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Amazon, one of the most renowned names in the field of electronic commerce, started its operations on July 5, 1994, by Jeff Bezos. The company can be considered the largest technology giant in the world in the terms of market capitalization and revenues. It is the second-largest online retailer in terms of total sales. The history of Amazon includes many different mergers and acquisitions. Later, Amazon started an online bookstore, and then they started selling videos and audio streaming.
The major products that Amazon sells include books, videotapes, DVDs, CDs, software, consumer electronics, tools, apparel, groceries, kitchen items, musical instruments, beauty products, toys & games, sporting goods, and gourmet foods, industrial & scientific supplies, jewelry, and automotive items. There is a number of other products that Amazon sells. Amazon also owns many other companies where they sell many other products like green products etc.
Amazon has been operating in different general segments like electronics, media, and many other merchandise products. The competitors of Amazon in all these segments are different.
- The competitors of Amazon in the electronics market include Best Buy, Walmart, Target, RadioShack, Delia, etc.
- The competitors of Amazon in the media segment include eBay, Google, Apple, Netflix, QVCB and Time Warner Cable, etc. In the segment of merchandise, Amazon competes with Overstock.com, Alibaba’s Group, PCM, JD.com, Zulily, Vipshop Holdings, and Wayfair Inc.
- As the company also provides cloud computing services, the competitors in this segment are PC Connection, Salesforce.com, CDW, Insight Enterprises, Citrix Systems, Oracle, Accenture, and many others.
Amazon started by Jeff Bezos has now become the largest online retailer in the whole world. The company has been progressing rapidly due to its vision and mission of Jeff. He defined that Amazon tries to invent new and creative ideas that no one has ever thought of. The company recently crossed Walmart in 2015 and became the world’s most valuable retailer. The company has been acquiring many businesses and retailers since it was formed. The financial history of the company shows that it has never been in a situation of loss in the market.
The company has almost 341,400 employees in the world and has been on the list of Fortune 500 for more than 16 years. The revenues earned by Amazon in the last fiscal year were $135,987 million which was 27.1% more than the previous year. The profit of the company was $2371 million. The stockholder equity of the company is $19,285 million while the market value of the company as of March 2017 was $423,031 million. The current market situation of Amazon has made Jeff Bezos, the richest man in the world. He just crossed Bill Gates in net worth. His current net worth is more than $91 billion.
If the market situation of Amazon is assessed with respect to its competitors, the company has experienced some shortfall in total revenues. The total revenues of the company have decreased by 0% in the 4th quarter of 2017 while the revenues of its competitors have decreased -by 82.83% in that quarter (CSIMarket, 2018). The combined profit ratios of the company also lowered in that quarter as compared to the combined profit ratios of its competitors. The market shares of the company increased in the electronics and media segment while in the merchandise and other segments, the market share of the company decreased a little bit.
It seems like Amazon has already matured and is saturated in the market but there are also some problems with it. The net worth of the company has already reached $175 billion in sales while it seems that the profits of the company are not that high as compared to the sales. The competition of the company has been increasing rapidly with a number of new tech giants joining the market on daily basis. The profit margins of some largest competitors of the company are already very huge which means that Amazon is not making enough money. Some of its competitors like Apple and Microsoft have been earning large profits (Ritala, Golnam, & Wegmann, 2014).
Amazon needs to reformulate its strategy in order to focus on earning more profits in the market. The company is already putting efforts to increase its sales and profits. It is expected that Amazon will account for 50% of the total E-Commerce sales in the US in 2021.
SWOT analysis helps to find out where the company can make profits, where the company is facing threats, where the company needs to change its strategies, and where the company lies in the market (Rothaermel, 2015). It helps to find out the strengths, weaknesses, opportunities, and threats of the company. This assessment can be used to reformulate the operational strategies of the company.
- Amazon is the world’s most valuable retailer in the field of electronic commerce. The company primarily derives its strengths from three strategic thrusts differentiation, cost leadership, and focus. These strategic thrusts help the company to become a market leader and return the best shareholder value.
- Amazon enjoys consumers’ top-of-the-mind recall in the international market. This recognition not only helps the company to enter the new markets but also has helped the company to earn customer loyalty.
- The competitive advantage of the company is derived from its leveraged grip on information technology that helps the company to be scaled out on the top against its biggest competitors.
- The company uses the best and superior logistics to deliver the customer products which helps to fulfill the customer requirements and expectations(Kantor & Streitfeld, 2015).
- Amazon has been focusing on a diversity management program in which the company has been implementing new and advanced strategies to diversify its operations in the market. The company has been shifting its focus from core competence toward new areas and opportunities which is good for the company but it can also be harmful to the company.
- The products are delivered free of cost to the customers which means that there are chances that Amazon may lose its profit margins on the products.
- The major focus of Amazon in business is online retailing which means that this mindset can hinder entry into new global markets.
- Amazon has been using online payment methods which increases the chances of the company being scaled up in the market.
