Amazon SWOT Analysis

Studying the company Amazon?  Use this free SWOT analysis of Amazon to help you write a business essay.

Amazon (www.amazon.com)

Strengths

  • Amazon describes themselves as the leading on-line retailer of media products which educate and entertain.
  • Product diversification from books and CD/DVD markets has provided additional customers in other product areas and indicates strategic movement to grow the business through new customer bases.
  • Functions such as the User Reviews are seen as a positive attribute to share information and feedback which can help to stimulate sales.
  • The use of an on-line market place providing the facility for customers to sell unwanted items adds a point of difference to competing retailers and succeeds in building strong customer bonds with younger clients who will provide longevity in loyalty to the brand.

Weaknesses

  • The focus on technology is important for on-line facilities as the use of technology is needed for all aspects of interface with the consumer. These systems require constant maintenance to ensure the customer receives the level of service the brand is expected to provide.
  • Amazon are dependent on external delivery companies to carry out the delivery function of the interface with the customer which can lead to uncontrollable service level problems and potential cost increases in line with the wider transportation industry such as rising fuel and increased vehicle taxation. If these costs are not absorbed they are passed back to the consumer both with potential negative effects.

Opportunities

  • Amazon have the opportunity to develop specialist relationships with publishers to offer exclusive editions and launch new authors as part of exclusive rights which will provide a point of difference within the market place and generate stimulated growth through followers of specific artists.
  • Investment in fulfilment will provide an increases level of actual customer service meeting consumer expectations. Consumer expectations are relied upon by Amazon.com to ensure repeat business and longevity.
  • Through acknowledging the change in technology and buyer behaviour Amazon have obtained controlling share in LoveFilm.com, a new online service to film rental providing growth through new a new area and diversification whilst using existing technology indicating low level costs.

  • A membership facility has been introduced to offer customers prime delivery slots during key seasonal times and member benefits can lead to providing a differential within customer service expectations around seasonal times which may lead to the growth in sales through this facility.

Threats

  • Growing on-line facilities from high street brands with provisionally better economies of scale suggest Amazon may not be able to compete on like for like service and product price. Thus with no specific differential to the competition there is the potential customer sales will migrate.
  • Increasing transportation costs will directly impact delivery charges to customers - as these costs are not absorbed into the direct business but paid to a third party it is assumed these will be directly passed onto the consumer which can have a negative impact to brand perception from the consumer viewpoint.
  • General economic conditions will drive retail prices down and customer expectations for promotional deals will become a focus for all product areas - with smaller economies of scale overall within the marketplace the buying power may not be sufficient to carry such offers.

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