SWOT Analysis of Amazon.com

Summary of SWOT Analysis of Amazon

Some truths become clear in this SWOT Analysis of Amazon. Firstly, Amazon remains the world’s largest online retailer, dominating market share and expanding its services into new international markets. Its strengths include robust revenue growth, with a 25% year-on-year increase, and a thriving cloud computing division, Amazon Web Services, which continues to deliver strong profits. Amazon’s commitment to innovation is evident in its collaborations with leading universities, such as Edinburgh, enhancing its technological edge and cloud offerings.

However, Amazon faces notable weaknesses. Heavy investment in overseas expansion has sharply reduced profits, with shares falling as profits dropped by 75%. The company also contends with formidable competition from technology giants like Google, Apple, and Microsoft, which limits Amazon’s potential market share, particularly in cloud computing.

Opportunities for Amazon are significant. Its aggressive expansion into South East Asia opens access to a vast market of 600 million people, potentially worth $70 billion. New trade agreements between the UK and US present further growth prospects for Amazon’s British operations, allowing it to replicate successful US service models.

Yet, Amazon must navigate serious threats. In South East Asia, competitors such as Alibaba possess first-mover advantage and deep local knowledge, challenging Amazon’s growth. Additionally, Amazon’s global expansion is hampered by underdeveloped infrastructure in some regions, which may prevent the company from achieving its rapid delivery promises and erode its competitive advantage.

In summary, this Amazon SWOT analysis highlights Amazon’s dominant market position and innovation, while acknowledging profit pressures, fierce competition, and the challenges of global expansion.

Introduction

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 of Amazon additionally examines what Amazon does well and what it could do better in addressing the opportunities and threats that it faces. Accordingly, we invite you to look at our Amazon SWOT analysis below.

Strengths

• The second quarter revenue in 2017 was $38 million/£29 million, a 25% rise from the previous year (Dastin and Sadam, 2017).
• Amazon is the world’s largest online retailer, indicating that it has captured the largest percentage of market share than all competitors in the same market (Dastin and Sadam, 2017).
• A number of Amazon services have been expanded to new markets in the past year, including the expansion of on-demand Amazon TV subscription channels to the UK, the two-hour delivery Prime-Now service to Singapore and the Amazon Fresh delivery service of groceries to Germany (Boland, 2017).
• The cloud computing division of Amazon, the Amazon Web Services, continues to grow, with the net income from the three months to the 30th of June growing to $914 million as opposed to $718 million the previous year (Boland, 2017).
• Additionally, Amazon coordinates its research and development activities with the research of the world’s leading universities. For example, the company’s collaboration with Edinburgh University.
  • Edinburgh is a “top-rated for computer science, delivering world-leading and internationally excellent research.” Moreover, it continues to aid Amazon in its cloud computing services (Law, 2017).

Weaknesses

• In 2017 Amazon profits were reported to have fallen sharply due to heavy spending and extensive overseas investment as part of Amazon’s bid to become the global go-to shop for all products, be it food or technology (BBC, 2017b).
• Amazon shares have recently been reported as sinking, as profits fell 75 per cent due to the aforementioned heavy spending on overseas investments (Boland, 2017).
• In addition, Google and Apple are significant competitors to Amazon in terms of its technological offerings. As a result, Amazon is not capturing the potential market share they could. One example of this can be seen in the fact that customers traditionally associate the Apple iCloud function with cloud computing, as opposed to Amazon’s cloud services, along with the growing threat to Amazon from Microsoft (Deagon, 2017).

Opportunities

• Amazon is expanding into South East Asia through their Prime-Now delivery service. This is a region with a potential market of 600 million people. This may be worth around $70 billion, meaning that Amazon now has the opportunity to increase sales and market share in one of the most highly populated regions of the world (BBC, 2017a).
• New trade deals between the U.K. and the U.S. present the opportunity for Amazon to further expand its British based businesses with the same service offerings presented in the United States.

Threats

• Despite expanding into South East Asia, Amazon faces considerable competition in a region so close to China. Competitors such as Alibaba already have the first mover advantage in the region. Accordingly, Alibaba has extensive local knowledge as an organisation based in Asia (2017a).
• For certain, Amazon increasingly continues to expand globally. But they often do so in regions which lack the requisite extensive infrastructure they are used to (BBC, 2017a). As a result, the competitive advantage Amazon has in other countries may not materialise here.

