Amazon SWOT Analysis 2024 : Best Report With Infographics

Amazon is the world’s 5th largest company, with a market cap of $1.000 trillion. It is the largest e-commerce company in the world, with over 75 million products listed for sale on its website. Let’s take a closer look at the company’s internals through the Amazon SWOT analysis and find out how it evolved from an online bookstore into a corporate giant.

Amazon: Company Overview

On July 5, 1994, Jeff Bezos founded Amazon as an online book retailing service. By 1999, the company had begun to sell music, videos, games, consumer electronics, software, and more. In 2002, it introduced Amazon Web Services, which was its first step in cloud computing. In 2006, Amazon launched its Fulfillment by Amazon program to enable 3rd party sellers to retail on its virtual platform.

In 2023, Amazon evolved into a U.S. multinational tech giant specializing in e-commerce, cloud computing, online advertising, streaming media, and A.I. It’s headquartered in Seattle, Washington, and Arlington, Virginia. In 2022, the company generated a TTM revenue of $502.19 billion and reported earnings of $12.11 billion.

Product & Services of Amazon
E-commerce Marketplace | Electronic Devices | Amazon Web Services | IMDb | Whole Foods Market | Junglee | Ring

Amazon Competitors
Walmart | eBay | Apple | Target | Home Depot | Alibaba | Netflix | Costco | Walgreens

Did You Know?

Of the 75 million products listed for sale on Amazon’s platform, 50 million are books. The company that started as an online bookshop has still held on to its original mission.

Strengths – Amazon Competitive Advantage

Brand Recognition and Reputation: Amazon is considered the market leader when it comes to the dimensions of performance of economics, management, sustainability, and quality of products and services. The company ranked 1st in the Axios Harris Poll in the years 2016, 2017, and 2018 and 8th in 2022, with reputation scores over 80. Fortune ranked Amazon as the 2nd world’s most admired company, due to its efforts in innovation, investments, supporting communities, and saving the planet.

Wide Range of Products and Services: Amazon’s range of products and services span thousands, offering nearly everything under the sun. Amazon.com offers electronics, baby care, beauty, fashion, healthcare, appliances, toys, games, industrial and scientific equipment, and more. Amazon Prime offers media, music, comics, games, and more as subscription services. Amazon also has an audiobook platform called Audible and now sells medicine through Amazon Pharmacy.

Superior Logistics Chain: Amazon Logistics has become the national backbone for many countries’ logistics services. Amazon attaches a unique barcode to every package and uses GPS to track the package through its delivery systems to the customer. It also employs DSPs to deliver packages faster, all year round. Amazon Logistics also started Amazon Prime Air, Amazon Flex, FBA Tracking, and Last Mile delivery, all of which are revolutionary shipping tactics.

Strong Technological Platform: From the beginning, Amazon has been a digital platform. The company’s primary existence is virtual, which helps it track its data and employee activity much more aggressively and accurately for generating forecasts. Its strong grasp of technology was the reason why it made $87.44 billion in 2019 Q4. Amazon is working on the frontlines of innovation in space travel, logistics, customer service, robotics, software, and more.

Financial Capacity: Amazon generates billion-dollar revenues per quarter. Amazon’s annual net sales in the USA were $54.72 billion in 2014, $120.49 billion in 2017, and 314 billion in 2021. It can acquire competitors and take over new markets through expenditure alone. It is nearly impossible to overtake the company, as it can afford to spend more than its competition and gatekeep resources and logistics.

Weaknesses – Amazon Competitive Advantage

High Employee Turnover Rate: Amazon has always viewed its workforce as essential, but replaceable and fears older employees can become less efficient. Because of its mentality, it lost 3% of its hourly associates per week, equating to a 150% employee turnover rate in 2021. Most workers also don’t consider Amazon to be more than a temporary job and have no reason to stay. Since 2022, Amazon has been at risk of going through the entire U.S. labor force and failing to find a workforce.

Bad Employer Image: Amazon is infamous to every worker for its aggressive performance checking, harsh work environment, and mistreatments. In 2016, an employee was forced to work even after she was about to suffer heatstroke. In 2021, Amazon workers were forced to relieve themselves in bags and bottles just to keep up with the workload.

