SWOT analysis of Amazon
This SWOT analysis looks at Amazon, one of the world's leading online retailers that offers books, movies, music, clothing, groceries, sporting goods and housewares to many countries around the world. The online retailer is looking for ways to remain at the forefront of an ever-expanding and changing online retail format driven by changing consumer needs, new regulatory environments, and interest in introducing its retail model in new countries to sustain its growth and revenue objectives. As the competition among online retailers begins to increase and other external factors impact Amazon, this SWOT analysis examines what Amazon does well and what it could do better in addressing the opportunities and threats that it faces.
- Amazon provides a convenient way to shop for products through its online and mobile platforms.
- The company offers one of the most diverse product arrays available, including everything from books, music, and movies to clothing, textbooks, sporting goods and more, making it a one-stop shop for consumers who are looking to get their shopping done in less time.
- Amazon offers special functionality that helps others have a storefront, including its online marketplace to sell products in a way not previously available.
- It offers useful information, including user reviews, which more consumers now use to influence their shopping decisions.
- Amazon provides a recommendation service based on previous purchases and searches to help consumers as well as increase the potential for more sales.
- Amazon has started to offer weekend delivery service in the U.S. with a partnership with the U.S. postal system.
- The company has expanded into offering streaming of movies and television shows to increase its value with customers as well as attract new customers.
- It has also begin to offer its own devices, including the Kindle and a digital box for streaming content similar to Roku and Hulu, which positions it in new revenue markets.
- The company's prime membership has offered customers the advantage of free shipping and access to some complimentary streaming content while providing Amazon with a new revenue stream.
- Amazon must continually work on its technology, which is the framework for how well the company consistently delivers on service and availability.
- Amazon is dependent on external delivery companies to deliver the goods on time and in excellent condition, which can adversely impact the company's reputation if the delivery companies fail to offer good service.
- The company may be trying to diversify too much, which could impact on its reputation for quality service.
- Some of the storefront operators have experienced some issues with selling their products while Amazon has had to contend with reputation issues because some storefront operators were offering low-quality or counterfeit products.
- Amazon has the opportunity to create partnerships with various publishers and continue to expand its service for self-publishing to attract new authors and create a unique new market that will drive book sales tied to its Kindle devices.
- The company is investing in interesting technology to streamline its supply chain, including the use of robots in its fulfilment centres, and the purchase of drones for potential future delivery of packages that would allow it to work outside of its current reliance on external delivery companies.
- To expand its online streaming business, it has recently formed a partnership with HBO (Home Box Office) to offer the company's library of content, beating out competing streaming companies like Netflix. It may also have the opportunity to form similar relationships like Netflix in terms of also offering original content.
- The company has the opportunity to expand into new countries as more consumers are interested in the type of format Amazon offers for diverse shopping, device, and content experiences.
- Other online retailers are beginning to emerge that offer a similar diverse array of products, including well-known retailers like Target and WalMart as well as Tesco and Sainsbury's just to name a few. These competitors are offering similar products at a lower cost, including those of similar brand quality, which can mean increased customer migration.
- The cost of transportation, logistics, equipment and fuel are beginning to impact on the retailer who is facing the possibility of having to raise shipping charges, which may cause customers to buy less or migrate to a competitor.
- Recent economic cycles illustrated how consumers tend to buy less or cut back entirely, including cancelling their prime memberships or other associated revenue streams that decreased the retailer's profitability.
- Amazon has faced local issues in some areas, involving sales tax and other tax or regulatory issues, which in turn have impacted how shoppers buy.
- If Amazon wants to compete in digital devices and the content streaming niches, it must continually assess what the competition is doing in these areas differently than it had when it was an innovator and market leader in its primary business of online retailing.
- Amazon has not been able to solve some logistical and supply chain issues in certain countries, which has decreased its ability to introduce its online model. For example, countries like Australia are difficult in terms of creating distribution centres in the appropriate location to serve all customers in a timely fashion.