INTRODUCTION

Amazon.com, Inc., commonly known as Amazon, stands as a global e-commerce and technology
giant that has revolutionized the way people shop, consume media, and engage with technology.
Founded in 1994 by Jeff Bezos as an online bookstore, the company rapidly evolved into a
comprehensive online marketplace, offering an extensive range of products and services, from
electronics and books to groceries and streaming content. Amazon's unparalleled success can be
attributed to its customer-centric approach, innovative business strategies, and relentless pursuit
of technological advancements.

The company's meteoric rise has not only reshaped the retail landscape but has also left an indelible
mark on various industries, challenging traditional business models and setting new standards for
efficiency and customer experience. Amazon's commitment to long-term growth and
diversification has seen it expand beyond its e-commerce roots, venturing into cloud computing,
artificial intelligence, and entertainment.

This case study aims to delve into the intricacies of Amazon's business model, exploring the key
factors contributing to its success, the challenges it has faced along the way, and the innovative
strategies it employs to maintain its competitive edge in a rapidly evolving market. By examining
Amazon's journey from a humble online bookstore to a global powerhouse, we can gain valuable
insights into the dynamics of e-commerce, technology, and the future of retail.
 SWOT ANALYSIS OF AMAZON
The SWOT analysis of Amazon is given below:
Amazon’s Strengths – Internal Strategic Factors

1. Strong Brand Image

As a global e-commerce giant, Amazon has a strong position and successful brand image in the
market.
2. Brand Valuation
According to Interbrand’s Global Brand Ranking 2022, Amazon is ranked at #3 position (Apple
at #1 and Microsoft at #2), with a brand value of $274 Billion.
3. Customer Oriented
Amazon caters to a large number of customers for everyday needs at inexpensive prices. This has
made it a customer-oriented brand.
4. Differentiation and Innovation
Amazon frequently brings creative ideas and innovative additions to its product line and service
offerings like ambitious drone delivery service and Withings Aura Smart Sleep System. This
creates a differentiation from other companies.
5. Cost Leadership
Amazon doesn’t incur costs in maintaining physical retail stores by selling everything online. With
economies of scale, Amazon efficiently controls its costs and lowers its inventory replenishment
time. The company has formed numerous strategic alliances with many companies like Evi
Technologies, Thalmic Labs, Shoefitr, The Orange Chef etc. It has a strong value chain system
which also helps in maintaining a low-cost structure.
6. Largest Merchandise Selection
Amazon owns extensive product mix which attracts online customers to make their majority of
purchases from it rather than other online retailers. Amazon has sold 75 million products in its
Amazon.com Marketplace.
7. Large Number of Third-Party Sellers
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. The data from Fulfillment by Amazon
(FBA) reveals that there are more than 2 billion items available from third-party sellers.
8. Go Global and Act Local strategy
This strategy has benefitted Amazon the most. Amazon develops partnerships with local supply
chain companies that help it in competing against domestic e-commerce rivals. It understands the
local needs and launches its services as per the country’s culture.
In India, for example, it has launched a market campaign “Aur Dikhao” to encourage users to
search more of its products.
9. Large Number of Acquisitions
The successful acquisitions of Whole Foods, Zappos.com, woot.com, Junglee.com, IMBD.com,
and many others have produced significant revenues and profits for Amazon.
10. Key Business Segments
Amazon Marketplace, Amazon Web Services (AWS), and Amazon Prime are 3 key businesses of
Amazon which work and support each other. As a whole, they generate massive profits and
advantages for the company.
11. Market Leader
With over $1 Trillion market capitalization and above $513 billion annual revenue, Amazon is
truly a market leader in online retail industry.
12. Superior Logistics and Distribution Systems
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.
13. Minimum Pay Raise to $15 Per Hour
Amazon is among the first companies in retail to raise its minimum hourly pay to $15. In
comparison, Target pays $12 per hour, Walmart pays $11 per hour, and Costco pays $14 per hour.

