Amazon SWOT analysis.doc

Amazon SWOT analysisStrengths:1. Lower price：Amazon provides lower prices of most products than other online retailers to consumers especially head-line products. For example, books sold on discount from 20%-50%.2. Economic of scale：The size of the Amazon is bigger than the sum of twelve e-commerce companies ranking behind it. The advantage resulted from the scale is incredible thus Amazon can donate its profits into the scale expanding to gain lower prices and faster logistics (Exhibit 1). How to compete with Amazon. . Jeff Jordan, October 24, 2013. /tag/competitive-strategy/3. Brand image: Amazons focus on meeting customer needs has made it one of the most admired brands worldwide, which gives the company a gigantic competitive advantage over rival firms with more than 282 million customer accounts by now.4. Diversification: Amazon diversified its products portfolio over 20 categories (Exhibit 2).5. Fast search：Amazon consistently ranks as one of the top 10-15 search platforms in the world alongsideeBay, in a field heavily dominated by the search king,Google. 6. Continuous Innovation：The AWS which provides technology services that give developers and enterprises of all sizes access to technology infrastructure that enables virtually any type of business. Kindle devices have been a key part of Amazonsrazor blade business model as well. 7. Efficient logistics and distribution: Amazon has a number of fulfillment warehouses in each market it operates. By the end of 2012, Amazon has about 339,000 square footages logistics warehousing centers in the United States, has 22,000 square footages warehousing centers overseas. Amazon annual report Form 10-K. Period of Report: 2012-12-31 /1562/119312513028520/filing-main.htm8. Amazon Associates: Amazon constantly seeks associate. In fact, five of the six most visited Web sites are already Amazon Associates. Yahoo and Excite are marketing products from their Web sites. So are AOL com, Geocities, Netscape, and tens of thousands of other sites both large and small.Weakness:1. Low net margin:even though Amazons soaring revenues have led to investors valuing the company consistently based on Price/Sales and Enterprise value/sales multiples, the companys profits have been lower than many retailers due to its free shipping strategy (Net transport cost increased from zero to about 4% of sales revenue). See Exhibit 3. Trend net margin. . December 13, 2013. /stock/A_(AMZN)/Data/Net_MarginCapital turnover risk: Amazon has always been focused on gaining incremental market share and has constantly entered newer business sectors. As a result, Amazon has to sustain losses initially to bring that business to scale, before it can achieve profitability. Thus cash flow is crucial in this process, while the capital turnover may in jeopardy as illustrated in Exhibit 4. Amazon annual report Form 10-K. Period of Report: 2012-12-31 /1562/119312513028520/filing-main.htm2. No off-line business. Amazon lacks physical presence like retailers such as Wal-Mart and Target. The brick-and-mortar allows people to see and touch the purchases there and buy them instantly.Opportunities:1. Internet users grow rapidly. Amazon global independence number of users reached 282.2 million, the first place in the world. See in Exhibit 5. Amazon Sites Visited by 1 in 5 Global Internet Users in June. C. AUGUST 17, 2011./Insights/Press_Releases/2011/8/Amazon_Sites_Visited_by_1_in_5_Global_Internet_Users_in_June2. E-book accepted by customers gradually. The kindle series products have taken up 14% market share as the tablet market is expanding fast. For instance, Amazon.co.uk has said that sales of its Kindle e-books are now outstripping its sales of printed books.3. Electronic payment and credit developed. Amazons payment system can ensure the safety of clients private information and meanwhile speedy checkout. Besides, it could be adopted by numerous online retailers for a small amount of charge.Threats:1. Online Competitors. Certain competitors possess abundant capital; constantly swarm into online retail market, such as alibaba. Besides, Traditional bookstore and retailer enter online sale market, such as Barnes and Noble, wal-mart.2. Losing Price advantage. Amazon is squeezed between large store retailers and online startup retail enterprises, the latter has been making efforts to narrow the gap with Amazon on the price these two years, Amazon is losing price advantage in certain markets such as China.3. Data loss or other security breaches. Breaches of vendors technology and systems could expose Amazon or its customers to a risk of loss or misuse of such information, adversely affect operating results, result in litigation or potential liability for it and otherwise harm its business.4. Exchange rate. U.S. Dollar weakens year-over-year relative to currencies in Amazons international locations, consolidated net sales, and operating expenses will be higher.5. IPR protections. Effective intellectual property protection may not be available in every country in which our products and services are made available.6. Adverse Policies and regulations. Existing and future laws may impede growth. Such as cover taxation, privacy, data protection, pricing, content, copyright, distribu