Amazon soon removed the phone from its shelf in September 2015 because of the big loss of profit.
Tax Avoidance Controversy
Support: According to Business Strategy Hub, Tax avoidance in Japan, UK, and the US have sparked negative publicity for Amazon. President Trump has recently criticized Amazon over taxes on social media networks.
Limited brick-and-mortar presence
Support: Amazon owns very limited physical stores. This sometimes hinders to attract customers to buy things that are not sellable in online stores.
limited penetration in developing markets
Support: Amazon took a big part of the e-commerce market in America. But Amazon didn’t take a big part in the world. there are many e-commerce companies like Alibaba, eBay, wish and others to compete with Amazon. There is a market that Amazon is hard to squeeze in such as China, Europe, India.
Product quality issue
Support: although a lot of products that sell on Amazon are regulated and high-quality products. But, since Amazon allows all third-party seller to sell their products on Amazon, Amazon can’t determine whether the product is genuine or counterfeit.
Seasonality of the business
Support: Amazon has a high seasonality business revenue. According to Amazon.com Inc’s annual report, the company generated 32%, 34%, and 31% of our annual revenue during the fourth quarter of 2016, 2017, and 2018, respectively.
OPPORTUNITY
Expansion in developing markets
Support: there are many sites online that talk about future trends of e-commerce. According to Beeketing, one trend is global eCommerce retail sales will hit 4.9 trillion in 2021. This is a 256% growth rate from 2014 to 2021. Another trend is that the center of eCommerce is shifting from the western hemisphere. Even though Amazon is harder to squeeze into China’s e-commerce market. but it can take advantage of other Asian country’s e-commerce market. And other trends such as Ecommerce personalization will be a standard, Mobile shopping revolution, Voice commerce is on the horizon are all opportunities to Amazon. Because Amazon has already had an advantage in those aspects.
Expansion of brick-and-mortar business operations
Support: according to Buxton, 5% of the retail sales in the US are online sales, another 5% of the retail sales in the US are multi-channel sales. What I mean is, 90% of the sales in the US are happening in physical stores. brick-and-mortar business operations is still an important part of the retail sale. Amazon should start to make its own brick-and-mortar business operations so that it can have more advantages than other competitors. Also, brick-and-mortar business operations have one more advantage over online. That is people can buy and get their stuff instantly.
Developing more local sites in international markets
Support: Amazon should expand 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.
Increasing focus on own-brand products and services
Support: by focusing on their own products, Amazon could produce products in other fields such as electronics. This could spread out the brand name to other fields and increase the competitive advantage.
Looking for a better delivery option
Support: Amazon should look for other delivery options. With technology advancing, there are other ways to deliver the orders, a more efficient and cost-effective way. If Amazon finds it, it will improve its competitive advantage in the market.
THREAT
Controversies caused damage to brand reputation
Support: although Amazon is a successful company, controversies still causing damage to brand reputation. According to Seattlepi, Amazon has leaked customers’ information without their consent and notice, charged different prices to different customers for the same product, undermine other countries' laws.
Online security problem
Support: e-commerce company will have cybersecurity issues because current government regulation and technology are hard to block others from hacking their system. for example, according to Cisomag, Amazon has suffered a fraud attack during 2018 which broke into about 100 seller’s accounts and stole their money for more than 6 months.
Aggressive competition with Non-online firm switching to online
Support: non-online firm such as Walmart, home depot, Costco wholesale, and many more have started their online website. People can start to purchase online rather than in-store. This will give Amazon pressure on online retail business. Netflix, Hulu, and other online digital content distribution are competing with Amazon Prime. Google, Microsoft, and others are competing with Amazon AWS.
Imitation
Support: anyone can involve in e-commerce and become a seller. although they can’t become recognizable suddenly, given them enough time, they will become recognizable and be able to compete with Amazon. For example, eBay and Taobao are Amazon’s competitors, even though started late compare to Amazon. Wish started growing its reputation in recent years. Now, it is recognized by everyone.
Government regulations
Support: different governments may have different regulations on e-commerce. The government can also create regulations when they dissatisfy with the e-commerce business. In the recent past, Donald Trump has lashed out at Amazon for the Antitrust issue and taxes. In December 2018 Indian government banned Amazon and Flipkart, one of its local competitors, from selling off those companies’ products where they have an equity stake.
