Amazon SWOT Analysis of Inc

Amazon.com, Inc. or www.amazon.com has a mission statement to be the most customer-centric or customer-oriented retailer on this planet, where people can browse and buy anything they want to buy online with prices as low as possible on the market. (About Amazon) They are one of the world’s most important online retailers and providers of web service. (Amazon.com Inc.) They offer a large-scale of products such as clothing, merchandises for car and industrial uses, beauty and health products, books, games, electronic devices, grocery, food, jewelry, merchandises for kids and babies, movies, music, toys, sports goods, and etc. (Amazon.com Inc.)
They also offer delivery and shipping, web hosting services and some other related services. (Amazon.com Inc.) They also make Kindle devices, and provide their products via company-owned online retailer websites. (Amazon.com Inc.) Not only they sell brand new unused merchandise, they also sell refurbished and second-hand used goods online. (About Amazon) Internal analysis – Strengths (their business model is their strength) In strategy, Amazon has improved the operations of their business by diversifying it from online bookstore to online merchandising with a wide variety of different kinds of products. (Amazon.com Inc.)
Their dealing with costumers online without reseller model increased their inventory turnover with better returns. (Amazon.com Inc.) With their business models they also run warehouses that are not huge and large, but small and lean in many different places in the world. (Amazon.com Inc.) Their direct-to-customers with no resellers strategy makes it easier for them to handle their capital investments in their warehouses and lower possible inventory risks. (Amazon.com Inc.) By that strategy of dealing with customers directly also have increased the volume of their sales. (Amazon.com Inc.)

Their business model offers everyday low prices for their products online. (Amazon.com Inc.) They have expanded their presence to many different countries globally by offering websites modified specifically according to different countries’ needs and wants like languages and taste with fulfillment networks. (Amazon.com Inc.) They learned and copied the most successful business ventures from any other countries in the world internationally, and tested new features for their business strategy within the US market. (Amazon.com Inc.)
Their product offerings are expanding by making agreements with third-party sellers around the world. Moreover, they let other retailers use their e-commerce online retailing platform technology for a price. (Amazon.com Inc.) They also offer bundle services to consumers for bringing in greater efficiency and lowering their prices in the market. (Amazon.com Inc.) And their bundled services later on diversified itself in the e-commerce markets to other platform services within the industry of cloud computing. (Amazon.com Inc.) Amazon has a broad product portfolio allowing them to provide various products to serve a market of diversified customers. (Amazon.com Inc.)
Customers of Amazon.com are offered a one-stop shopping experience to shop from clothing to smartphones to food. (Amazon.com Inc) Their efficient customer service and wide choice of goods and products putting their business focus on product selection, product prices, and the convenience to shop them. (Amazon.com Inc) Their product offerings include clothing, auto and industrial items, beauty and health products, books, computers, digital downloads, electronics, grocery, games, home goods, jewelry, kids and baby items, movies, music, office supplies, outdoor goods, shoes, sport goods, toys, and other kinds of tools. (Amazon.com Inc)
Their strategy also emphasizes on selling their products at the lowest possible price by everyday low product pricing and free shipping such as the package Amazon Prime offering for free two-day-delivery on millions of items plus other features. (Amazon.com, Inc.) More and a greater number of customers shopping online are drawn to shop on Amazon.com because of Amazon’s broad and diverse product assortment with low prices. (Amazon.com, Inc.) And lately, Amazon just introduced their newly invented product, Kindle Fire, the most-advanced tablet providing a fully-integrated and end-to-end service for customers. (Amazon.com Inc.)
