Amazon SWOT Analysis: A Case Study To Find Your Competitive Edge
Remember that time when you wanted to launch a new product and were clueless where to begin? A SWOT analysis should have been the first step on that long road to the attainment of your aim. (And an Amazon SWOT analysis would have been the perfect guide – more on that later.)
But what is a SWOT analysis? What is it used for? Why do you need it?
The good news is that we will answer all these questions for you and carry out a SWOT analysis on one of the biggest companies in the world: Amazon.
The areas we will cover in detail are:
- The Right First Step Towards Success
- What Exactly is a SWOT Analysis?
- Why Are You Carrying Out a SWOT Analysis?
- Amazon Overview
- Conducting a SWOT Analysis – Explained with an Amazon SWOT Analysis
- Identify Your STRENGTHS
- Amazon SWOT Analysis – Strengths
- Discover Your WEAKNESSES
- Amazon SWOT Analysis – Weaknesses
- Uncover OPPORTUNITIES
- Amazon SWOT Analysis – Opportunities
- Recognize THREATS
- SWOT analysis on Amazon – Threats
- What To Do Next – Analysis
- Devise a Game Plan
- Implement the New Strategies
- Potential Strategies for Amazon
- SWOT Analysis for Your E-Commerce Biz
- Top Questions to Ask
- What is Amazon's business model?
- What are some Amazon marketing strategies?
- Who is Amazon’s biggest competitor?
- What are AMS, Amazon Marketing Services?
- What are some Amazon core competencies?
- What is Amazon’s net worth in 2020?
We’ve also got a surprise bonus for you further in the blog post (something to help you carry out your own SWOT analysis)!
But before all that, let’s get a little bit of context.
The Right First Step Towards Success
A business does not operate in a vacuum.
We all know that, right?
There are many internal and external factors that affect the ability of a business to reach its goals and be successful.
Aaah, the trigger word. Success.
Whether you are a small, medium-sized or large business, you want to see it succeed. Success may mean any number of different things to you. But at the end of the day, you want to achieve all your goals and witness your business moving forward.
But what is the catch?
Well, before you can work on improving your business, you need to determine where you stand.
The process of analyzing your business is daunting to most business owners, partly because of the fear of what they will find. But it doesn’t have to be.
A SWOT analysis can be easy to carry out and highly beneficial to your business in the long term.
But how do you do it?
That’s where we come into the picture.
In this blog post, we are going to teach you all about how to conduct a successful SWOT analysis. But that’s not all – we will help you understand better by conducting a SWOT analysis of Amazon!
Let’s dive right in!
What Exactly is a SWOT Analysis?
In simple words, it is a tool that lets you do what we mentioned above – determine and study the internal and external factors that have a role to play in your success.
To be more specific, it helps you identify
- Your Strengths as a business (internal).
- Weaknesses you may have (internal).
- Opportunities you can use to your advantage (external).
- Threats that you may face (external).
Once you have all this information in front of you, you can focus on what’s important. You can reinforce the good, tackle the bad, make the best use of opportunities you had been unaware of until now, and be prepared to tackle any issues that come your way.
You will understand perfectly once we walk you through the steps with the SWOT analysis for Amazon as a guide.
But before that:
Why Are You Carrying Out a SWOT Analysis?
Before you begin the analysis, you need to be clear about your motivation to do so.
What is it that you are trying to achieve? Are you launching a new product or revamping your website? Do you want to slightly modify your business game plan or implement an entirely new marketing strategy?
Do you want to carry it out on the entire company, a single product or service or even an individual?
Are you willing to take the steps necessary to rectify a potentially messy situation that you may discover?
Once you have determined your motivation to carry out the analysis, you can get started.
E-commerce giant, Amazon, is a leader in the industry. With over 350 million items for sale on the platform and 300 active customers, Amazon is the first place people go to find the best deals and check prices.
According to Repricer Express, Amazon conducts sales of $17 million an hour. Yes, you read that right. $17 million in one hour!
In addition to that, eMarketer estimated Amazon’s e-commerce sales to be nearly half of all the retail spending in the US in 2018. So they must be doing something right!
Like all other businesses though, they also have weaknesses, as well as potential opportunities and threats they need to address.
Amazon is a company that has been an inspiration for many others while also having witnessed its own fair share of bumps in the road along the way. The Amazon case study, thus, is the perfect one for your understanding.
Conducting a SWOT Analysis – Explained with an Amazon SWOT Analysis
Now we come to the fun part. We will teach you just what you need to do to conduct the analysis, illustrated by discussing the swot analysis example of Amazon every step of the way.
