Amazon.com SWOT Analysis From Case

Amazon.com SWOT Analysis from Case Study

The intent of this paper is toe evaluate the strengths, weaknesses, opportunities and threats (SWOT) Amazon.com faced within the context of the case study used as the basis of this analysis. The time period of the case study was a pivotal one for the company as CEO and founder Jeff Bezos concentrated on increasing the sales growth of low-margin high velocity products while also concentrating on paying down its debt, which resulted in a high burn rate in terms of cash.

Strengths

Order management, fulfillment and several automated service functions are giving Amazon.com the opportunity to begin generating customer loyalty. The performance of the Amazon.com site and its navigation are consistent and leading to a high level of trust with its most loyal customers (Gupta, Lehmann, Stuart, 2004). Serving customers more efficiently through the use of technology is an emerging strength as a result. Second, the brand image of the company continues to improve during the period of the case study due to consistent performance of the site, and fulfillment processes delivering books on time and in the right quantity. Third, geographic expansion continues to gain in momentum as Amazon.com relies on its knowledge of web technologies to successfully scale into other countries. Another key strength of this specific aspect of Amazon.com's technological leadership in online retailing is the quickness with which it opens partnership shops and quickly builds selling alliances online in several different languages. The branding of Amazon.com continues to be supported by all these factors working in conjunction with each other to support the brand, making it one of the top 100 during 2003. The company has also been able to successfully capitalize on its technological leadership with the introduction of Amazon Web Services, an enterprise-wide infrastructure offering for businesses. Twitter, the social networking site, is based on Amazon Web Services today for example.

Weaknesses

Despite the strengths of building the order management and fulfillment systems that have made order execution and delivery reliable, Amazon.com is still facing declining margins, lack of profitability and an increasing burn rate as shown by the financials in the case. By staying only with commodity-like books and concentrating on inventory turns, the Amazon.com management team is not making any headway on this problem. It will take a financial restructuring of the company to alleviate the high burn rate it is experiencing. Second, the Amazon.com partnership are draining cash and not increasing gross contribution margins as was planned. Third, the company's management faced challenges in changing the internal culture of Amazon.com away from market share gains to profitability gains, and this would require intensive changes in the structure, processes, roles and responsibilities, and systems of the company.

Opportunities

There are many opportunities for Amazon.com however to continue growing during this phase of their history. First, the commercializing of their technologies through Amazon Web Services, One Click Ordering and other technological innovations have proven to be effective in generating a higher level of customer loyalty than had been possible when the online store was undifferentiated from competitors (Gupta, Lehmann, Stuart, 2004). Second the consistency and predictability of their execution due to systems integration and fulfillment processes working is generating a higher degree of trust in the company. Third, partnerships are providing incremental revenue and illustrate an emerging strength of the company for being able to scale globally. Fourth, there is the overall increase in online retail spending that is occurring as consumers begin to increasingly look to the Web as a means of convenience and time savings.

Threats