Amazon.com Inc. SWOT Analysis & Recommendations

Amazon.com Inc. SWOT analysis, strengths, weaknesses, opportunities, threats, internal, external factors, recommendation and e-commerce case study
An Amazon Kindle. Amazon.com Inc.’s SWOT analysis shows that the business has potential to continue its e-commerce leadership in the long-term. (Photo: Public Domain)

Amazon.com Inc. leads the online retail industry, indicating business success in addressing issues shown in the company’s SWOT analysis. The SWOT Analysis identifies the internal strategic factors (strengths and weaknesses) and external strategic factors (opportunities and threats) that influence the business. A SWOT analysis of Amazon shows the strengths that the company uses to overcome its weaknesses and the threats to its e-commerce business, so as to maximize the benefits from exploiting opportunities in the market. Thus, to maximize the benefits of having the highest revenues in the online retail industry, Amazon must ensure that it continues to effectively address the concerns shown in this SWOT Analysis.

A SWOT analysis of Amazon points to the need to ensure strong brand image. Amazon also has other concerns, such as cybercrime and imitation, as shown in this SWOT analysis of the e-commerce company.

Amazon’s Strengths (Internal Strategic Factors)

Amazon.com Inc.’s e-commerce success relies on its notable strengths. In the SWOT Analysis model, this aspect enumerates the internal strategic factors that the company uses to grow its business. The following strengths support the success and ongoing growth of Amazon:

  1. Strong brand
  2. Extensive product mix
  3. Highest revenues in the industry

Amazon.com Inc. has the strongest brand in the online retail market. This strength is partly responsible for the rapid growth of the business in its early years. Also, an extensive product mix makes it easy for customers to find what they need or want on the company’s website, fulfilling Amazon’s vision statement and mission statement. This strength supports service attractiveness, which is crucial in maintaining the firm’s success. In addition, having the highest revenues in the industry is one of Amazon’s strengths. For example, it enables the company to invest in new business ventures or in new product development. This aspect of the SWOT Analysis shows that Amazon.com Inc. has the strengths necessary to maintain its e-commerce market position.

Amazon’s Weaknesses (Internal Strategic Factors)

Amazon’s weaknesses present challenges that limit its e-commerce business. This aspect of the SWOT Analysis model outlines the internal strategic factors that impose difficulties in growing the business. In the case of Amazon, the following weaknesses are most significant:

  1. Easily imitable business model
  2. Limited penetration in developing markets
  3. Limited brick-and-mortar presence

Amazon.com Inc. has a business model that others can easily imitate. For example, other firms could easily establish an online retail website that sells just about anything. Also, Amazon generates most of its revenues from developed countries, such as the United States. When other firms become fully established in developing markets, it would be difficult for Amazon to penetrate and compete in such markets. The company’s limited brick-and-mortar presence also limits the ability to attract customers to certain product types that are more sellable in physical stores than in online stores. Based on this aspect of the SWOT Analysis, Amazon.com Inc. must strategically maintain online and offline competitive advantage to overcome the negative effects of its weaknesses.

Opportunities for Amazon.com Inc. (External Strategic Factors)

There are a variety of opportunities available to Amazon.com Inc. In the SWOT Analysis model, this aspect identifies the external strategic factors that the firm could use to grow its business. Amazon has the following opportunities related to the e-commerce market:

  1. Penetrate developing markets
  2. Expand brick-and-mortar business
  3. Boost measures to reduce counterfeit sales

Amazon has the opportunity to penetrate developing markets. This move should establish the company’s presence before other large online retail firms take root, thereby giving Amazon the advantage of a stronger competitive edge. The company also has the opportunity to open more brick-and-mortar stores to improve competitiveness against large retailers with significant brick-and-mortar presence, such as Walmart [Read: SWOT Analysis of Walmart]. Moreover, one of the issues facing Amazon.com Inc.’s e-commerce website is the continuing sale of counterfeit items, which are generally against customer expectations. This condition presents an opportunity for the company to improve its technological measures and organizational policies to address counterfeit sales. For example, an automated process for consumer reports and product evaluation could help reduce the amount of counterfeit products sold on the website. In this aspect of the SWOT Analysis, Amazon has major opportunities for growth.

Threats Facing Amazon.com Inc. (External Strategic Factors)

Amazon faces a number of significant threats in the online retail market. External strategic factors that reduce business performance are considered in this aspect of the SWOT Analysis model. Amazon.com Inc. must address the following threats in the online retail industry environment:

  1. Cybercrime
  2. Imitation
  3. Aggressive competition with large retail firms

Cybercrime threatens practically every online retail company. Amazon must keep stringent measures to counteract cybercrime attacks against its online operations. For example, the company must intensify its network security efforts. Also, Amazon.com Inc. faces the issue of imitation, considering that its business model is easily imitable. The materialization of this threat could reduce the company’s market share. Moreover, aggressive competition is an issue against Amazon. Large retail firms, such as Walmart, are continuing their efforts in improving their online retail presence. Thus, based on this aspect of the SWOT Analysis, Amazon.com Inc. needs to strengthen its marketing efforts and competitiveness.

Amazon.com Inc.’s SWOT Analysis – Recommendations

Amazon.com Inc. has the necessary strengths to continue its e-commerce dominance. However, the company faces a variety of concerns. For instance, Amazon has limited presence in developing markets. It is recommended that the company must increase its strategic entry into developing countries, which present major growth opportunities based on rapid economic development. Also, to address the issue of competition against retail firms like Walmart, Amazon must consider increasing its brick-and-mortar stores, which help increase market reach and brand popularity. Another recommendation is for Amazon to address counterfeiting and cybercrime through intensified information technology measures for organizational and consumer security and protection.

References
  • Amazon.com, Inc. Form 10-K.
  • Bernroider, E. (2002). Factors in SWOT Analysis Applied to Micro, Small-to-Medium, and Large Software Enterprises: an Austrian Study. European management journal20(5), 562-573.
  • Jackson, S. E., Joshi, A., & Erhardt, N. L. (2003). Recent research on team and organizational diversity: SWOT analysis and implications. Journal of management29(6), 801-830.
  • Leigh, D., & Pershing, A. J. (2006). SWOT analysis. The Handbook of Human Performance Technology, 1089-1108.
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