Identify Your STRENGTHS
If you will recall, the first element of the internal analysis that affects where you stand in the market is the strengths you possess.
This could be any number of things, including things that you do well, processes that have a high ROI, and the characteristics that make you better than your competitors. Some other examples of your strengths include:
- A highly qualified and dedicated team
- Efficient processes
- A smooth workflow
- Tangible assets such as solid capital, state-of-the-art equipment, and more
- Integrated IT functions
- Being ahead of competitors in most, if not all, aspects
Identifying your strength allows you to know what areas you are doing well in. This, in turn, allows you to focus on them more without changing too much and reap the maximum possible benefit that you can.
Amazon SWOT Analysis – Strengths
The strengths of Amazon can be summed up in their own words; the company is guided by “customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking.”
They are also in line with the Amazon mission statement which puts their customers above everything and everyone else.
Here are some other strengths of Amazon that set it apart:
Brand Image and Recognition
Everyone knows about Amazon. Most people have also shopped there. It is a household name, one that is often spoken of as an example of a great deal someone got to enjoy on their favorite product. In other words, it has a positive brand image and high recognition.
Amazon is an e-commerce site and does not have a major physical presence and the costs associated with it. Through this, as well as many strategic partnerships and well-implemented strategies, Amazon maintains its image in the market as a low-cost vendor.
Innovation and Uniqueness
Every day, you see new kinds of products and services being added to the Amazon platform (many times through third-party sellers). You also see new trends with a focus on user-friendly functionality and a great shopping experience that sets it apart from competitors – this is a great example of Amazon’s strategic differentiation.
Scalability and IT
As we just mentioned, Amazon expands its inventory regularly and its customer base isn’t shrinking either. It keeps up by using state-of-the-art technology to refine its processes and tools, ensuring the user experience isn’t compromised. This allows the e-commerce giant to stay ahead of the game.
Customers’ First Choice
Amazon’s customers are its priority – that is evident from Amazon’s mission statement, which states the company’s goal to be the most customer-centric business in the world. Keeping in line with this mission, the company offers low costs, great deals, and a phenomenal shopping experience to keep them satisfied. This makes it the go-to for millions of people.
Whether it is a strategic alliance with Evi Technologies or the acquisition of Whole Foods among other things, the partnerships Amazon forms result in a massive increase in profits for the company.
Consumers want a smooth shopping experience and quick delivery – a process that does not create any unnecessary hassle for them. And Amazon delivers immaculately. With the use of top-notch logistics and distribution methods at play, it dominates the market when it comes to customer satisfaction.
Amazon taps into new markets whenever it sees the opportunity to do something big. Its unmatched brand recognition at an international level paired with its dedication to providing top-notch services makes it a success anywhere it goes.
These strengths, among many others, help Amazon stay ahead in the race to be the best.
Discover Your WEAKNESSES
Your weaknesses are areas that may be holding you back from reaching your full potential as a business.
It’s true that they may just consist of hurdles that are very easy for you to overcome. But how can you take corrective measures if you don’t even know what is wrong?
On the other hand, there could be problem areas that need your immediate attention. And you are unable to give that attention because you aren’t even aware of the problem.
This is why it is important to list down all your weaknesses. This list can then form the basis for your future course of action.
Here are some examples of weaknesses for your clarity:
- Processes that offer a low ROI
- The inability to overcome competitors in certain activities
- Limited amounts of resources
- An incompetent team
- No USP that sets you apart
Let’s take a look at where, according to the swot analysis on amazon, Amazon stands when it comes to weaknesses.
Amazon SWOT Analysis – Weaknesses
Lack of Substantial Physical Presence
This point proves that a single factor can act as both an advantage and a hurdle. While the online-for-the-most-part approach helps the company save a large amount in costs, it prevents Amazon from tapping into markets where e-commerce is still an emerging trend.
Amazon usually offers free shipping to its customers (on eligible items) when a consumer places an order over $25. This has a role to play in its popularity because no one likes to pay shipping. However, it is a costly approach and can affect the company’s margins by a great deal. While it seems to be working for now, the strategy may require some consideration in the future.
Low Profitability Margins
Although Amazon generates a huge revenue, its profitability margins are thin.
While this is great in the sense that the company gets to offer great value and incredible experience to its customers, it doesn’t make much of a profit. And while it may have found great ways to offset the losses, the company could potentially run into trouble in the future.
Retail businesses are popping up online every other day. However small to begin with, they are Amazon’s competitors.
