AMAZON’S STRENGTHS
Muscular brand name – Globally, Amazon has a powerful standing in the market. This brand leads in the e-commerce market.
Brand estimate – Amazon is second in the list with a worth of $249 billion, following Apple. Google stands third in number, estimated by Interbrand’s Global Brand Ranking 2021
Customer orientation – Amazon has become a customer-oriented brand with a behemoth number of buyers. This orientation is mainly because Amazon provides the daily needs of people at a cheap cost.
Differentiation and Innovation – This Firm gives a dynamic outlook while practicing innovative ideas. Ambition Drone Delivery Service (ADDD) and Withings Aura Smart Sleep System (WASSS) has introduced in the product line and service offerings, a milestone ahead in a competitive market.
Cost Leadership – While maintaining physical retail stores, Amazon doesn’t incur costs in selling online. Instead, using economies of scale, Amazon controls Its cost and lower inventory replenishment period. Companies like Evi Technologies, Thalmic Labs, Shoefitr, The Orange Chef, and more have a strategic alliance with Amazon. Its value chain system helps in maintaining a low-cost structure.
Largest Commodity Selection – Extensive products enable customers to buy most purchases than other retailers. Amazon has sold 75 million products in the marketplace till 2021.
Macroscale third-party sellers – Many third-party vendors capture traffic volume via Amazon and sell their merchandise. Fulfillment by Amazon (FBA) revealed that more than 2 billion items are available from third-party sellers.
Think Globally and deliver Locally– This approach has worked for Amazon. Its partnership with local companies assists in competing for domestic e-commerce rivals. Amazon obliges the local culture and provides services accordingly. “Aur Dikhao” campaign has been launched in India while advertising its products to capture local users.
Large-scale acquisitions– Amazon generates a great deal of revenue from Whole Foods, Zappos.com, Woot.com, Junglee.com, IMBD.com, and others. Surely a massive step for financial gains.
3 key businesses– Amazon Marketplace, Amazon Web Service (AWS), and Amazon Prime serve as these platforms work in coordination with each other and generate huge profits and benefits for the company.
Leading the Market- Amazon leads the market with $1.6 Trillion capitalization and more than $386 billion annual revenues in the online retail industry.
Best Logistics and distribution systems– Amazon’s superior logistics and distribution systems enable it to deliver in fixed delivery time at fixed rates. Hence, goods and products are delivered to the customers in a reliable, secure, and fast manner.
Minimum $15 wage per hour– Amazon became the first to raise its minimum $15 per hour in retail. Whereas, Target pays $12/hr., Walmart offers $11/hr., and Costco gives $14/hr.
AMAZON’S WEAKNESSES
Imitable business model– Digitalization of business has provided an opportunity to online retail business. Many rivals copy Amazon’s model to gain profits. Even some businesses like Barnes & Noble, eBay, Netflix, Hulu, and Oyster, among others, have really pushed Amazon.
Low Margins in some Regions – Amazon has lost margins in countries like India due to free shipping offers. This service has made Amazon bear losses.
Flops and Failures of Products – Products like Fire Phone launched in the US failed in generating revenues. Kindle fire device didn’t receive a warm welcome as well.
Tax Escape Issue – Japan, the UK, and the US have publicly criticized the firm. President Trump has given severe remarks on social media about the controversy.
Restricted Brick-and-mortar setup – Amazon owns a few warehouses and stores, which hinders customers from buying items not available in the online store.
Blow to Market Reputation – A report published by Vox revealing the employee’s treatment and workplace conditions harmed the company’s reputation. The report was published in July 2018. Poor air conditioning, timed restroom breaks, and constant video surveillance were mentioned in the report. These reports harmed the company’s reputation among the workforces.
Decreasing Consumer Safety – With the rise in products, it has become difficult for the company to vet each product. Safety is sometimes compromised by the company. The US Environmental Protection Agency (EPA) had banned many products and asked the company to remove them from the platforms. There is a wide range of products, including pesticides.
The controversial use of Third-Party Data – Increasing unfair trade practices undervalued trust and reliability with the surge in legal risks. The company is already facing antitrust charges in the European Union (EU) for the collection and usage of data from third-party to compete against them. If charges are proven, they can inflict a fine of 10% ($28Billion) from its revenue for the 2019 year.
