Amazon’s Analysis: Advantages and Disadvantages

Background

Amazon is one of the world’s leading retail companies, dominating the electronic sector of the market. Founded in 1994, the service expanded at a rapid pace, becoming global in the 21^st century. Amazon employs over 1 million people and opens new locations that extend the number of jobs even further. In a way, Amazon has become the primary association with the sphere of electronic retail. It serves as an effective link between businesses and buyers, organizing convenient purchases and deliveries. The company sees its mission as a “customer obsession” as it prioritizes relations with its customers over the focus on competitors (Amazon, 2021).

As a result, Amazon has been able to retain its leading position in the market, but the continuous progress and emerging competition project new challenges for the company. In order to ensure its preparedness, Amazon will benefit from the analysis of its strengths, weaknesses, opportunities, and threats. The company’s official website provides more information in regard to the brand’s history, mission, and positioning.

SWOT Analysis

Matrix

Internal	External
Strengths What does the organization do well? What unique resources can the organization draw on? What do others see as the organization’s strengths?	Opportunities What opportunities are open to the organization? What trends could the organization take advantage of? How can you turn the organization’s strengths into opportunities?
1. Customer-centric model 2. Technology and innovation 3. Strong brand name 4. Leadership in Online Sales	1. Global expansion in developing markets 2. Enhanced physical presence 3. Acquisition of competition 4. Emphasis on worker rights
Weaknesses What could the organization improve? Where does the organization have fewer resources than its competitors? What are others likely to see as weaknesses?	Threats What threats could harm you? What is your competition doing? What threats do your weaknesses expose you to?
1. Business model subject to replication 2. Employee treatment issues 3. Tax evasion 4. Insufficient physical presence	1. Controversy and public criticism 2. Increasing competition 3. Intensifying cyber attacks 4. Counterfeit products

Strengths

Customer-centric model – Amazon recognizes its official strategy as providing the best quality of service for its customers. This mission is prioritized by the company’s management as more important than focusing on competition. Amazon develops an array of instruments that engage primary stakeholders, building loyalty and reputation. The company develops convenient services that help customers economize the time and efforts they dedicate to the task. Amazon’s model promotes smart shopping, as buyers have the opportunity to compare and select the best-value offers efficiently.

Technology and innovation – Amazon’s design is inherently innovative, as it utilizes state-of-the-art solutions for an enhanced customer experience. The company became the pioneer of electronic retail, establishing its reputation as a technologically advanced organization. The use of Big Data, modern analysis techniques, and technological advancements in delivery have the potential to secure Amazon’s leadership in the digital era.

Brand recognition – the name of Amazon has become eponymous with electronic retail. This strong point of the company is enabled through the effective nexus of the two previous ones. Enhanced customer experience, combined with technological superiority, makes Amazon the key associated with the market segment. Even those who have never used such services yet hear about Amazon at some point, making them eligible customers for the future.

Leadership in online sales – the online format has been the leading sales mode in recent years. The ongoing COVID-19 pandemic has contributed to the development and popularity of e-commerce. Under these circumstances, the industry has seen an influx of new customers who had to resort to this format due to lockdowns and restrictions. Amazon is the leader of the segment, meaning that it enjoyed a strong positive impact enabled by this tendency.

Weaknesses

Business model subject to replication – The secret to Amazon’s resounding success consists of its status as a pioneer of electronic commerce. The company was among the first who ventured into the uncharted territory of online retail. However, this business model appears rather simple and subject to imitation. With the rapid development and current availability of technology, Internet-based stores have become a common occurrence. In this regard, the replication of Amazon’s business model may become a matter of time.

Employee treatment issues – Considering the publicity surrounding Amazon, it is possible that the emphasis on customer relations has been achieved at the expense of the employees. More specifically, the company has been involved in scandalous affairs regarding the unfavorable conditions of its workers. Insufficient salaries, poor work environment, as well as extended workload and hours form the core of the issue (Kantor et al., 2021). In the age of holistic business practices, maltreatment of the employees is alarming, as it undermines the public’s trust.

Tax evasion – From a financial point of view, Amazon has seen numerous accusations of unfair business practices. The company has been found to avoid taxes through the use of intricate business schemes in the U.S., the U.K., and Japan. Previously, President Trump issued similar accusations toward Amazon, contributing to the controversy surrounding the company. In the eyes of certain stakeholders, Amazon does not give back to the countries’ economies as much as it should.

Insufficient physical presence – From one perspective, the online-based format is the cornerstone of Amazon’s success. It is a pioneer of electronic retail with state-of-the-art service and delivery technology. However, even in the 2020s, a considerable number of people remain loyal to traditional retail formats. They prefer to visit stores in person, selecting the goods and items they can physically touch. While other retailers develop their online markets, Amazon appears to not value the possibility of brick-and-mortar sales.

Opportunities

Global expansion in developing markets – Amazon’s business model has proved it effectiveness in highly developed markets, such as the U.S. and Europe. However, in order to retain the desired level of sustained growth, the company needs to seek other opportunities. The experience during global lockdowns has prompted people to recognize the opportunities within the sector of e-commerce. Accordingly, Amazon can use this situation to increase its presence in developing markets, namely Eastern Europe and Africa.

Enhanced physical presence – The considerable financial assets of the company can be invested in the development of brick-and-mortar formats of retail.

Acquisition of competition – Another opportunity enabled by the economic superiority of Amazon consists of the acquisition of projected competitors. While such business practices do not represent fair play, the instrument still can be used to secure Amazon’s position.

Emphasis on workers’ rights – The current environment presents interesting opportunities for Amazon’s internal policies. Amid the public criticism, this company can implement new effective measures protecting the rights of all employees in the short term.

Threats

Controversy and public criticism – Amazon remains subject to external pressure from its stakeholders. The lack of attention to workers’ rights and tax evasion accusations do not contribute to the positive development of this rich company.

Increasing competition – Amazon sees strong competition in all areas of its business. eBay and new players improve their positions in electronic retail. Next, Amazon Prime remains in a heated battle against other streaming services, such as Netflix, Apple TV+, and Disney+. Furthermore, the environment appears to become only more competitive moving forward.

Intensifying cyberattacks – Internet-based models of business pose additional requirements in terms of data security. Cyberattacks against major organizations and crucial points of infrastructure are becoming more common. Under these circumstances, Amazon, being a company in the spotlight of attention, is subject to elevated risks.

Counterfeit products – The presence of unauthentic products in Amazon’s stores is an alarming occurrence. The company will experience a decrease in customers’ trust if this tendency persists without due supplier control.

Process Improvement Goal

In the current environment, the development of new human resource policies appears to be the primary process improvement goal for Amazon. The company needs to make meaningful efforts that would improve working conditions in terms of salaries, benefits, workload, and hours. However, the improvements are to be implemented in reality and not only on paper. The priority of this process is conditioned by the magnitude of the issue. As of now, public criticism in regards to workers’ rights is the primary threat to Amazon’s reputation, status, and customer loyalty.

Recommendations (3)

• Organize an Employee Rights task force that would be in charge of the new policy development.
• Develop the data security architecture against cyberattacks to protect customer information.
• Allocate available funds to the development of brick-and-mortar stores to enhance the range of the company’s influence.

References

Amazon. (2021). Who we are. Web.

Kantor, J., Weise, K., & Ashford, G. (2021). The Amazon that customers don’t see. The New York Times. Web.