What’s more, is that many of them have imitated Amazon’s business model, which takes away one of its major competitive advantages. According to the Amazon vision statement, the company wishes to remain on top of the list of most customer-centric companies in the world.
This could become more and more difficult as other companies start imitating Amazon and catching up.
While Amazon excels at its core business operation, it has faced trouble in other areas. One example of this is the Fire Phone disaster. The phone, developed by Amazon, did not do well and resulted in massive losses for the company.
Loss of Competitive Advantage
Amazon started out as an online bookstore. Since then, it has turned into a full-fledged online retail marketplace that aims to sell everything. That has worked out in its favor but the company still lost its focus and competitive edge in that particular industry.
Now we come to the external factors that affect the running of any business. The first of these is the opportunities that your business can grab.
An opportunity is anything that you can make use of in a timely and effective manner to gain an advantage.
Just like a particular component can be a strength and a weakness at the same time, an opportunity can also act as a threat to another element of the business. All these things are connected as opposed to being standalone factors.
Some opportunities that are common to many businesses include:
- New and innovative technology solutions
- Expansion into a new market
- A partnership, acquisition or another kind of deal
- A small number of competitors in a particular market
- Publicity through the media
- A sudden need for your products or services
Opportunities can take any shape and form. The trick is to identify them as soon as they become available and grab them before anyone else does. And that is where the SWOT analysis comes into the picture.
Amazon SWOT Analysis – Opportunities
To effectively identify all of Amazon’s opportunities, the SWOT analysis on amazon is definitely the way to go.
Let’s discuss some of them, one by one.
This was previously discussed as one of Amazon’s strengths. It, thus, makes perfect sense for it to be an opportunity. Why? Because there are MANY more markets that Amazon can yet penetrate and make the most of. With an increase in the trend of online retailing in developing countries among others, the possibilities are limitless.
Creation of Own Product Line
One of the main functions of Amazon is to serve as an online vendor for third parties to sell their products. Something that would be more beneficial to the company is if it started creating and selling its own products more. This must be done in a smart, strategic way, however, to prevent it from becoming another Fire Phone fiasco.
Expansion of Offerings
Having said what we covered in the point above, there is always room for expanding the platform and adding all kinds of products from more third-party sellers to its already massive list of offerings. The focus, here, can be on products that are currently not found in abundance on the website.
Strategic alliances or acquisitions among other steps that strengthen the brand and allow it to expand its horizons are clearly a good option. Such partnerships have benefited Amazon in the past; there is no reason why they won’t prove to be instrumental to the growth of the company in the future.
Threats are the second of the major external factors that can have a role to play in how far a business gets. A threat is anything that endangers the brand from the outside and can cause problems for it in the short and long term.
Identifying threats early on is essential if you don’t want to be left behind while your competitors achieve all their goals.
Once you are aware of the possible issues that your company can encounter, you can devise a game plan to tackle the concerns.
Before we go into the potential threats Amazon faces, let’s take a look at some examples of what a threat to a business can look like:
- A massive increase in competitors
- Customer turnover
- Political unrest in a local or global location
- A great increase in the costs of doing business
- A change in customer preferences
- Negative publicity
SWOT analysis on Amazon – Threats
Cybercrime and data theft are modern-day criminal activities that put internet users at risk, especially those individuals who shop online. There is an increased awareness among the public about the perils of sharing personal and bank account details over the web today. This has forced people to avoid shopping online when they can to some extent.
One of the major issues that threatens Amazon at all times is that more and more online retail stores are springing up every day. While Amazon dominates the e-commerce industry by a great margin, some, if not many, of the newbies will always possess the potential to grow at an exponential rate and leave the undisputed giant (for now) behind.
Because of conflicts between the US and many countries, Amazon cannot look at them as potential future markets. This gives a competitor from another region a great advantage as they can tap into markets Amazon does not have access to.
A major strength of Amazon, as you will recall, is cost leadership – the company strives to provide its consumers with the best products at the lowest prices. This, understandably, infuriates its competitors and Amazon often finds itself in the middle of legal battles.
What To Do Next – Analysis
Once you have completed the four stages we just mentioned – identifying the strengths, weaknesses, opportunities, and threats – it is now time to analyze them and devise a game plan.
All the information you need to tackle any issues and determine what areas to focus on is in front of you at this point.
Here are the steps you can take next:
With everything in front of you at one time, you will be able to do what was impossible before.
Take a guess.
That’s right, you will be able to determine which issues need your immediate attention and which ones you can come to later.
