AMAZON

 Introduction
Amazon.com, an American multinational technology company, based in Washington and found
by Jeff Bezos in 1994 is the global leader in e-commerce and it was the first company to
introduce the concept of selling goods on the Internet. Beside e-commerce, Amazon.com focuses
on cloud computing, digital streaming, and artificial intelligence. It is considered one of the Big
Five companies in the U.S. information technology industry, along with Apple, Microsoft,
Google and Facebook. It is considered that the company is “one of the most influential economic
and cultural forces in the world”.
Initially Amazon.com started as an online bookstore and its success led the company to diversify
into other products such as: video games, home-improvement items, consumers electronics,
games, jewelry, software, and toys.
 Amazon’s main strategies
Amazon, since its formation in 1994, has had to deal with numerous changes in environment
such as: Year 2000 problem known as Y2K problem in the digital world in 1999-2000, the
economic markets after September 11, 2001 attacks on the World Trade Centre in New York ad
2008 economic crisis. Despite these, in trying to achieve advantage over its competitors, Amazon
focusses of its Business Level Strategy as well as its Corporate Level Strategy. The main
emphasis of Amazon’s main strategies lies within its “customer-centric” approach by serving its
three distinct groups of customers.
Consumer customers (Amazon provides a wide range of merchandise, low prices, and convenience to
its customers)

Seller customers (Customers selling their products through Amazon’s fulfillment facilities)
Developer customers (Amazon’s technology infrastructure enabled the users to create any type of
business)

1. Business Level Strategy refers to a set of commitments and actions that company uses to
gain a competitive advantage by exploiting core competencies in specific product market.
This competitive advantage can be gained through three generic strategies: Cost
Leadership, Differentiation and Focus.
Amazon.com operates using a Hybrid Business Strategy which combines two of the above three
strategies depending on the Business sector it is operating within.
Within the Business Level, Amazon focuses on innovative technology, along with keeping the
cost low plays a vital role in keeping itself a step ahead of its competitors. Amazon is also able to
offer differentiation through innovative products whilst keeping the cost down of products such
as Kindle which has helped Amazon to stem its authority among its competitors even further.
[ The KINDLE example - A good example of using the best Hybrid Strategy, was within the
period 2009-2012 when the e-book reader was very popular. Amazon.com created their own
 e-book reader called Kindle of which an estimated ‘200 million units have been shipped
worldwide since 2009 and another 1 billion was predicted to be ship by 2018. The Hybrid
strategy used towards this was the Cost Leadership and Focus strategy. Despite the
innovative Kindle receiving the Reader’s Choice award for the best e-book reader 3 years in
a row, Amazon has kept the cost of this device affordable, hence sticking to their core
emphasis of providing low-cost products to their customers in trying to achieve customer
satisfaction. ]
2. Corporate Level Strategy
Customers, sellers, and developers are all focused around the vision of growth that the founder
and CEO of Amazon, Jeff Bezos, yearned from the beginning. The customer focus is mainly
based around E-commerce. Ansoff Matrix considers that there are 4 main strategies on the
corporate level, namely: Consolidation, Product Development, Market Development, and
Diversification. Amazon managed to adopt all these strategies in lifetime.
[ The KINDLE example - Within 2009-2012, Product Development has been a major part of
Amazon’s strategy in the form of the e-book reader Kindle, when the company created a new
product and launched it into an already existing market. ]
Also, Amazon used PESTEL Analysis which is a framework used to monitor the micro-
environmental factors that have an impact on organization such as: political environment
(European Union, World Trade Organization), economic environment, social environment
( Social Networking), technology, environment(issues that can be take into consideration are :
Global Warming, Pollution Control, Conservation of energy, Use of environmentally friendly
ingredients, Use of recyclable and non-wasteful packaging, Corporate Social Responsibility) and
the last one is legal environment.
 Competitors
Amazon is the most dominant online store in existence today and every e-commerce store owner
needs to face the reality that they are competing with Amazon.
The E-commerce competitors for Amazon are the following:
Online stores - The ecommerce industry is growing at an exponential rate. In fact, retail
ecommerce sales worldwide are expected to reach $4.8 trillion by 2021.
Niche E-commerce Stores - Amazon is obviously very good at what they do. But in terms of
knowledge and quality, they can’t compete with smaller niche shops that are experts in a
particular industry.
There are also, other popular online store which has a significance presence and compete with
Amazon, such as Walmart, Alibaba, Otto, eBay etc., but Amazon manages to maintain his
position very well.
 SWOT Analysis
A SWOT Analysis assesses the strengths and weaknesses of a business which are internal
strategic factors, and opportunities and threats of a business which are external strategic factors.
Strengths - Amazon is a globally recognized brand and is ranked at first position after with a
brand value of $415 Billion. Amazon was a top performer this year, ranking first position and
increasing brand value by 32%.
Amazon is a customer-oriented brand because it caters to many customers for everyday needs
at inexpensive prices. Also, its business strategies such as differentiation and innovation and
cost leadership are one of the most important strengths of this company which owns the largest
merchandise selection (an extensive product mix which attracts online customers to make their
majority of purchases from it rather than other online retailers).
Due to the high traffic volume on Amazon’s sites, a large number of third-party sellers have
joined the platform of Amazon to sell their own merchandises. Also, the company understands
the local needs and launches its services as per the country’s culture.
With over $1 Trillion market capitalization and above $280 billion annual revenues, Amazon is
truly a market leader in online retail industry.
At the same time, Amazon uses highly efficient logistics and distribution systems. It even has
fixed rates for different delivery time periods. Thus, it executes reliable, secure, and fast delivery
of goods and products to the customers.
Although Amazon is the most dominant online store, there are some weaknesses. The first
weakness of this business is the fact that it is an easy imitating business model. A few
businesses are even giving amazon a tough time. These include Barnes & Noble, Netflix, eBay
etc.
Also, Amazon is losing margins in a few areas such as India because of its free shipping to
customers.
Tax avoidance is another problem for the company because in Japan, UK and US has sparked
negative publicity for Amazon.
At the same time, there is a very limited number of physical stores and this sometimes hinders
to attract customers buy things which are not sellable on online stores.
Regarding the opportunities, Amazon can gain the opportunity to penetrate or expand its
operations in developing markets. Also, by expanding physical stores, Amazon can improve
competitiveness against big box retailers and engage customers with the brand. Also, Amazon
can improve technological measures and organizational policies to reduce counterfeit sales.
At the same time, more acquisitions of e-commerce companies can increase the company’s
market share and reduce the competition level.
Some of the threats of the company could be the following:
Government regulations can threaten the business proceedings of Amazon in some critical
countries. Amazon does not ship to Cuba, Iran, North Korea, Sudan, and Syria.
 Regarding the exploitative labor, Amazon is one of three retail giants facing scrutiny from the
US State Department for maintaining supply chains and labor sources associated with human
rights abuses. This exposes the ecommerce giant to reputational, economic, and legal risks.