Dependence on Distributors – Relying on other distributors poses many challenges for Amazon. They can influence their position to renegotiate terms as in the case with (German Logistic Group – Deutsche Post DHL).
Employees Protest – Protests and strikes by the Amazon workforce can halt its operations. For instance, employees in Germany went on strike and protested against the unsafe and unhealthy work environment, which closed its operations in six distribution centers.
Delivery Force faces extreme Work Conditions – Amazon’s delivery drivers repeatedly have a complaint about the working conditions. They alleged that they are forced to urinate in bottles due to strict delivery schedules and strictness. Although the company denies the allegation, some employees have brought complaints. The imposition of strict company policies on employees can create bad consequences for workers.
AMAZON’S OPPORTUNITIES
Developing markets are still an opportunity for Amazon to expand operations and capture mammoths of the population.
Amazon can compete with larger box retailers and engage customers by expansion in their physical stores.
Forge sales can drastically lower the product’s sales. Amazon must bring technological measures and organizational policies to an end forge counterfeit sale. As happened in the past, My Critter Catcher was sold for $1, which was less than the real price.
Amazon can expand its production by backward integration of in-house brands. Thereby, it can differentiate its offerings and can improve its gains.
By acquiring more companies, Amazon can enhance the market and can reduce competition.
Amazon spent $1 billion to acquire a California-based Self Driving Technology company named Zoox. lnc. It can create differences by exploiting new technologies to enhance ride-hailing services, or they can use it in delivering their products.
Acquainted Electric Rickshaw in India – Amazon has devised an environment-friendly policy in India. Amazon strategies to deploy 10,000 electric rickshaws for the delivery purpose by 2025.
Incredible Personalized Shopper Service – Amazon’s prime members can opt for personal shoppers, which gives access to Amazon’s expert stylists and fashionistas. This enhanced customer satisfaction and interaction with Amazon.
They help their customers in choosing the best product for them. As there are plenty of items available on Amazon stores, personal help can contribute to saving customers’ time and can enhance quality.
Desire to start Crypto adventures – As the crypto currency has earned mainstage in the digital monetary system, Amazon urges to take part in the crypto ecosystem. Some reports have suggested that the company has a great desire to pursue digital currency and blockchain.
With the acceptance of digital or virtual currency as a payment method by this giant, there could be a massive opportunity for new business and trade.
AMAZON’S THREATS
Some controversial issues have surfaced to cause a reputation loss. In 2010 people reacted and boycotted Amazon sites when Amazon sold “The Pedophile’s Guide to Love and Pleasure: A Child’s-lover Code of Conduct.”
Governmental regulations may also harm the normal business proceedings in various countries. Cuba, Iran, North Korea, Sudan, and Syria are already out of delivery service areas.
Issue of Exploitation of Working-Class – US State Department is already investigating Amazon for human rights abuse in the supply chain and other labor. It can cost the company reputation, economy, or legal consequences.
Swelling cybercrime invasions pose a serious threat to the network security system of the firm.
The rise of competitive market by other firms like Walmart, Target, Home Depot, eBay can give Amazon a rough time in the coming time. Moreover, there are other firms to compete with:
- Video Streaming Service: Apple TC+, Netflix, Disney+
- Logistics: FedEx, UPS
- Self-Driving Technology: Tesla, Uber, Ford
Many new entrants are copying amazon’s business model due to its imitable business model.
Forge Products – Amazon’s financial gains are harmed by fake and forged products. Its Valentino shoes, a luxurious Italian shoe brand, were sold by a US-based online retailer. The company filed a lawsuit against them.
Era’s of Economic Recession – Amazon could bear crises in case of economic recession as the company’s sales are not immune to global economic recessions.
Company’s warehouses prone to natural hazards – Democrats are pursuing the reasons for the incident that happened in Illinois when a Tornado hit one of the company’s warehouses and killed 6 people. Institutions criticized and asked to submit reports on security measures practiced in their places.
Fake Reviews – In a report, Financial Times revealed that the company had deleted some 20,000 5-star reviews from its top UK reviewers. Amazon already has the burden of fake reviews, and the problem worsened in the pandemic. As customers rely heavily on reviews to buy products, it can hit the company’s reliability.
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