It is crucial that you make the right calls with regard to the priority the different tasks have.
Your current customers are bouncing back off the site without making a purchase.
Instead of finding out why this is happening and working towards fixing the issue, you instead focus on another weakness – decreasing traffic to the site.
You work to get the traffic back up and succeed.
But guess what?
The new visitors you are able to bring to the site are likely going to leave the site without making a purchase too. Because of the same issue you chose to ignore.
This is counterproductive. The strategy could have been much more effective if you had focused on getting visitors to make a purchase before they left the site and THEN worked on getting more new visitors.
Prioritizing your tasks can be the difference between success and failure – choose wisely.
Devise a Game Plan
It is now time for you to devise a game plan for all the issues identified, Start with the ones that cannot be delayed – we just explained to you why.
Gather experts from all the relevant niches, put your heads together, and figure out what needs to change. Also determine how it will be changed and who will lead the effort among many other things.
Try to focus on how you can use your strengths and minimize your weaknesses to tackle the threats and make full use of the opportunities in front of you.
Implement the New Strategies
Kick off the plan by putting the strategies to fix the most crucial issues into place first.
Follow with the rest until all the issues are on the way to being dealt with.
Make sure that you follow up regularly and analyze the results of the changes.
Have things taken a turn for the better? Great, the strategy seems to be working.
Have the numbers barely moved? Seems like you need to revisit the changes and work out where you’re going wrong.
Potential Strategies for Amazon
We have walked you through the brand’s strengths, weaknesses, opportunities, and threats. It would be unfair to leave you without closure – an Amazon strategic plan.
Here are some of the potential strategies the company can put into play, derived from the SWOT analysis on amazon.
- Amazon can consider expanding its services and moving from a vastly online model to having a more substantial physical presence. This will allow it to tap into otherwise inaccessible markets and increase its revenue.
- One thing Amazon needs to do is to always work on enhancing security so that customers feel safe sharing their data to make a purchase.
- Another thing that can help is to enter into more partnerships that are beneficial for the company.
There are, of course, hundreds of areas in which a huge business like Amazon can make changes – this is just scratching the surface to give you an idea of the kind of solution companies can go for against their strengths, weaknesses, opportunities, and threats.
You must have a lot of clarity by this point – you’ve gone over what a SWOT analysis involves, as well as a SWOT case study of the largest e-commerce store in the world.
Now let’s talk about YOU.
What does the amazon industry analysis do for YOUR e-commerce store?
Why is it your partner in growth?
What are the most important considerations for your store trying to stay afloat among millions of others?
Read on and find out!
SWOT Analysis for Your E-Commerce Biz
Whether you are a retailer who wants to expand into the online sphere or an Amazon marketing agency that helps businesses sell effectively on Amazon, you need to be well-versed in carrying out a SWOT analysis of an e-commerce firm.
As an online seller in an ever-changing environment (or an Amazon marketing company representing such a business), you can’t afford to be left behind.
You need to conduct a SWOT amazon industry analysis on a regular basis to:
- Recognize and build on your strengths instead of remaining stagnant, thinking you’re doing enough. You can NEVER be doing enough in the hyper-competitive world of e-commerce.
- Discover your weaknesses and work on eradicating them before your competitors get ahead and you’re left dealing with a mess. And when we say competition, we mean it – there are anywhere between 12 million to 24 million e-commerce platforms in the world as we speak.
- Identify and grab onto opportunities for dear life. Even if you don’t, your competitors probably will. And you don’t want to be the biz that’s left behind.
- Steer clear of threats and tackle them sooner rather than later – a timely response is crucial to minimize losses here.
As promised at the start of this blog post, here are some considerations that can set your brain into motion.
Top Questions to Ask
The following things can be strengths or weaknesses depending on whether the answer to the question is yes or no.
Ask yourself these questions among many others while conducting the SWOT analysis.
- Is your range of products wider than that of your competitors?
- Are your prices lower than your competitors or are your customers likely to go elsewhere for better deals?
- Do you ship on time? Do your packages ever arrive incomplete or damaged?
- Are customers comfortable paying through a credit card on your site? If not, do you provide them with any alternative solutions?
- Does your site give users the kind of experience you would want to have on an e-commerce site?
- How prompt is your customer care team when it comes to resolving complaints and issues the consumers may be facing?
- Your customers can’t physically see the products – do you give them enough details and pictures from various angles to give them a better idea of what they are considering buying?
- Are you using the right kind of technology that can help you during all steps of the online selling cycle?
