AMAZON STRATEGIC ANALYSIS

Amazon Strategic Analysis

Table of Contents

Company Background1

Current Business Practices2

Amazon Different Strategies2

Combating Recession3

The Success Story at Amazon4

User Feedback5

The Competitors6

Amazon Business Strategy6

Amazon's SWOT Analysis6

Strengths6

Customer-Centric Business6

Strong Revenue Growth7

Weaknesses7

Seasonal Nature of Business Amazon.com7

Opportunity8

Threats8

Competitive Strategy9

Amazon Prime9

Strong Growth in Global e-Commerce11

Amazon's Customer-Oriented Strategy12

Amazon's Category Expansion Strategy13

Can Online Sales Show Differentially Higher Growth Over a Sustained Period?13

Amazon's Slow But Successful Overseas Expansion14

Can Amazon Continue Its Trend Toward Higher Operating Margins?14

Future prospects15

Amazon Strategic Analysis

Company Background

Amazon.com is a US based online retailer and web service provider. It sells its merchandise through the company-owned retail websites, with the presence in North America and other international locations. The company offers a broad assortment of merchandise ranging from apparels to electronics to grocery. It implements strong marketing strategies and operates a customer-centric business to maintain its position among the Fortune 500 companies. In addition, its strong sales growth in the fiscal year 2009 represents its sound financial position. Moreover, the company has an opportunity to accelerate its growth through acquisitions and new service offerings. With the growth of e-commerce segment and the recovery of the economy, it can boost its revenues. However, the company's business is restricted due to factors such as government regulations in China and software issues. Additionally, rising competition from in-store retailers, government regulations and foreign exchange risks may limit the growth prospects for the company (Williamson & Duncan, 2002).

Amazon is the first company to start selling books on the Internet. The main activity of Amazon is concentrated around the sale of books; it has thus competed with bookstores, supermarkets, chains of leisure products and vendors by correspondence. With its success, Amazon then launches into the sale of video games, DVDs, software, games and toys, multimedia devices. Yet in these times of recession, the company constantly needs to update its marketing strategy and bring in innovations to ensure sustainability in the E-business.

The site Amazon.com was established in 1994 in Seattle Jeffrey Bezos and has covered online library (e-bookselling) from 1995 to 1998 as well as online sale of products (May 2009). In 2005, the company had 9,000 employees and annual sales of around 8.49 billion dollars.

The goal of the company was to compete with bookstores, supermarkets and mail order vendors. Building on its success and because of a well developed strategy, Amazon launched into the sale of video games, DVDs, software, multimedia devices because Amazon has adopted different strategies (About Amazon.com, 2002).

Current Business Practices

In order to open up new markets, Amazon is in very close attention to the relationship with the publishers. Traditional publishers have to bear all risk of returns. Therefore, the whole book industry return rate as high as 30%. Amazon is different from the general retailers. That is why almost all publishers are willing to give Amazon a very preferential treatment order to improve the Amazon to fight "price war" in the ability to book in the highly competitive market in an invincible position. In addition, Amazon also relies tremendously on the customer information, order room textbook model to track preferences and analysis, ...