Amazon’s Weaknesses – Internal Strategic Factors

1. Easily Imitable Business Model

Online retail businesses have become quite common in this digital world. So imitating Amazon’s
business model for rival firms is not so difficult. A few businesses are even giving Amazon a tough
time. These include Barnes & Noble, eBay, Netflix, Hulu, and Oyster etc.
2. Losing Margins in Few Areas
In few areas such as India, Amazon has faced losses. It’s free shipping to customers can be one of
the reasons that expose the risks of losing margins in some markets.
3. Product Flops and Failures
Its Fire Phone’s launch in the US was a big failure while its Kindle fire device didn’t even grow
well.
4. Tax Avoidance Controversy
Tax avoidance in Japan, UK and US has sparked negative publicity for Amazon. President Trump
criticized Amazon over taxes on social media.
5. Limited Brick-and-Mortar Presence
Amazon owns very limited physical stores. This sometimes hinders to attract customers buy things
which are not sellable on online stores.
6. Poor Workplace Conditions
Vox published negative reports related to employees’ treatment and workplace conditions against
Amazon. Poor air conditioning, timed bathroom breaks, and constant video surveillance are few
of the negative remarks made by the employees. Such things affect the reputation of Amazon.
7. Declining Consumer Safety
As its offerings increase, it is becoming a challenge for Amazon to vet each product and guarantee
the highest level of safety. The U.S. Environmental Protection Agency (EPA) recently had to order
Amazon to remove a wide range of pesticides and unsafe products on its platform.
8. Unfair Use of Third Party Data
Engaging in unfair trade practices undermines trust and increases legal risks. Amazon is facing
antitrust charges in the European Union for collecting and using data from third-party to compete
against them. If found in violation, Amazon can be fined up to 10% ($28 Billion) of its 2019 annual
revenue ($280 Billion).
10. Over-Dependence on Distributors
Relying on distributors exposes Amazon to a wide range of issues. One of its main distributors
(German Logistic Group – Deutsche Post DHL) can leverage its position to renegotiate terms.
11. Employees Strike
Strikes can grind Amazon’s operations to a halt. In Germany, Amazon employees went on strike
due to unsafe working conditions and paralyzed operations in six distribution centers.
12. Amazon Drivers Allege Inhumane Work Conditions
Amazon delivery drivers allege that they’re forced to urinate in bottles because of the strict
delivery time schedules and constraints. While the company has denied that they don’t force their
drivers to pee in bottles, some drivers have come forth with complaints.
While the online retail giant denies the allegations, it’s also true that the company does impose
very strict company policies – which can come with bad consequences for Amazon workers.

Amazon’s Opportunities – External Strategic Factors

1. Expansion in Emerging Markets

Amazon can gain the opportunity to penetrate or expand its operations in emerging markets.
2. Physical Stores
By expanding physical stores, Amazon can improve competitiveness against big box retailers and
engage customers with the brand.
3. Counterfeit Products
Amazon has the opportunity to improve technological measures and organizational policies to
reduce counterfeit sales. One case of counterfeit sales came into light when Amazon sold a fake
My Critter Catcher. The product was sold for $1 less than the original product.
4. Backward Integration
Can do backward Integration by expanding its production of in-house brands such as Amazon
basics to differentiate its offerings and improve profit margins.
5. Self Driving Technology
Amazon recently acquired California-based self-driving startup Zoox Inc for whooping $1 Billion.
It can now leverage autonomous technology to exploit the increase in demand for ride-hailing
services or use it to improve its delivery network.
6. Launch of Electric Rickshaws in India
Amazon pledges to make a positive impact on the environment. With this vision in mind, Amazon
plans to deploy 10,000 electric rickshaws for delivery in India by 2025.
7. Personalized Shopper Service Hits Big
Amazon recently launched its incredible personal shopper service exclusively for Prime members.
So, if you have an Amazon Prime subscription, you can opt for the personal shopper experience
giving you access to the company’s team of professional stylists and fashionistas.
They’re going to help you select the best clothing items, accessories, shoes, bags, wallets, etc., that
suit your taste. Remember, there are millions of product options available, having a personal team
of shoppers is going to be big-time help.
8. Plans to Enter the Crypto Stratosphere
There are a lot of speculations and rumors floating around the crypto ecosystem. However, there
have been reports by mainstream media outlets that Amazon does indeed plan to make a move into
cryptocurrency, stating that the company has developed a big appetite for digital currencies and
blockchain.
If the retail giant does step into crypto-space and accepts virtual currencies as a payment option,
there will be massive opportunities for small businesses in the future.
9. Launch Of Electric Delivery Vans Across The US
Amazon is revolutionizing the delivery industry with its commitment to sustainability. With the
roll-out of over 3,000 custom electric delivery vans packed with cutting-edge safety, design, and
navigation features, Amazon is well on its way to achieving its Climate Pledge goal of bringing
100,000 electric vehicles on the road by 2030 with Rivian.
These eco-friendly vans are already making deliveries in over 500 cities and regions across the
country, including major metropolises like Boston, Austin, and Chicago, having delivered more
than 75M packages to customers in the US.
Amazon is not only dedicated to customer satisfaction but also to protect the planet we all call
home.
10. Amazon Luna – Game Anywhere On Devices You Own
Amazon Luna is a cloud-based gaming service that allows you to play games on your devices
without needing gaming consoles or PCs. Games can be streamed directly to your screen as long
as you can access high-speed internet.
Launched first in the US in 2022, the service is now available in Germany, the United Kingdom,
and Canada. A broad range of casual games, AAA titles, and retro classics are available here.
However, you’ll need a “Luna Controller” for a better gaming experience and a monthly fee to
access the Ubisoft +, Luna+, and Jackbox Games subscription packages with a many new games.
11. Launch Of Amazon Clinic – A Virtual Healthcare Service
Amazon has launched the Amazon Clinic – a message-based virtual care service that offers
affordable and accessible virtual care options for more than 20 common health conditions,
including allergies, acne, and hair loss.
Currently, the service is available in 32 states, allowing customers to select their preferred
telehealth provider and receive treatment within hours with upfront pricing.
The service helps customers achieve better health at their convenience, whether at home, during
dinner, at the grocery store, or on the go.
12. Amazon’s Biggest Acquisitions
More acquisitions of companies can increase the company’s market share and reduce the
competition level. Some of the biggest acquisitions by Amazon are Whole Foods, MGM, Zappos,
Twitch, Ring, etc..