- Are any major changes happening in the industry that have the potential of affecting you negatively? Do you have a plan to deal with these changes if the need arises?
- Could a physical presence that supplements your online store help you in a substantial way? Conversely, do you have a physical store that is draining your funds and not giving much back in return?
- Are there any areas where you can cut costs without compromising on the quality of your services?
These questions, and many others, can form the basis for recognizing your strengths and weaknesses. They will also help uncover the opportunities you have and potential threats that can affect your business.
Come up with a lot more questions that are relevant to your business and add them to this list. The answers will give you a clear direction about prioritization, strategy creation, and implementation.
The ability to conduct a SWOT analysis with perfection is a skill every marketer and business owner should have. It should come to you as easy as counting one, two, three.
The reason is simple:
It lets you identify what you’re doing right, where you’re going wrong, what opportunities you have the chance of grabbing, and what obstacles can come in your way.
We hope the Amazon SWOT analysis gave you more clarity regarding the whole process. If you have any questions or would like us to analyze another company or discuss another analysis method, let us know in the comments below!
What is Amazon's business model?
Amazon’s business model has many different elements – after all, the e-commerce giant is the largest such company operating in the niche today. Here are a few of these elements:
• Amazon applies of model of direct sales whereby it sells some products directly to the consumers.
• The e-commerce giant acts as a platform for other retailers to sell their products – in other words, it acts as the bridge between businesses and consumers. The retailers are not charged anything to place their items for sale on the site but Amazon does receive a share from the sale price.
• Amazon has a line of electronic products up for sale, including the e-reader, Kindle.
• The company has a subscription-based model, Amazon Prime, that allows users to pay a fee to obtain a premium package. This privilege allows them to get quicker shipping options, as well as access to streaming media.
• AWS, or Amazon Web Services, is the cloud platform through which the company provides services such as storage, analytics, AI, machine learning, and so on.
What are some Amazon marketing strategies?
If you are a retailer on Amazon, it is likely that you struggle to market your brand and products on the platform sometimes.
Building your brand and making your offerings stand out on the platform isn’t easy – you are one in a sea of similar businesses.
But here are some strategies you can employ to come out on top and win at Amazon retail:
• Optimize your listings in such a way that you beat the Amazon algorithm and make sure that your product is the one that appears at the top when someone searches for a relevant keyword.
• Run highly targeted advertising campaigns using Amazon’s PPC service. Better yet, get one of the Amazon marketing experts at Canz Marketing to help!
• Use affiliate marketing to bring traffic to your site.
• Get people interested in your products through social media.
• Work on reputation building and management – encourage customers to leave positive reviews for the product as this boosts its popularity on the platform.
To see the best results, apply as many of these strategies as you possibly can.
Who is Amazon’s biggest competitor?
Amazon has a number of main e-commerce competitors, the most noteworthy of which include Alibaba or Aliexpress, JD, Walmart, and eBay.
This list can go on to include up-and-coming online stores, and even those who have just entered the market but are quickly learning the ropes and rushing past well-established names in the business.
What are AMS, Amazon Marketing Services?
AMS is a platform that allows you to make sure your product stands out among the thousands of products (maybe more) that are similar to yours.
How does it do this? It is a pay-per-click platform that allows you to run ads to bring your products to the top.
You have the option of running the following types of ads:
• Headline search ads
• Sponsored product ads
• Product display ads
The result? A boost in sales and revenue!
Do you want to look into AMS further but are unsure where to start?
We have you covered. Canz Marketing offers top-notch Amazon Marketing Services! Click here to read more about it.
What are some Amazon core competencies?
There is a reason why Amazon is at the top of the chain in the e-commerce world – it does what it does well!
The following are some of Amazon’s core competencies:
• Convenience: People shopping from Amazon can get what they want in a few clicks – sometimes even on the same day.
• Customer Experience: An easy-to-use website, smooth processes, great customer care – Amazon makes sure every customer has a great experience. Which is why they come back for more.
• Brand equity: The company has managed to build a brand image and reputation that attracts consumers on a consistent basis.
• Variety: Amazon has a large variety of products from thousands of sellers on one platform. But that’s not all – it also has different kinds of services its consumers can enjoy.
• Low prices: Amazon offers products that are less expensive than on other platforms.
• Technological advancement: Amazon invests in and stands out with ever-improving services in the technology sector, including machine learning, artificial intelligence, Amazon Go, and more.
What is Amazon’s net worth in 2020?
Amazon is worth more than a whopping $1 trillion.
For a complete Amazon financial analysis, click here.