M RahmanSWOT analysis of Amazon – Amazon SWOT analysis
This is a detailed SWOT analysis of Amazon. It examines the strengths and the weaknesses of Amazon. It also examines the opportunities and the threats facing the company. Amazon is the trading name of Amazon.com, Inc. Its journey began in 1994. It was founded by Jeff Bezos and is based at Seattle in Washington.
Strengths of Amazon
Amazon has made some great success stories over the years. For example, it was the most valuable retail brand in the world in 2020 with a brand value of about $415.9 billion (Statista, 2020). It has more than 350 million customers and sellers and has achieved the title of the highest book seller in the world.
Amazon has received a number of awards and accolades over the years. For instance, BrandZ’s Most Valuable Global Brand 2019-2020, Values Institute America’s Most Trustworthy Brands 2017-2018, Brand Finance World’s Most Valuable Brand 2018, and Forbes’ 50 Most Engaged Companies 2017 are some of the achievements to mention but a few in this regard (Amazon.com Inc., 2021).
Brand recognition is a great strength of Amazon. Many customers around the world can recall it on top of their mind. It initially started its business with books only; however, it increased its portfolio enormously over the years. Today, it lists more than 3 billion products across 12 marketplaces worldwide.
Amazon invests heavily on cutting-edge technology and its global expansion. For example, it has invested £9.3 billion in the UK since 2010 (Amazon.com Inc., 2021). It is currently experimenting Amazon Prime Air (small unmanned aerial vehicles) delivery system to get packages delivered to customers in 30 minutes or less. In mid-2020, it announced its decision to buy Zoox (a self-driving car company) with over $1 billion create a fleet of self-driving taxis (McGee and Lee, 2020).
Amazon’s financial position is great. Even when many companies were struggling in 2020 due to global economic lockdown, its sales increased by 37%. This is shows that it is in a safe position even in a drastic global macro-environmental condition.
Weaknesses of Amazon
Next issue to discuss in the SWOT analysis of Amazon is weakness. Certainly, price war in online retailing is intense and Amazon is not immune from it. In fact, it impacts heavily on Amazon’s profit margins. Amazon’s rapid expansion has also been proven costly. As mentioned above, it agreed to pay over $1 billion to by Zoox; however, Levy (2020) reports that the company need to spend $2 billion a year in ongoing development to get Zoox technology into the market.
Amazon has received a lot of negative media coverage over the years. For instance, it is widely known that many Amazon delivery drivers quit their jobs and do not stay with the company for a long time due to working long hours and delivering hundreds of packages a day. Likewise, the accusation of tax avoidance in the USA, the UK, and Japan has also affected the company’s brand image.
Opportunities for Amazon
Opportunities for a giant like Amazon are everywhere. Amazon’s brand recognition and financial position make it able to grow further into its current markets. It can grow further in five mega categories i.e. clothing/accessories, home and kitchen, health/beauty, grocery, and office equipment/B2B.
Further opportunities exist in opening operations and more sites in the emerging markets. These markets have already begun battle grounds for many big corporations. Similarly, Amazon can introduce more own branded products that are likely to be more profitable.
Threats to Amazon
Threat is the last element to address in the SWOT analysis of Amazon. As Amazon operates in a number of segments e.g. media, electronics, and other merchandise, it faces a number of competitors. For example, Walmart, eBay, Alibaba, and Google are some of the toughest competitors of Amazon in different markets.
Another threat to consider is online vulnerability. A number of great giants’ security has been breached by malicious hacking over the years. This threat is omnipresent which may destabilise any company in the world suddenly.
Amazon has faced legal challenges as well. It was fined $42 million in France in 2020 for violating the country’s data protection law. In 2017, the EU commission ordered it to repay €250m over ‘illegal tax advantages’ it received from Luxembourg. However, Amazon maintained that it did not receive any special treatment from Luxembourg (Rankin, 2017).
Hope the article on ‘SWOT analysis of Amazon’ has been useful. You may also like reading PESTEL analysis of Amazon. Other relevant articles for you are:
Competitors of Amazon (Competitor analysis of Amazon)
Marketing mix of Amazon (4Ps of Amazon)
If you liked any of these articles, please feel free to share with others by clicking on the social sharing icons.
Last update: 25 January 2020
References
Amazon.com Inc. (2021) About our Fulfilment Centres https://www.amazon.co.uk/p/feature/k3eaequ7cy8v762 (Accessed 24 January 2021)
Levy, A. (2020) Amazon will have to invest many billions more than it’s spending on Zoox to bring self-driving tech to market, available at: https://www.cnbc.com/2020/06/26/amazon-spending-1-billion-on-zoox-will-have-to-invest-billions-more.html (accessed 24 January 2021)
McGee, P. and Lee, D. (2020) Amazon acquires self-driving start-up Zoox for over $1.2bn, available at: https://www.ft.com/content/37ae69d9-f160-48c3-b3c5-736730c110ce (accessed 24 January 2021)
Rankin, J. (2017) Amazon ordered to repay €250m by EU over ‘illegal tax advantages’, available at: https://www.theguardian.com/technology/2017/oct/04/amazon-eu-tax-irish-government-apple (Accessed 28 February 2018)
Statista (2020) Brand value of the leading 20 most valuable retail brands worldwide in 2020 (in million U.S. dollars), available at: https://www.statista.com/statistics/267870/brand-value-of-the-leading-20-most-valuable-retailers-worldwide/ (Accessed 24 January 2021)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.
Joe David