Overview of the Company

Amazon.com, Inc. is an American multinational technology company which focuses on e-

commerce, cloud computing, digital streaming, and artificial intelligence. It is one of the Big
Five companies in the U.S. information technology industry, along with Google, Apple,
Microsoft, and Facebook. The company has been referred to as "one of the most influential
economic and cultural forces in the world", as well as the world's most valuable brand.

Amazon is the world’s leading online retailer and its success has spurred other physical,
brick, and mortar retailers to have an online presence. It is often referred to as the online
equivalent of Wal-Mart because of its reach and global footprint as well as its aggressive
pricing strategies.

Amazon can leverage on several opportunities in the emerging markets and can ensure that its
global supply chain of networked warehouses deliver substantial value for itself and its
stakeholders. Further, Amazon has to rethink its business model of operating at close to zero
margins and the fact that the company has not returned a decent profit in the last five years
gives it much room for improvement.

SWOT ANALYSIS

Amazon’s Strengths (Internal Strategic Factors)

Amazon.com Inc. has the strongest brand in the online retail market. This strength is partly
responsible for the rapid growth of the business, especially in its early years, considering
brand recognition and confidence among consumers. Moderate business diversification is
also among the strengths in this SWOT analysis of Amazon. For instance, the company now
operates as a provider of consumer electronics, online retail services, brick-and-mortar (non-
online) retail services, private-label goods, and information technology services, including
cloud-computing services, among others. These diversified operations are complementary
and make Amazon.com Inc. a formidable competitor. Moreover, the high capability for rapid
technological innovation strengthens the business in terms of the ability to respond to trends,
at least technologically. Such internal factors in this aspect of the SWOT analysis enable
business development toward the fulfilment of Amazon’s corporate mission and vision
statements.
Amazon’s Weaknesses (Internal Strategic Factors)

Amazon’s weaknesses present challenges that limit its business growth and expansion. This
aspect of the SWOT Analysis model outlines the internal strategic factors that impose
difficulties in growing or improving the business. In this case of Amazon, the following
weaknesses are most significant:

Amazon.com Inc. has a business model that is easy to imitate. For example, other companies
can establish e-commerce websites that sell just about anything. In the SWOT analysis
framework, this internal factor is a weakness that creates opportunities for other firms to
impose greater competition against the e-commerce giant. Amazon’s limited penetration in
developing markets is also a weakness that prevents the business from benefitting from the
high economic growth rates of these markets. On the other hand, the company’s limited
brick-and-mortar presence is a barrier to rapidly expanding in the non-online market.
Considering its acquisition of Whole Foods Market, Amazon is on track to grow its non-
online operations. Overall, the internal factors in this aspect of the SWOT analysis impose
challenges on the company, especially in terms of growth in current and new e-commerce
markets. Addressing these challenges may involve changes in Amazon’s organizational
structure and design, as well as corresponding adjustments in strategic planning and
management.

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

There are various opportunities to improve Amazon’s business performance and service
quality. In the SWOT Analysis model, this aspect identifies the external factors that the
company can use to enhance its business, such as through growth in the international e-
commerce market. In this case, Amazon has the following opportunities:

In relation to the weaknesses considered in this SWOT analysis of Amazon.com Inc., there is
an opportunity to expand the company’s brick-and-mortar operations. This external factor
refers to the potential revenue increase that comes with establishing a stronger presence
through more brick-and-mortar stores, in addition to existing Amazon Go stores.
Furthermore, the opportunity to develop new partnerships with other firms is an external
strategic factor that the company can exploit to expand its reach in the global e-commerce
industry. Also, partnerships with businesses that have a strong corporate citizenship image
can improve the effects of Amazon’s corporate social responsibility strategy and stakeholder
management efforts. The company can use these external factors to improve market reach
and revenues. Thus, this aspect of the SWOT analysis illustrates that Amazon can continue
growing despite increasing market saturation.

Threats Facing Amazon (External Strategic Factors)

Amazon experiences various threats corresponding to its operations in different industries

and markets. External factors that reduce or limit business development and performance,
such as in e-commerce operations, are considered in this aspect of the SWOT Analysis
model. Competition remains one of the strongest threats against Amazon.com Inc., with
regard to competition against firms like Walmart, Home Depot, Costco Wholesale, eBay,
Apple, Google, Microsoft, and Netflix, among others. This competitive pressure represents
the strategic management challenges in the markets for consumer electronics, retail, e-
commerce, online digital content distribution, cloud-based services, and other information
technology services. Cybercrime is also pertinent to this SWOT analysis of Amazon.com Inc.
Cybercriminals threaten the security and integrity of the business, as well as customer
confidence in the company. The PESTEL/PESTLE analysis of Amazon.com Inc. identifies
this threat as one of the technological trends affecting the industry. Another threat is
imitation, which is an external factor that could reduce the e-commerce company’s market
share and brand value.

