AMAZON

Strategic financial analysis of Amazon

Strategic financial analysis of Amazon

Introduction

Amazon.com is an e-commerce company based in Seattle, Washington (USA). Although he started selling books, currently markets a wide range of products, among which are music, video, clothing, toys, jewelry, electronics and more. Besides operating in the United States have websites in other markets such as Canada, France, Germany, Japan and the United Kingdom. In 2003, the company had revenues of $ 5.3 billion. It has about 26 million customers and it is the part of the Fortune 500.

SWOT Analysis

STRENGTHS

WEAKNESSES

Brand Recognition: the Amazon brand is synonymous with online sales and customer-oriented service

The business model: it has the potential to increase their sales (in $ and units) without large increases in direct costs

Diversification: the variety of products it sells and geographic markets serving gives it great stability

Business performance: Over the past years has continuously reinvented itself, constantly improving its value proposition

Strategy based on low prices: the major incentive for the company is its low prices, although these have achieved their purpose, it is possible that customers are attracted to other stores that provide greater or better incentives.

Complexity of the business: to increase the variety of products and geographical reach, it becomes more complex distribution

Growth: The growth of the company, excluding special events (like the release of Harry Potter) are not impressive

Shipping Cost: for some time, the company has offered free shipping, to win customers, this strategy is costly and not necessarily sustainable

OPPORTUNITIES

THREATS

Increase pre-sale: the pre-sale of items (customers pay before they are available and months before they have to pay the provider), it is a big business that can increase

Multi-supplier strategy: to include third-party stores (like Circuit City, Toys R Us and Office Depot), allows you to add a lot of products, improve its value proposition and strengthening its brand

Web services: the AWS service, whereby allowing third parties to develop applications for its technology platform, allows you to constantly innovate without major investment

Underdeveloped markets: the rapid increase in Internet use and broadband in other countries (including those where already present) will allow you to continue to grow internationally

Growing competition: the segment of electronic commerce is evolving rapidly and highly competitive. Companies like eBay and Wal-Mart are short-term threats

Inventory risk, to meet its promised delivery time, the company must maintain significant inventory. This puts you at risk to changes in demand and product cycles

Performance under pressure: the company must justify the "price aggressively high" assigned to the financial markets

Porters 5 Forces

Force 1: The bargaining power of customers

Although some sites have developed a B2B solution, I will focus only on the B2C side. Demand is very fragmented. The bargaining power of customers is theoretically weak.

Force 2: Bargaining power of suppliers

Apart from exceptions, suppliers are numerous on each segment. They are not really in a position to dictate terms to sites and thus to recover much of the ...