Strategy
W to S
Losing Margins in Few Areas
Support: there are several areas that Amazon is losing profit on, such as non-domestic Amazon service, prime member free shipping service. In order to not lose profit on those parts, Amazon could do a couple of things to help it. first Amazon could shrink the return period. the customer won’t have time to think whether or not they should return it. When they want to return, it will be too late. Another is that Amazon can find a cheaper way to deliver the package, maybe create their own shipping company. last, Amazon can close or create a new strategy for those countries that are not profitable. This way, Amazon could reduce costs and increase its profit.
Product Flops and Failures
Support: Amazon actually pretty successful with creating their original product such as kindle paperwhite, Amazon Alexa, and audible. Amazon should learn from its experience of why some products are succeeding and some are not. Amazon could copy some new designs and technology from a certain company when they want to make a new product. Or, Amazon could enhance current succeed products and rely on it. Either way, Amazon has the advantage of holding a share of other markets compares to other e-commerce companies.
Tax Avoidance Controversy
Support: Amazon could obey the law and pay the taxes, or Amazon could find a better way to avoid tax that is not illegal. Almost all companies have done tax avoidance. If Amazon could find a way to deal with tax legally, Amazon could save billions. Amazon could use that money to invest.
Limited brick-and-mortar presence
Support: Amazon should open physical stores for customers to testing products and pickup packages faster. This store can also be a grocery store that delivers local groceries to nearby people. This store can also achieve many other goals. There are very few e-commerce companies that have opened a physical store, because of the reason, Amazon could be its pioneer in the e-commerce industry.
limited penetration in developing markets
Support: Amazon’s business model is probably too monotonous. It could be the reason that Amazon is not successful in other countries besides the United States. Amazon probably should learn and observe a country’s market first and make a new strategic market plan accordingly. This could dramatically increase Amazon’s profit.
Product quality issue
Support: Amazon could create an inspection line or enhance the current inspection force. Or Amazon can create a scoring system based on the customer’s complaint. If a seller reaches to certain amount Amazon can shut it down. This product quality control could increase Amazon’s competitive advantage in the market and attract more customers.
Seasonality of the business
Support: Amazon can learn from other e-commerce companies that have less seasonality of the business, getting some experience, and make changes. Amazon could increase its seasonal profit if they make correct changes.
T to O
Controversies caused damage to brand reputation
Support: Amazon has had some terrible controversies that can’t be undone. If Amazon sincerely apologizes to the public to and correct their mistakes. Or, starting to do things that beneficial to the public. This will not only bring back the brand reputations but also an opportunity to increase brand cognition.
Online security problem
Support: Although online security problems can’t be solved, Amazon could hire a better security team to decrease security problems. This has the potential to increase customer’s trust towards the company.
Aggressive competition with Non-online firm switching to online
Support: many non-online firms have already created their own online shopping website. it seems they are taking market share of Amazon. But Amazon can cooperate with them. Amazon has cooperated with kohls to return packages in kohls store. Amazon could also cooperate with Walmart that set up an Amazon section in Walmart store.
Imitation
Support: e-commerce’ s business model is very easy to imitate. Imitator of Amazon will compete and take Amazon’s market share. But, if imitators can imitate Amazon’s business model, Amazon can also imitate them. Amazon could use this opportunity to make up its weakness by learning and imitate others' helpful ideas.
Government regulations
Support: if a government made a regulation about the e-commerce industry, Amazon will not be the only one that gets affected. But the brand name is big enough, Amazon could have the capability to alter the regulation for themselves. However, smaller brands can’t even think about it because they can’t compare to Amazon. If no altercation is possible, Amazon also has other products that are able to enter the market.
Conclusion
Based on researches that I did; Amazon does have competitive advantages in the e-commerce market. there are several reasons to prove it. first, Amazon is spread out in nearly every country in the world. Amazon’s businesses are covered all the developed countries and some developing countries. Although Amazon probably is not the only company that covering that much of the areas, there are only a few could compare to Amazon in the e-commerce industry. second, Amazon has a great brand reputation. Amazon’s great brand reputation is coming from the pioneer of the industry, better product quality, better service. The great brand reputation brings Amazon much more returned customers compare to brands like eBay, Shopify, and other brands that are at the same level as Amazon. Third, Amazon is not easy for other e-commerce companies to catch up and surpass. E-commerce company needs time to build up customers and brand reputation in order to maintain a long-term business. Amazon has the earliest company establishment time, a long-time business experience, and more loyal customers than almost all the companies in this industry. Fourth, Amazon holds market shares in other markets. Amazon has its own products that are outside of the e-commerce market. Amazon can still make a profit even the e-commerce industry is declining in the future.