They also started renting thousands of college textbooks to college students with a recently launched service called Amazon Textbook Rental. (Amazon.com Inc.) Amazon’s wide range of product offerings gives them a good chance of future financial growth. (Amazon.com Inc.) Amazon has adopted different technologies that make their website more customer-friendly. (Amazon.com Inc) With key features such as editorial and customer reviews written on their website, manufacturer product information, gift guides, web pages customized to individual preferences like recommendations and notifications, 1-Click technology, secure payment systems, digital content and the Search Inside the Book technology. (Amazon.com Inc) And shoppers can track their orders on the website with “Your Account” features. (Amazon.com Inc)
Amazon provides customer service all around the world easily with their customer service centers located on different parts in the world globally. (Amazon.com Inc) Moreover, their delivery is free with other options for shipping available worldwide around the globe. (Amazon.com Inc) With all those satisfactory shopping features available on their website, in return they have also gained high customer loyalty. (Amazon.com Inc) But they are still expanding not stopping with their customer serving coverage across the world, lately, they have just launched their Amazon Appstore in Western Europe including the United Kingdom, Germany, France, Italy and Spain providing access to their wide range of various Android apps which give convenience to customers using Android phones and tablets to shop. (Amazon.com Inc)
Debt, for the fiscal year 2012, Amazon recorded a total of $3,830 million in debt, and compare to their debt in the fiscal year 2011 that was an increase of 170% in one year! (Amazon.com Inc) Amazon’s total long-term debt was almost $3,084 million. (Amazon.com Inc) Their debt could make them less likely to borrow more money to finance their working capital, capital expenditure, or other kinds of investments, particularly if rating organizations downgraded Amazon’s debt securities’ ratings. (Amazon.com Inc)
This weakness would be unfavorable for Amazon especially during tough times in the economy with unstable market conditions to respond to. (Amazon.com Inc) Another very obvious unfavorable effect that Amazon’s huge debt has on them is that they need to pay back what they owe in principal plus accumulated interest which is a substantial amount of their cash flow from their business operations, which then reduced the amount of funds available for them to expand their business via activities like acquisitions and create more product offerings and to spend on their marketing. (Amazon.com Inc) Legal proceedings, Amazon has many lawsuits filed against them both in actual terms and those haven’t yet but have the possibility to do so. (Amazon.com Inc)
And majority of those cases suing Amazon are concerned with the issues of patent violations, the relations between Amazon and their employees, contract issues, liability of products, environmental issues, antitrust issues, and other kinds of issues, etc. (Amazon.com Inc) The companies that filed and On-Demand Publishing LLC dba CreateSpace claiming that Amazon has infringed US patents in the number of 7,392,283 and patent number 7,174,362. (Amazon.com Inc) And another case filed against Amazon was in September 2012 by B.E. Technology, LLC claiming that Amazon Digital Services, Inc. has again infringed people’s US patents in the number of 6,771,290. (Amazon.com Inc)
An Australian quasi-government entity, Commonwealth Scientific and Industrial Research Organization, filed a lawsuit against Amazon for their infringement of US Patent number five-four-eight-seven-zero-six-nine. (Amazon.com Inc) Not only did Amazon face the lawsuits filed against them mentioned above, they have been also sued for patent infringement, violation of copyrights and etc. (Amazon.com Inc) Regardless if the companies filed lawsuits against Amazon won or lost, any legal proceeding could have a negative impact on Amazon’s cash flow and waste management’s time and effort. (Amazon.com Inc) External Analysis, uncontrollably good opportunities for Amazon Strategic acquisitions have continued to be considered as an important way by Amazon as a strategy for business growth. (Amazon.com Inc)
Although merely viewed as supplements to their core business growth, acquisition is one way for them to expand their business including adopting new technologies of newly acquired companies, introducing new products, and expand their business reach in geography. (Amazon.com Inc) Examples such as their recent March 2013 acquisition of the company Goodreads a website providing customers a place for sharing books online. (Amazon.com Inc) Another example of their acquisition is with a company called IVONA Software in January this year 2013, which did text-to-speech technology. (Amazon.com Inc)
And Amazon’s company which mainly works for their publishing, Amazon Publishing, bought another company, Avalon Book’s publication rights, of over three thousands backlist titles, and mostly in the romance, mystery and western book categories in the June of 2012. (Amazon.com Inc) And they have also made an agreement in March 2012 to acquire another company called Kiva Systems, Inc. or Kiva that focused on working with and inventing innovative technology forhandling material. (Amazon.com Inc)
Amazon intended to raise the level of productivity via the acquisition of this innovative material handling company, making the employees able to pick, pack and stow their products in their fulfillment centers. (Amazon.com Inc) And this particular strategy is called “inorganic growth strategy”, as organic stands for “characterized by continuous or natural development”, might be able to help expand their market share in a significant extent. (Amazon.com Inc) Amazon’s opportunities for growth are also driven by their initiatives in strategy to make their product assortment better in the market. (Amazon.com Inc)
For example, they have expanded their multi-year licensing agreement with PBS Distribution in order to offer free-of-charge online streaming of past seasons PBS programs to registered members of their Amazon Prime package in June 2013. (Amazon.com Inc) And in May of 2013, Amazon introduced their invented Kindle Worlds, a platform product made for publishing commercially and available for the first time in the market. (Amazon.com Inc) Then in January 2013, they made an agreement regarding the licensing of the content of A+E Networks, in order to add earlier seasons of A&E, bio, HISTORY and Lifetime channel into the prime instant video service on their Amazon.com website. (Amazon.com Inc)