References for Amazon SWOT Analysis

A-D Sources

• Bartz, D. (2017) ‘Deceptive Amazon discounts under investigation by Federal Trade Commission.’Independent. [Online] [Accessed on 30 July 2017] https://www.independent.co.uk/news/business/news/amazon-discounts-deceptive-federal-trade-commission-whole-foods-buy-out-prices-online-a7852516.html
• BBC. (2017a) ‘Amazon Prime makes first foray into South East Asia.’ [Online] [Accessed on 30 July 2017] http://www.bbc.co.uk/news/business-40736830
• BBC. (2017b) ‘Amazon profits fall sharply as it invests overseas.‘ [Online] [Accessed on 30 July 2017] https://www.bbc.co.uk/news/business-40748097
• Bedard, P. (2017) ‘Obesity becomes worldwide epidemic, US is the fattest.’ Washington Examiner. [Online] [Accessed on 26 July 2017] https://www.washingtonexaminer.com/obesity-becomes-worldwide-epidemic-us-is-the-fattest/article/2629712 
• Boland, H. (2017) ‘Amazon shares shrink as profits fall 77pc.’ The Telegraph. [Online] [Accessed on 28 July 2017] https://www.telegraph.co.uk/technology/2017/07/27/amazon-boss-jeff-bezos-overtakes-bill-gates-worlds-richest-person/
• Bowman, A., Erturk, I., Froud, J., Johal, S., Law, J., Leaver, A., Moran, M. and Williams, K. (2014) The end of the experiment? From competition to the foundational economy. Manchester, UK: Manchester University Press.
• Daily Mail. (2017) ‘REVEALED: Amazon is under federal investigation for selling goods to someone on the terrorism list and possible US sanctions violations.’ Daily Mail. [Online] [Accessed on 30 July 2017] https://www.dailymail.co.uk/news/article-4743386/Amazon-investigated-selling-possible-terrorist.html#ixzz4oKcpcYnT
• Dastin, J. and Sadam, R. (2017) ‘Amazon profit plunges with breakneck investment in global expansion.’ The Independent. [Online] [Accessed on 30 July 2017] https://www.independent.co.uk/news/business/news/amazon-shares-latest-updates-profits-drop-investment-global-expansion-jeff-bezos-online-shopping-a7864156.html 
• Deagon, B. (2017) ‘Amazon Cloud Services Under Growing Threat from Microsoft, Google, IBM.’ Investors. [Online] [Accessed on 30 July 2017] https://www.investors.com/news/technology/amazon-cloud-services-under-growing-threat-from-microsoft-google-ibm/
• Denning, S. (2017) ‘Apple, Google And Amazon: How to Understand Capitalism’s Future.’ Forbes. [Online] [Accessed on 31 July 2017] https://www.forbes.com/sites/stevedenning/2017/07/31/apple-google-amazon-how-to-understand-capitalisms-future/#5e96759a3fa0
• Diamond, J. (2017) ‘Striking protectionist tone, Trump touts US-made products.’ CNN. [Online] [Accessed on 27 July 2017] http://edition.cnn.com/2017/07/17/politics/donald-trump-made-in-america-showcase-protectionist-rhetoric/

E-Z Sources

• Foss, N. J. and Saebi, T. (2017) ‘Fifteen years of research on business model innovation: How far have we come, and where should we go?’ Journal of Management, 43(1), pp. 200-227.
• Gilchrist, K. (2017) ‘Here’s what could come out of the UK trade secretary’s meeting with Wilbur Ross.’ CNBC. [Online] [Accessed on 24 July 2017] https://www.cnbc.com/2017/07/21/wilbur-ross-liam-fox-trade-us-uk-deal-brexit.html
• Gov. (2016) ‘Sanctions, Embargoes and Restrictions.’ [Online] [Accessed on 30 July 2017] https://www.gov.uk/guidance/sanctions-embargoes-and-restrictions
• Gunther, M. (2016) ‘Can Amazon’s new ‘dream team’ fix the company’s sustainability reputation?’ The Guardian. [Online] [Accessed on 30 June 2017] https://www.theguardian.com/sustainable-business/2016/feb/02/amazon-sustainability-edf-epa-best-buy-walmart-apple-microsoft-csr-child-labor
• Law, J. (2017) ‘Amazon Development Centre Edinburgh devising and growing global innovations.’ City A.M. [Online] [Accessed on 30 July 2017] http://www.cityam.com/269426/amazon-development-centre-edinburgh-devising-and-growing
• London, A. (2017) ‘Amazon has launched ‘Hub’ – storage lockers for deliveries in your home.’ Tech Radar. [Online] [Accessed on 29 July 2017] https://www.techradar.com/news/amazon-has-launched-hub-storage-lockers-for-deliveries-in-your-home
• Ruddick, G. (2017) ‘Amazon to double the number of R&D staff in London.’ The Guardian. [Online] [Accessed on 30 July 2017] https://www.theguardian.com/technology/2017/jul/25/amazon-double-number-research-development-staff-london
• Sindi, S. and Roe, M. (2017) ‘The Evolution of Supply Chains and Logistics.’ In: Strategic Supply Chain Management (pp. 7-25). Springer International Publishing.
• Vandevelde, M. (2017) ‘Amazon is creating more jobs than it enjoys.’ Financial Times. [Online] [Accessed on 30 July 2017] https://www.ft.com/content/cf98680c-738f-11e7-aca6-c6bd07df1a3c