Mission & Vision Interpretation

The mission statement of Amazon is “We strive to offer our customers the lowest possible
prices, the best available selection, and the utmost convenience.” The statement clearly
outlines what the customers should expect from Amazon – services that go beyond meeting
their needs. It targets offering the customer the best offers on three shopping factors that
include the pricing, variety and personal satisfaction. Based on this, the statement has the
following components:

 Affordable prices: Amazon strives to be a company that cares about the spending of
its customers. It does this by giving its customers the lowest prices without
compromising on the quality of the products that it showcases. In fact, the
attractiveness characterizing Amazon across the globe comes down to this element. In
fact, there are no much variations even when making overseas orders as shown by the
affordability of the global shipping rates displayed on the website of the company.
 Amazon has also gotten this right through its online marketing model that ensures its
costs of operations stays at the minimum enabling the company to offer these
competitive prices and services.
 Varied selection: To satisfy this characteristic in Amazon’s mission statement, the
management diversifies the range of services and products for the customers to shop.
The presence of these products is one of the major reasons Amazon has gained
popularity as a place where one can find virtually everything and with ease.
 Top convenience: Amazon prioritizes on the online shopping experience. It
understands that this is the most appropriate ways for clients to access whatever they
want, and at the comfort of their homes. To add to how the company meets this
component, Amazon collaborates with reliable stakeholders to ship all the orders of
its customers fast, irrespective of their location.

Vision Statement
Amazon vision statement is “to be Earth’s most customer-centric company, where
customers can find and discover anything they might want to buy online.” The vision
statement revisits the desired reputation it wants to achieve as that of being a destination
where all customers in the world feel satisfied and care for in all ways. In relation to this, the
following components can be related to this vision statement:
 Customer-centric company. Based on the business culture cultivated by Amazon,
the customer takes the front seat in the order of importance. For example, as a show of
how much the company looks to impress its customers, it incorporates occasional
impressive deals and promotions as indirect rewards to customer loyalty. Amazon also
considers the friendly services and easy to navigate sites as an indication of how it meets
the needs of this first characteristic in its vision statement.
 Global presence.  As an e-commerce company, Amazon strives to have the largest
influence on the market at the global level. The strategic approaches of the company
directly link to the progressive expansion efforts Amazon considers a priority. It explains
why the firm includes the term ‘be Earth’s’ as a reminder of the extent to which the
company wants its impact to be felt.
Growth & Expansion Strategy

Amazon has launched a new kind of retail experience in January 2018 in Seattle. This store
was called Amazon Go, which has no store staff to help you on your shopping, and you do
not need to pass your credit card or your billing information to any machine other than your
smartphone, via Amazon Go app.

People who use Amazon for online shopping will increase due to the connection between
Whole Foods, better service thanks to the purchase data, and people will start preferring
Whole Foods for their retail shopping because Amazon owns it and provides a
known/guaranteed customer service along with other perks.

Amazon Go, Whole Foods, AmazonFresh, Amazon Prime, Alexa, they are all connected with
each other and helps consumers fulfill their needs with a great experience. Integrations make
consumers' lives more comfortable, and it will break the walls of grocery shopping - and start
a war between the brands on breaking down the commodity.

When we observe the consumer states when they shop for groceries, we see three states.

First one is our on-the-go needs. When we are moving from point A to point B, we are having
quick needs like a bottle of water, a can of coke, gums, or snacks. To fulfill these needs, we
are going small convenience stores like 7-Eleven.

The second one is our regular grocery needs at home. If we do not want to go out to shop, we
are ordering groceries using our laptops/smartphones; we are going to Amazon and select
products according to our needs.

The third one is regular shopping when we have flexible time. Considering we have a
structured shopping list and time, we are visiting grocery stores like Walmart or Costco, and
making our purchases from there.

Amazon acts visionary on this area, and according to the shopper behavior, they are on the
right path. Covering shopping 360-degrees, allowing consumers to make their purchases
without a time, location and product list constraints are what make consumers happy - and
providing a good experience in all these areas is making Amazon irresistible.

Value Analysis & Interpretation

Amazon’s value chain analysis consists of a company’s activities into primary and support
activities. Therefore, it is crucial to look at both of them separately. In the primary activities,
we cover the inbound logistics, operation, outbound logistics, marketing and sales, and
services while the support activities consist of the firm’s infrastructure, human resources,
technology development, and procurement.

Amazon’s Primary Activities

In Amazon’s value chain analysis, primary activities are those involved in obtaining raw
materials, converting them, and delivering them to customers. It may also include marketing
and sales activities and services. Lastly, it also consists of any services provided to
customers. There are five primary activities that any company may have. For Amazon, these
are as follows.