And earlier in November 2012, they started to provide a service called Amazon Redshift, which is a fully managed and powerful warehouse in the cloud for petabyte-scale data storage. (Amazon.com Inc) In the meantime, Amazon also introduced a marketplace called the Amazon wine in the market, where customers are offered more than a thousand wines. (Amazon.com Inc) And in earlier in August 2012 in the UK, Germany, France and Italy and Spain in Western Europe, Amazon launched their Amazon Appstore providing an access for European customers to download and use their wide range of high quality Android smartphone apps conveniently to shop on their website when the European customers are using their Android electronic devices such as cellphone and tablet computer to shop. (Amazon.com Inc)
And then earlier in the March of 2012, Amazon made an announcement to the world that they were going to make a $150 million USD investment to open a new Jeffersonville, Indian fulfillment center in the US. (Amazon.com Inc) Their initiatives to make themselves able to provide customers with more product offerings with a new fulfillment center in the US could give them a better chance in business growth. (Amazon.com Inc) Another area of opportunity for Amazon to potentially expand their presence in the market is in the E-Commerce business. (Amazon.com Inc) There is a good chance of potential for Amazon to grow their business and raise their profitability with direct marketing along with e-commerce business’ rising trend. (Amazon.com Inc)
Due to the recent scenario that a growing number of consumers these days rather shop online than visit the retail stores physically to save their time and money in one stop. (Amazon.com Inc) According to professionals in the industry, traffic of the IP data in the globe is forecasted to go up to six point six zettabytes annually by the year 2016, and also traffic of the cloud storage is forecasted to rise from 2011’s 39% of total data centre traffic up to 64% in the year 2016. (Amazon.com Inc) The growth of E-commerce market is driven by smart phones, tablets and other internet enabled electronic devices’ uses. (Amazon.com Inc)
Along with this growth of online shopping using internet enabled electronic devices, this trend pushes and changes other retailers to invest more into serving the new format of electronic device online shopping customer segment. (Amazon.com Inc) And Amazon could increase their cost savings and expand their share in the retailing market with an already well established position in the e-retailing. (Amazon.com Inc)
The fact that Amazon is subject to the government and the law’s regulation and intervention is considered an external threat. (Amazon.com Inc) The government and the law could pose external threats to Amazon’s business in aspects such as taxation, privacy, data protection, pricing, content, copyrights, electronic device certification, electronic waste, consumer protection, the provision of online payment services, the design and operation of websites, and the characteristics and quality of Amazon’s products and their services. (Amazon.com Inc)
Today, the US Supreme Court does not allow collecting state and local taxes for Internet sales. (Amazon.com Inc) However, some states in the US and the Congress have been thinking of initiatives that could restrict the Supreme Court’s place and voice in matters regarding issues of Internet sales’ taxation. (Amazon.com Inc) And if those states and Congress succeed, Amazon might will be required to either collect a certain tax called “sales and use taxes” in some states or alter the ways of how they practice their business for the law. (Amazon.com Inc) Imposing taxes by the local government and by state could create a burden on the company’s administration. (Amazon.com Inc)
Moreover, those taxes if imposed on the bills of Amazon’s customers could less their demand and make their products and services less attractive in the market with increased cost. (Amazon.com Inc) The online shopping market is a very competitive one to do business in, including for Amazon. (Amazon.com Inc) The kind of competitors they have such as any other online e-commerce and mobile e-commerce sites, publishers, media companies and other companies designing, manufacturing, marketing digital media devices. (Amazon.com Inc)
They compete in terms of price, product selection, how convenient is it to shop, product quality, how much time it takes/speed, and their services and tools’ reliability. (Amazon.com Inc) The list of names of Amazon’s online shopping competitors would be eBay, Yahoo, Books-A-Million, Barnes & Noble, ValueVision Media, and Netflix. (Amazon.com Inc) Their competitors could possess more resources with more customers and better recognitions than Amazon. (Amazon.com Inc)
Along with the competition getting fiercer Amazon needs to maintain their stock while adapting to an unstable environment of changing needs and wants in order to survive. (Amazon.com Inc) In international finance, there is a risk called foreign currency exchange risk, and that’s the kind of external threat that Amazon is exposed to as a global company doing business internationally. (Amazon.com Inc) Last year in 2012, Amazon’s revenue in total has a 43% stake outside the US in the international segment. (Amazon.com Inc) And for that year their business profit went down dramatically in the figure of $853 million compare to their 2011 revenue due to the ups and downs of the values of foreign currencies, in other words they lost a lot of money because of their vulnerable and high exposure to exchange rate risk. (Amazon.com Inc)
As they have revenue denominated internationally in the continents of Asia, Europe and North America. (Amazon.com Inc) They also have things in value other than revenue such as assets, liabilities denominated in many different foreign currencies. (Amazon.com Inc) Those currencies for example such as they do business transactions with the European Euro, British Pound, Japanese Yen, Chinese Yuan and Korean Won and etc. (Amazon.com Inc) Yet they still have the USD as their main functional currency. (Amazon.com Inc) If the foreign currencies devalue against the USD then they would lose money when they convert their foreign revenue back to the US, but if the US dollar exchange rate weakens against all other major foreign currencies, then Amazon would face potentially greater long-term liabilities. (Amazon.com Inc)