Aggressive competition with big retail firms like Walmart and eBay can give Amazon a tough

time in the future. In addition, now Amazon competes with the following companies:

 In Video Streaming Service: Apple TV+, Netflix, Disney+

 In Logistics: FedEx
 In Self Driving Technology: Tesla, Uber, Ford
Imitation is simple as many new entrants are coming up in the market usually with the
same business model of Amazon.
The increase in counterfeiting and fake products threatens Amazon’s profits. The company
recently filed a lawsuit against New York-based online retailer for allegedly counterfeiting
Valentino shoes, a luxury Italian shoe brand offered by Amazon. 

Amazon is not immune to an economic recession. If economic uncertainty worsens, it can

impact Amazon’s sales. Also, the company has an overwhelming amount of fake reviews, and
the problem has worsened in recent times due to the pandemic. Product reviews are a critical
indicator of quality and authenticity, and customers rely heavily on reviews to make purchases.

 Conclusion
In a nutshell, Amazon is the most dominant online shop, ranked the first globally recognized
brand and its popularity is keeping to raise, especially this year, with the pandemic situation
which has accelerated the online shopping and the company managed to double its net profit year
over year. This company is very successful because of its strategies through which it gains a lot
of customers and manages to maintain them. Also, Amazon is the most innovative company in
America in an industry build around constant innovation and change due to the fact that, as one
of the creators of the E-commerce industry, they well know the industry is in its infancy and is
built on a foundation of new technology and constant introduction of new ways of doing things.
The company also knows that its future is based on those new trends and it is good at trying new
ideas in many areas as experiments, and most of them work as planned.