- The company has been diversifying its operations and has been introducing new products which can increase its market capitalization of the company.
- The company can open more sites and can use social media as an advertising channel which can help it to grow even more.
- The biggest threat to Amazon is the increasing concern over identity theft in online shopping.
- The company has aggressive pricing strategies which can bring the company lawsuits from rivals and competitors.
- The company has also been facing significant competition from many of the local retailers in the region.
Areas of SWOT Analysis
Amazon is a leader in online sales. This electronic retailer has allowed a change in technology for American commerce as well as the customers who trade using the utility of Amazon. Trends that support the facility of online retailers have also made a strong consumer policy to change the shape of the shopping experience.
In order to explore the key areas of the market, Amazon management has been effective in proposing strategic plans for the period of long-term planning. Management is planning to regulate the strength of the marketing platform in the eyes of development. SWOT analysis was conducted in order to explore the strength and weaknesses of the company. In identifying the strengths and weaknesses, there were new opportunities created for the online shopping facility. In identifying the opportunities, there were threats present to the company’s online service. This analysis helped to change the forecasting model for Amazon. In long-term planning, this company has identified three prospective areas where future work will be regulated. These areas respond to planning the development process.
Changing the payments channels and connectivity
Amazon has proposed a new plan in order to prepare for the future. This is noted in the form of payment options. The company wishes to open new smart ways of technology which will help users with the online shopping and retailing service. In the previous years, a method of payment was not secure. There were plans made in order to control the lag of price control but this approach was not sufficient to gather resources from customers and management.
The reason behind the strategic plan of payment options depends upon the profit as well as investment from company management. This plan was introduced due to the addition of new technologies in the market. There are fierce rivals in the online shopping market which poses a threat to the company. The company outlines the threat and creates an opportunity for the policymakers in order to step in and propose a protected system that will keep regard to the financial transactions. In the literature, business activities propose the concept of trust between the consumer and product suppliers. The marketing mix also considers people as the most important option in order to expand business in national as well as international ways.
The meaning of change in payment can be understood with the new mobile app technology where a user can independently receive and give money for cellular devices without any confusion of card and account verification. This will prove a big step for the Amazon Company as the management team is highly efficient in providing uninterrupted services to people. This will promote a strong customer relationship between the company and it will help to increase its profit in the future.
Using social media as advertising tool
Amazon can build a strong strategy for sales in connection with social media. Social websites are now becoming a norm in a culture that is open to freedom of life and choice. This store can easily classify the products and target a bigger market. This will be done by targeting specific groups for the initial promotion and then using the same sources to expand the sales network outside the country.
Literature also helps to support the marketing pattern. Here the term used for direct and indirect marketing comes insignificance and it can be practiced to raise the sale of the country and improve the financial records. This is the area where the company should plan to make an investment for the future as will help to remove deficiency in the online market.
Tackling competitors and building a reputation
The strategic plan will help to identify the potential customers and competitors which may become a threat to the online business. This can be proved in the form of online shopping areas like eBay and other companies which one hand pose damage to online shopping and also help to reduce the number of customers from the circle. The act of fraudulent services has removed the investment from this industry. The business concept also justified the use of market attractiveness in order to attract customers and develop trust in the demand and supply system. The reason behind this change and opportunity is the reputation that an online store has built from the stat of its foundation. This reputation becomes important for the company that wishes to plan a long-term investment for its potential buyers.
Methods to measure the success of the plan
The strategic plan includes the chances of adopting the areas which form the ground foundation of strategy. The strategy is to promote the online shopping experience as a useful utility for people. This plan depends upon users to understand the nature of the project. If users allow the plan to be implemented, the feedback from the customers will form the first measure of success. This feedback will be collected either through quantitative or qualitative analysis. The initial reports will give the nature of the plan and changes which are required in implementation.
The second method will be observed on the behalf of competitors. If solid planning is prosed under the management plan, then its effects are easily understood. The market stands as the first face of the plan. If there is room for service and the market shows an appositive response then plan success is guaranteed. If the inflation levels and debts increase on Amazon compliance, Management will formulate a policy to reduce the number of debts and become self-sufficient without the presence of any liability. The liabilities of a company reduce its transportation and cargo facilities. The importance of the warehouse also rises if the future model is highlighted. Amazon will manage its cargo services and find markets where it is viable to invest. This will be the part of the plan and its effectiveness will be measured when investment helps to produce the mainstream new customers.
This plan will also be measured by defining roles for the market. If Amazon Company has highlighted the planning in branches, it will be easy to incorporate and hold areas where feedback is required. Now technology is a tool to measure effectiveness. Human resource is also another tool that can help the company to gather expertise in business services. Plans are always measured by the relation of management and how the consumer-based approach is used to target market demand. This is the bright side for Amazon to work in the future and gather the goals for the plan made.
If you need a similar but plagiarism-free “amazon strategic plan”, then feel free to contact us!