Dependent on 3rd Party Sellers: Amazon’s marketplace is heavily reliant on 3rd party sellers. It mostly offers a virtual platform for its partners or sellers to retail its products, and use its logistics and supply chain for delivering products. If these sellers become independent or find a better deal from competitors, then Amazon’s business will collapse.

Copyright Infringement and Counterfeit: Counterfeit products sold across all online marketplaces have reached a market value of over $1.8 trillion in 2020. From May 2016 to August 30, 59,749 counterfeit products were found on Amazon. 75% of L’Oreal, Olay, and e.l.f. products were reported to be fake at least once. Selling fake products on Amazon is an effective way to make money for scammers, which ruins the company’s brand image.

Opportunities – Amazon Competitive Advantage

Increasing Demand: After the advent of Covid-19, approximately 76% of U.S. adults have shown a preference for online shopping. 9.1 million retailers have taken their business online globally, and the number of sales was $4,248 billion in 2021. Amazon is the perfect platform to market to these vendors and shoppers to increase revenue.

Exploring Content Ads: Amazon Prime Video will only show ads when the user is perusing non-Amazon content, such as a movie from Freevee. However, the company can consider showing ads for original Prime content in exchange for offering a cheaper subscription fee option or accessing 4K resolution footage. This should increase Amazon Prime Video’s user count and profit by a significant margin.

Expanding into Smaller Countries: While Amazon delivers worldwide, it chooses to stay away from sellers in developing countries with small economies. However, if it offers its platform in such markets, it can effectively control the rising trends in these countries’ economies. This will boost these countries’ economies and also establish Amazon as a monopoly.

Threats – Amazon Competitive Advantage

Increasing Labor Disputes: Amazon’s mistreatment and forced labor have caused the company to clash with its workforce in the past. It faced union strikes in Germany, its 2nd biggest market. In 2022, Amazon was accused of violating the U.S. National Settlement agreement. Even as Amazon markets itself as a good employer brand, the increasing number of labor disputes is beginning to hamper its operations and recruitment.

Powerful Competitors: Alibaba, Walmart, Flipkart, Wish, eBay, and other e-commerce sites have been contending heavily for Amazon’s market share for years. In March 2022, Alibaba generated $134.6 billion in revenue. Walmart made $524 billion in revenue in 2020, $138 billion more than Amazon that year. Combined, these competitors can easily overtake and undermine Amazon’s primary business.

Brand Forgery: Amazon has been losing a war against certain product forgers. Batteries, smart devices, mattresses, collectibles, makeup, jewelry, designer clothing, and more categories have more forgeries listed on Amazon than genuine products. Despite searching for and destroying counterfeit products by millions, Amazon is at risk of losing consumer trust completely.

[Bonus Infographic] SWOT Analysis of Amazon

Recommendations for Amazon

Amazon is a monolith when it comes to e-commerce and online services, yet one that can be toppled. Its biggest competitors are gaining ground at a rapid pace, while new local competitors are taking over specialized markets. The company should carefully consider these options to continue its growth.

• Amazon should reevaluate its workspace culture and company philosophy. Instead of dispensable workforces, it should aim to nurture a highly skilled, loyal, and high-performance workforce.
• Amazon should invest in talent management strategies. It should offer training programs for its employees to develop new skill sets, use typical performance assessment methods, and offer benefits that entice experienced workers to spend their career cycles in the company.
• The company should consider less aggressive tracking methods and include context in assessments. Firing workers based on real-time activity without reading the situation will only make employees more hostile.
• Amazon can invest in passive marketing tactics such as product placements inside of its original shows. This helps the company secure advert revenue without inconveniencing the consumers greatly.
• Amazon can set up verification by the customer rating system, where customers can rate if a product is genuine or not. This will be separate from a comment section and more visible. Amazon can take down products and services that are reported as forged or disingenuous in high numbers.

Frequently Asked Questions (FAQs)

Final Words on Amazon SWOT Analysis

Amazon has managed to dominate the e-commerce space due to its home advantage and business tactics. However, its approach to utilizing its workforce has been protested and criticized for years, and it’s finally taking its toll. Amazon has to employ better talent management and employee satisfaction tactics, or it won’t stay afloat for long.

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