History

• Founded in 1994 in Seattle, USA.

• Founded by Jeff Bezos

• The world's largest e-commerce marketplace, AI

assistant provider, and cloud computing platform.

• Employs over 560,000 people worldwide

• It is considered one of the Big Four technology
companies along with Google, Apple and
Facebook.
 History
• The company initially started as an online
marketplace for books but later expanded to sell
electronics, software, video games, apparel,
furniture, food, toys, and jewelry.

• In 2015, Amazon surpassed Wal-Mart as the most

valuable retailer in the United States by market
capitalization.

• In 2017, Amazon acquired Whole Foods Market for

$13.4 billion, which vastly increased Amazon's
presence as a brick-and-mortar retailer.
 Mission and Vision
Vision
• “To be Earth’s most customer-centric company,
where customers can find and discover anything
they might want to buy online.”

Mission
• “We strive to offer our customers the lowest
possible prices, the best available selection, and
the utmost convenience.”
Past Performance
 External analysis
1) General environment
• Political/legal environment
Up until recently, Amazon did not have too many
political or legal problems. However, many state
governments are now trying to make Amazon pay taxes
for all the sales that have taken place in the different
states.

• Technological environment
They need to make sure they are continually updating
their technology while staying ahead of their
competitors. They spent $1.2 billion on internally
furthering technology for the company last year.
2) Industry Environment

• Industry: Amazon exists in the E-commerce industry

where competition is cut throat.

• Competitors:

1. Wal-Mart
2. eBay
3. Alibaba
4. Flipkart
5. Otto
6. JD
Porter’s five forces analysis
• Threat of new entrants: LOW

New entrants have to invest in research and development

to stay in the industry and pose a threat to Amazon.
Amazon has a competitive advantage:

1. It has accumulated a large amount of funds due to its

tremendous profits over the years.
2. Due to its extensive operations, the research and
development cost per unit is low i.e. it experiences
economies of scale.
3. It has the first mover advantage.
• Bargaining power of buyers: MODERATE

Amazon has two types of buyers; consumers of Amazon

products and retailers who contract with Amazon for online
presence. The bargaining power of Amazon’s first category
buyers i.e. end users of products is high in terms of the
ability of customers to find alternatives to the company’s
online retail service. The low switching costs make it easy
for consumers to transfer from Amazon.

The retailers could switch to other websites such as Wal-

Mart easily. Thus, bargaining power of Amazon’s second
category buyers is high. Overall, there is moderate
bargaining power of buyers.
• Bargaining power of suppliers: LOW

Amazon has more suppliers to choose from because of its

access to suppliers all over the globe. Furthermore,
Amazon is a major client for most of its suppliers. Hence,
these suppliers are highly dependent on Amazon for a
major proportion of their revenue. Hence bargaining
power of suppliers is low.
 • The threat of substitutes: HIGH
Substitutes exist in a large number in the e- commerce
industry as well as physical retailers. EBay, Wal-Mart,
Alibaba and other e-commerce websites are huge
players who sell similar products and customers can
easily switch over to them if prices are high. Thus,
threat of substitutes is high.

• Intensity of rivalry among competitors: HIGH

Direct competition is from other online giants like eBay,
Wal-Mart, flipkart, alibaba etc. which offer very similar
products to Amazon. The intensity of rivalry is high.
The industry is not attractive
Internal Analysis

• Amazon’s state of the art software technology is

difficult to imitate because it requires funds and
economies of scale. Amazon has the first mover
advantage as well. Moreover, imitating the user
recognition system is difficult because many new
companies would not be having the record of
consumer’s previous purchases hence deterring
customers to choose substitutes.
• Amazon is involved in 3 key businesses which are
Amazon Marketplace, Amazon Web Services (AWS)
and Amazon Prime. All three Amazon offerings
support each other and create synergy and benefits
that would not be achieved if the businesses operated
independently.

• Using superior logistics and distribution systems, the

company has been able to actualize better customer
fulfillment and this has resulted in Amazon deriving
competitive advantage over its rivals.
 Key strategic issue:
1. Can Amazon fend off aggressive competition from
retail giant Wal-Mart?
Reasons why Wal-Mart poses a threat
to Amazons competitive advantage
• 1-day and same-day delivery is the future and Wal-
Mart has fundamental advantage over amazon
since they have more than 4500 stores located
within 10 miles of 90 percent of the U.S.
population.

• It is leading in the $840 billion grocery market,

where the customers can buy goods online and pick
it up from the closest store.
 • Free shipping with no membership required
Prime memberships cost $119 annually. Wal-Mart offers
free 2 day shipping on any online orders over $35, with
no membership required.

• Easy returns
Whether you bought an item online or in the store, you
can bring the product to a Wal-Mart for the return.
 Recommendations
• Amazon needs to invest in offline stores because
consumer behavior shows there are simply some
products and purchases that live almost exclusively
offline (as of now). Like groceries, snacks, drinks, and
take out.

• Establish more Amazon GO stores with prime

membership benefits. This ensures that the customers
will have an experience when they are buying products
at the store and don’t have to stay in line for payment.
Wal-Mart consistently scores low on the customer
experience survey and amazon can take advantage of
the same and acquire their customers.
• The acquisition of whole foods ensures a vast amount
of product at hand as well as loyal customers willing to
pay more. Amazon needs to start selling groceries
online with same day delivery options and easy return
method.
• Amazon should invest in creating a platform just for
perishable goods and sell the products online while
giving the customers the option to visit the physical
stores if they want to return the product.

• Amazon can cut costs by using the large whole food

stores(more than 500 stores located at prominent
places) and Amazon GO stores across the world for
storage purposes, to deliver goods faster and for easy
returns.
2) Can Amazon get rid of fake products on their
website?

It’s easy to sign up and become a third party seller for

amazon. Legally, Amazon isn't responsible for third-party
counterfeits, as it’s fulfilled by Amazon service acts as a
shield against liability.
Amazon is not the owner of the product it is the
middleman. It hampers the brand image and creates
doubt in the minds of the customers which might force
them to go for other competitors.
 Recommendations
• To curb this amazon needs to give more power to the
brands. As of now a brand needs to report a counterfeit
and then amazon would take care of it. It needs to
create software which can be used by the brands
themselves to take down the counterfeit objects from
the website.

• They need to work together with high popularity brands

to create a unique serialization for every product. Brand
puts these codes on its products as part of its
manufacturing process. Every time a product using
serial number is ordered in Amazon’s stores, the
authenticity of the purchase can be scanned and
verified.
• Amazon needs to develop a technology to scan
images uploaded by the third party supplier and
scan logos and trademarks provided by the brands.
This technology should work round the clock
searching their database for counterfeits and take
them down automatically.

• Amazon needs to resolve or refund the amount to

the customer within a set period of time and take
more accountability instead of putting the
responsibility on third party sellers.