In 1994, Jeff Bezos incorporated Amazon.com. Bezos concluded that books would be more relevant products to sell online. Amazon.com Inc was initiated in 1994 in Washington, and he became active in July 1995 as the largest online retailer in the World. Amazon was the world`s biggest online retailer and 2nd best e-commerce after Alphabet Inc., and it has a brand value worth USD 70.9 billion. Amazon Company enjoys a high level of buyer loyalty, and greater than 50% of its customers are recurrent (Smith, Rupp, & Offodile, 2017). Amazon has employed approximately 560,000 employees as at 2018 over the world, and it has attracted 2 million sellers on the platform. In 2017, the e-commerce giant received USD 37 billion in fourth quarters (Q4), which is 42%, increase from the previous year (Zhu & Liu, 2018).
Amazon`s popularity is extensively known around the globe. The company comprises of more than 310 million active users and approximately 100 million subscribers in the world. The total revenue of Amazon is 177.866 billion in 2017, which implies there was a 30.8% increase over 135.987 billion in 2016 (Zhu & Liu, 2018). From the financial report of 2017, Amazon declares a profit of 3.033 billion, which is a 30.9% increase of over 2.317 billion that was realized in 2016. Amazon manufactures and sells electronic products such as Kindle e-readers, Fire TVs, and Fire tablets, online digital content, cloud-based services retail, and e-commerce services (Rothaermel & McKay, 2015). Currently, Amazon is the biggest online marketplace serving most countries worldwide. Amazon operates mainly in China, Japan, the United Kingdom, Ireland, Germany, Canada Italy, Spain, Australia, and new countries are always added as Amazon`s market expands.
The SWOT analysis model entails an internal analysis that determines the strengths and weaknesses and an external analysis which identifies the threats and opportunities appropriate to the e-commerce business. Amazon.com Inc. `s e-commerce prosperity depends heavily on the effective utilization of business strengths as outlined by SWOT analysis (Rothaermel & McKay, 2015). The framework of SWOT analysis enumerates the internal strategic factors that Amazon applies to uphold and improves its tasks in the technology products online retail and online services markets. Amazon Company has the following strengths, which have enabled its continuous growth and success in the marketplace, strong brand, high potential for rapid technological innovation, and moderate and expanding business diversifications (Rothaermel & McKay, 2015). Amazon.com Inc. has set up a strong product brand in the online market, which is partly accountable for the rapid growth of the business around the globe. More excellent capability for Amazon to rapidly grow technologically as a result of innovation strengthens the business's ability to respond to emerging trends. Also, the diversification of company operations is complimentary and mark Amazon.com Inc., a fierce competitor in the online market.
Amazon`s main weaknesses present challenges faced that hinders its business expansion and growth. SWOT analysis aspects summaries the internal strategic dynamics that impose problems in improving business online (Smith et al., 2017). Amazon.com Inc. experiences the following weakness that hinders its growth, high product prices, and limited penetration into emerging markets, imitable business model, and limited brick-and-mortar presence. Some of the products are expensive; hence, it will hinder its growth in new markets. Limited penetration of Amazon to emerging markets is a weakness that inhibits the business from benefiting from the high economic growth rates of the online market (Zhu & Liu, 2018). Amazon.com Inc.'s model can be easily imitated. For instance, some companies can create e-commerce websites that sell most products. A SWOT analysis aspect presents internal factor weakness that develops opportunities for other companies to impose higher competition against the e-commerce giant. The absence of brick-and-mortar in Amazon is a barrier to the expansion of the business into the non-online market.
The business environment is conducive since there are inputs that make the business to operate successfully. Amazon.com Inc.'s business environment is determined through the environmental analysis by either using PESTEL or SWOT analysis model (Ritala, Golnam, & Wegmann, 2014). Amazon has several opportunities that can apply to improve business performance and quality of service rendered to its loyal customers. The following opportunities, as presented by the SWOT analysis model, enable the firm to promote business through a rapid expansion of the e-commerce market, expansion in developing markets, new partnerships with other firms, and introduction of new products with relatively lower prices (Greenspan 2017). Amazon has the privilege to enter emerging markets. The move will create the company`s presence in developing markets before other large e-commerce businesses take root, hence gives the company the advantage of a stronger competitive edge. Also, the opportunity to set up partnerships with other companies is an external strategic factor that the firm can exploit to expand its reach in the global e-commerce market (Ritala, Golnam, & Wegmann, 2014). Based on the opportunities presented SWOT analysis demonstrates that Amazon can continue growing despite increasing market saturation.
Amazon experience several threats relating to a firm's operations in diverse markets and industries. In the phase of the SWOT Analysis model, external factors hinder Amazon`s growth and performance (Greenspan 2017). For the success of Amazon.com Inc., it should address the following threats in the online market industry, aggressive firm competition with online and non-online firms, changes in product prices, change in customer preferences, and cybercrime. Amazon's firm faces high competition, which remains as the most constant threat against other e-commerce firms. Some customers have change test and preferences of some of the online products hence become a threat to Amazon Company to convince customers to prefer Amazon products. Some e-commerce firms provide their products at relatively lower prices than Amazon; thus, facing stiff competition in marketing its products.
Amazon.com Inc. upholds sustainable competitive advantage based on three operational strategies from the framework of the SWOT Analysis model. The operational strategy entails customer differentiation, low cost-leadership, and focus strategies (David & David, 2013). Amazon has applied competitive advantage to outcome its competitors by pursuing low cost-leadership and differentiated itself primarily based on product prices. The approach to providing low prices of products to Amazon`s customers ensures future success and rapid growth of the business around the globe. Amazon ensures that it provides the same quality of products as its competitors with relatively lower prices to attract more customers and penetrate in developing markets. Amazon Company has decided to adopt the strategy of reliable and faster delivery of its products and services upon the customer choice (Onyusheva & Seenalasataporn, 2018). Also, Amazon's firm should adopt a strategy of customer differentiation in the products they offer in the market. This strategy will enable customers to find a wide variety of products of their choice on Amazon websites; hence, it will retain customers and prefer the company products.
In conclusion, the SWOT analysis model illustrates that Amazon`s operations will continue to expand rapidly based on the strengths and opportunities in the e-commerce environment. Also, it is recommended that Amazon.com Inc. should continue to diversify its products in the market will further strengthen its operation against e-commerce industry-specific hazards, and establish partnerships to expand market reach.
David, F. R., & David, F. R. (2013). Strategic management: Concepts and cases: A competitive advantage approach. Pearson.
Greenspan, R. (2017). Amazon. Com Inc. SWOT Analysis & Recommendations.[Online]. Retrieved August 4, 2017.
Onyusheva, I., & Seenalasataporn, T. (2018). Strategic Analysis of Global E-Commerce and Diversification Technology: The Case of Amazon. com Inc. The EUrASEANs: a journal on global socio-economic dynamics, (1 (8)), 48-63. DOI.org/10.35678/2539-5645.1(8).2018.48-63
Ritala, P., Golnam, A., & Wegmann, A. (2014). Coopetition-based business models: The case of Amazon. Com. Industrial Marketing Management, 43(2), 236-249.DOI.org/10.1016/j.indmarman.2013.11.005
Rothaermel, F. T., & McKay, M. (2015). Amazon. com, Inc. McGraw Hill Education.
Smith, A. D., Rupp, W. T., & Offodile, O. F. (2017). Amazon. com, Inc.: Retailing Giant to High-Tech Player?.
Zhu, F., & Liu, Q. (2018). Competing with complementors: An empirical look at Amazon. com. Strategic Management Journal, 39(10), 2618-2642.DOI/abs/10.1002/smj.2932
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