Amazon is an American multinational company that mainly focuses on e-commerce, cloud computing, artificial intelligence, and digital streaming. It was founded on July 5, 1994, by Jeff Bezos. It sells its products and provides its services in 190 countries. Its headquarters are in Seattle, Washington, US. An Amazon SWOT analysis helps the company executives to analyze and assess all the internal and external factors of the community.
An Amazon SWOT Analysis is a proven management framework that enables Amazon to benchmark its business & performance as compared to the competitors and industry.
Amazon – At A Glance
|Founded||5 July, 1994|
|Headquarter||Seattle, Washington, U.S.|
|Annual Revenue||$386.064 Billion (FY 2020)|
Amazon SWOT Analysis
SWOT analysis is a strategic planning frame that can be used by the company managers to get a successful situation analysis of the company. An Amazon SWOT analysis framework can assist them to realize their internal strategic factors such as strength and weakness, and also their external strategic factors such as opportunity and threats.
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Amazon maintains its intimidating presence in the business sector only by reviewing the SWOT analysis regularly and improving itself. So, an Amazon SWOT analysis will be of great use for this company.
Strengths of Amazon in SWOT Analysis
Amazon has a plethora of strengths that will help it to thrive in the main field. An Amazon SWOT analysis will help to focus on these strengths. Some of these strengths are enlisted below:
Global reach: Amazon is a worldwide multinational company. It operates in different countries across the globe. So, it has a great deal of the global footprint. This makes it more recognizable to the public and helps with its publicity. So, it can implement its global thinking with local execution. This means that it can pursue its ubiquitous goals and can still win the hearts of its consumers.
Financial position: Amazon has a strong financial base. It has garnered a total of 570 billion dollars only during the pandemic. It has been gaining market slowly but surely for about 30 years. It has earned the public trust as a star company. Its financial position has it on a point of pure advantage that has increased its market value and brand name by leaps and bounds. With a total market profit of 149 billion dollars, it is catching up to its biggest rivals in the technology department. So, this financially secure position does good for the company.
Lockdown and pandemic situation: Ever since the covid pandemic hit us, people have been forced into isolation. Ever since then people have been more and more dependent on online services. This gave Amazon a major boost in their sales. They have upped their profit by 70 percent this year alone. This shows how much they profited during the pandemic years and how much they grew overall.
Market Share: It is speculated that Amazon has almost two-fifths of the e-commerce market under its control. This is to say that almost two people among five shops from Amazon. Its closest rival, in this case, is Walmart and it only owns 5.3 percent of the market. This gives us a clear idea about Amazon’s dominance in the market sector.
Weaknesses of Amazon in SWOT Analysis
Weaknesses are part of the internal factors of a company. An Amazon SWOT analysis will bring many of these to light.
Relationship with their sellers: People who regularly sell their products on Amazon are in a bit of a dilemma. They are very concerned about competition with Amazon’s products. They are also worried about the increasing unethical hacks that are happening at Amazon. Also, the fast delivery demands and inventory storage limits are worrisome. If Amazon does not resolve these issues their customers can mass migrate to many of their rivaling companies.
Moral of their Employees: As Amazon has very high expectations from their employees, they are often burned with extra work. Not to mention all the extra mental pressure that they deal with. Their holidays are also very scarce. This is why many of Amazon’s warehouse workers are resorting to strikes and protests to gain their rights as workers. They mostly demand better health protection and hazard pay.
Quality Products: As Amazon is mostly focused on utilizing, they often cannot confirm public claims of their products. As a result, people cannot rely on their reviews. They have to depend on different social media personnel to get reviews, but even then, they can’t be sure of it. So, it is about time Amazon stopped obsessing over its delivery speed and easy buying features, and focus on monitoring those reviews. Because if they don’t start doing these people will eventually leave this platform.
Work Culture: Amazon has a very harsh work culture. It is excessively competitive and critical. The most problematic feature is the total lack of work-life balance. Each and every work has to be done perfectly to avoid insensitive and unfair comments. Even if a job is done well the workers are never appreciated. This whole situation creates lots of mental stress and uneasiness.
Opportunities for Amazon in SWOT Analysis
The opportunities are outside factors of a company that they can exploit for profit and benefits for themselves. An Amazon SWOT analysis will help the executives to contemplate them before their next big move.
New markets: As the government has agreed to lend a hand to the economic development there are new markets in the making. This will help Amazon broaden its already wide horizon of business. This may soon cause Amazon to be the biggest thing in the world market.
Business Diversification: Even though Amazon has plenty of products to sell, there are many new products that it could launch. People are now aware of its presence. So, this will be advantageous for the company. Business diversification can get people more interested and invested in the company. This will work as publicity and raise the profit.
Podcasting: Recently Amazon has come up with the idea of initiating a podcast system. They are planning to merge this with their available music platform that as named as Amazon Music Platform. This will allow them to rise and compete against famous music platforms like Spotify. This service can also pair up well with Amazon’s Alexa.
Threats for Amazon in Swot Analysis
Threats are the most important part of a swot analysis. An Amazon SWOT analysis will point out the threats to this community that has been holding it back.
Increasing competition: In recent times, many new companies are mushrooming in this new market. This increases the competition. In the consumers’ sector, Amazon’s most deadly rival is Walmart. It has become even more of an issue after they announced their Walmart Fulfillment Services. This service provides an alternative system of Amazon to the third-party sellers. Even though the gap of profit is quite large they are expected to become smaller over the coming years. Etsy can be considered also a competitor for Amazon.
Impact of Pandemic: This is the time of pandemics. Amazon is one of the leading companies in the consumer goods department. Even though this pandemic has failed to make any big impact on the sales figure, that does not mean that the magnitude of the situation is any less. This pandemic has affected the manufacturing, distribution, and purchasing of Amazon products. This has fueled major changes in Amazon’s business strategies. Whether it will be beneficial or harmful for them will be decided by how they handle the situation.
Government Regulation: The rules and regulations that the government imposes may be a major threat for Amazon, especially if it does not abide by its profit-based agenda. Also, during pandemic, Amazon faced a major ban on non-essential items from the government of India. This resulted in a loss of 398 million dollars.
Amazon SWOT Analysis Overview Template
Recommendations & Conclusion for Amazon
Here are some recommendations for Amazon to improve their market game from the experts:
- Improving the health and safety of the company’s employees.
- Enhancement of the people by a long shot.
- Encourage the workers to be creative
- Lifting the team morale by achieving the team goals.
In conclusion, it can be said that a steady line of profit and global reach are the key strengths of Amazon. As for its greatest weakness, that would be that would be low staff morale. It may not look like much, but it is a huge load to carry.
An Amazon SWOT analysis helps the company in many different ways. Only because it would allow the executive directors to theoretically take apart the company’s strategic approach to this day and scrutinize them.