Amazon’s Threats – External Strategic Factors

1. Few controversies
have caused a dent in Amazon’s brand image. People critically reacted and boycotted Amazon
sites in 2010 when they found that it’s selling the book “The Pedophile’s Guide to Love &
Pleasure: a Child-lover’s Code of Conduct.”
2. Government regulations
Regulations can also threaten the business proceedings of Amazon in some critical countries.
Amazon does not ship to Cuba, Iran, North Korea, Sudan, and Syria.
3. Links to 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.
4. Cybercrime
Increasing cybercrime can affect the network security system of the company.
5. Aggressive competition
Competition with big retail firms like Walmart, Target, Home Depot, 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: FexEx, UPS
In Self Driving Technology: Tesla, Uber, Ford
6. New Entrants
Imitation is simple as many new entrants are coming up in the market usually with the same
business model of Amazon.
7. Fake Products
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.
8. Economic Recession
Amazon is not immune to an economic recession. If economic uncertainty worsens, it can impact
Amazon’s sales.
9. Fake reviews
Amazon 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.
According to the Financial Times investigation, Amazon has deleted over 20,000 fake 5-star
reviews from its top UK reviewers.
10. Lawmakers Seek Answers after Tornado Kills Amazon Workers
Democratic lawmakers are on a quest to seek answers from Amazon after a recent tornado hit an
Amazon warehouse in Illinois, killing 6 workers. In a letter posted, the company has been heavily
criticized regarding poor worker safety policies and complete disregard for putting emergency
countermeasures in place.
11. Federal Trade Commission (FTC) complaint
The Federal Trade Commission (FTC) is set to take legal against Amazon for allegedly violating
children’s privacy with its Alexa voice assistant. This is part of the agency’s ongoing investigation
into potential Children’s Online Privacy Protection Act violations, which could result in significant
financial penalties.
The e-Commerce giant is also being investigated for data security and privacy concerns in its Ring
camera and home security business.
Although COPPA imposes financial penalties of slightly over $50,000 for each violation, the sum
can add up quickly as each affected person is considered a separate violation.
Recommendations

SWOT analysis clarifies the current standing of Amazon. Few necessary improvements are needed
to be done to administer the lacking and reinforce its market position.
In short, Amazon needs to strengthen its key areas, minimize its weaknesses, avail opportunities,
and counteract threats for future progress.

Few recommendations are given below:

1. Consolidate the market dominance by boosting its marketing efforts, promotional activities, and
competitive advantages.
2. Strategically deal with global controversies. Amazon needs to resolve tax issues and manage its
app’s features efficiently to diminish negative publicity in the market.
3. Increase its limited presence through opening physical stores outside the U.S. This will augment
brand popularity and market reach.
4. Enhance its strategic entry in developing countries where many growth opportunities are
available.
5. Increase competitive edges and enlarge the gap between Amazon and its biggest competitors.
6. Address the issues of counterfeit sales and cybercrimes by upgrading technology measures.
7. Enhance network security systems for the protection of consumers’ rights.
 CONCLUSION

Amazon has seized the opportunity to successfully transform itself from an e-commerce company
into a global leading technology company! When Amazon realized the limitations of the retail
industry, it expanded its business boundaries promptly. In addition to cloud computing and smart
voice, Amazon has also contacted third-party platforms such as logistics and suppliers, and even
invested in the film and television industry, making its business model more diversify. In 2008,
Amazon realized that content can attract and extend users’ time on the platform, and began to
provide original content on Prime Instant Video, Amazon’s mainstream media video platform, and
as part of the Prime membership service. Amazon’s ecology can be described as a rotating flywheel.
This flywheel is centered on Prime’s membership system, and new interests have been added to it,
gradually creating an all-encompassing ecology. While continuing to attract new users, it has
promoted the development of Amazon’s e-commerce and other new businesses, and it will
continue to do so.