Inbound logistics

Inbound logistics defines a company’s activities involved in obtaining raw materials. Amazon
doesn’t usually have its own products. It provides a platform for other businesses to sell their
products and services. Usually, Amazon doesn’t have any long-term contracts with these
businesses or suppliers. The company provides the Fulfilment by Amazon (FBA) service to
its suppliers in inbound logistics.

Operations

Operations include all activities that go into converting raw material into finished goods.
Amazon organizes its operations into three segments. Firstly, it has the North America
segment, which accounts for a majority of its revenues. It contains its prominent brands, such
as Amazon.com, Amazon.ca, Amazon.com.mx. It is the company’s most profitable segment
compared to the others.

Amazon also has an international segment. These include its operations outside the North
America segment. Through this segment, the company focuses on international customers.
The International segment is the company’s second-largest revenue-generating segment. It
includes several countries, such as Australia, Germany, Sweden, Japan, India, and many
more.

Lastly, the company also has its Amazon Web Services (AWS) segment. It includes services
such as computing, storage, cloud infrastructure, database, and other services. Through this
segment, the company offers other businesses various online solutions. The AWS segment
allows the company to operate in markets outside its core activities.
Outbound logistics

Outbound logistics consists of activities involved in storing, moving, and distributing finished
products. Amazon has various operations included in its outbound logistics. Amazon has its
fulfillmentcenters that use robotic technology for inventories. It includes managing, storing,
picking, and shipping products. The company operates over 175 fulfillmentcenters around the
globe.

Marketing and Sales

Marketing and sales include operations involved in promoting products and selling them.
Amazon incurs significant marketing expenses worldwide. Similarly, the company has been
increasing its investment in the area steadily over the past. The company incurred over $13
billion in advertising expenses in 2018. However, the company increased its advertising
expenditures by $5 billion in 2019, investing over $18 billion during the year. It was an
increase of almost 37%.

Amazon’s Support Activities

In Amazon’s value chain analysis, support activities are those that don’t come as a result of
core activities. These are activities that all companies have. According to the value chain
analysis, there are four support activities that every business has. These are the firm’s
infrastructure, human resources, technology development, and procurement.

Human resources

Human resources involve activities a business participates in to manage its human capital.
Amazon has a great working environment for employees. It provides employees with the best
training. Similarly, it gives its human resources the recognition it deserves through its
promotions and reports. Amazon’s recruitment and employee management process has been
one of the primary elements of its success.

Strategies to increase Profits

Amazon’s current strategy is also built around the convenience aspect wherein customers
need not go to a physical bookstore or even wait for their purchases to arrive after some time
as it has introduced same day delivery in many countries and is even toying with the idea of
using Drones for near instantaneous delivery. Apart from that, its focus on non-retail product
lines such as cloud based services means that it is addressing the issue of differentiation as
well as its overreliance on cost leadership.

Amazon’s 4 Pillars of Business Success

Amazon’s 4 pillars are universally the best way to operate and grow a profitable business
today.

They work equally well for digital and physical businesses. And they’ll keep you focused on
what matters most, guiding your decisions, your priorities and your day-to-day operations.

Let’s take a look.

Pillar #1: Customer Centricity

Essentially, to be like Amazon, you’ve got to be obsessed with your customers’ experience,
prioritizing their needs and desires above everything else. Amazon is after all, the most
customer-centric company in the world.

For instance, Amazon puts a chair in every boardroom to represent the customer — a
physical reminder to innovate on their behalf.

And Amazon Echo, which began as a simple virtual assistant, has evolved into Echo Look, a
hands-free camera and style assistant, and Echo Show, a communal household computer.

Amazon doesn’t even consider starting a new project until they’ve looked at it through the
customer’s eyes. If someone wants to recommend a new product, they must write a (pretend)
press release outlining the benefits of the product they envision.

Pillar #2: Innovation

This is about coming up with new ideas and new ways of doing things, but not for the sake of
creativity or impressing stockholders.

True innovation is about bringing value to your customers — because innovation that doesn’t benefit
and serve your customers won’t help you grow.

Today, Amazon flexes its innovation muscles by exploring artificial intelligence (AI) and

outer space (through Blue Origin, Bezos’ private space company).

But innovation isn’t confined to radical new ideas. It happens anywhere

Pillar #3: Corporate Agility

Corporate agility is about speed of execution, the ability to remain flexible and adaptable
regardless of your business’ stage of growth.

Often, as businesses grow, they lose that ability, and as soon as they do, it’s often the
beginning of the end.

To be like Amazon, you need to be so agile, you’re willing to disrupt your own business.
Bryan Eisenberg even recommends you create a team whose sole job is to put you out of
business — because if you don’t come up with the innovations that shake up your status quo,
someone else will.

Pillar #4: Continuous Optimization

Continuous optimization is hard for most businesses because it means you’ll never be
satisfied or settle for “good enough.”

Optimization is about improving processes so you can become more efficient and bring more
value to your customers.