Amazon.com is a Fortune 500 e-Commerce company based in Seattle, WA.
One of the first big companies to sell goods over the Internet .
Founded by Jeff Bezos in 1994, and launched in 1995 on World Wide Web
Started out as an online bookstore and then quickly diversified by adding other
items, such as VHS tapes and DVDs, music CDs, software , video games,
electronics, MP3s, clothing, furniture, toys and even food items.
Seek to be Earth’s Most customer-centric company, where customers can find and
discover anything they might want to buy online, and endeavors to offer its
customers the lowest possible prices by offering competitive prices.
Amazon.com Rank 15 globally as per traffic. Page visits 137 Million a month
Fall of Amazon
• Amazon suffered the biggest loss of $1.4 billion in fueling its phenomenal
revenue growth of $2.76 billion. More than ever, now is the time to give
credence to its ‘get big fast’ strategy over short-term profitability. Show
now the paycheck.
• July 2001, after six years of relegating profitability secondary to the
company’s growth in the metrics of customer and revenue growth, the
degree to which customers continue to purchase on a repeat basis, and
strength of brand, Amazon.com is hard pressed to convince its
shareholders that it is a breed apart from the dominoes of dot.com snow
falling over the other.
• Threats from competitor’s by selling the similar products for lesser price.
• Researchers found that the book’s prices on the internet were 9%-16%
higher than the conventional brick and mortar stores.
• Can Amazon march toward profitability???
Reasons for Downfall
• Amazon’s losses due to massive expansion programs
• Pricing and Branding
• Investments and Partnerships
• Virtual Middleman
• Bricks, Books and Coffee Versus Clicks
It's All About the Long Term
I believe that if we’re investing in something and it works, then we should invest
more. Profitability is important to us, But it’s long-term profitability that’s
important, not short-term profitability. I don’t want to leave anyone with the
impression that we don’t care about it. But if what you’re trying to optimize for is
long-term success, then that causes you to make different decisions in the short-
term. It would be a mistake to optimize for profitability in the short term, because
that would mean you weren’t investing aggressively in the things that were
working and the things that we really, really believe in.”
SWOT Analysis: Strengths
• Amazon has been one of the most profit making dotcom.
• Customer Relationship Management (CRM) and IT support business strategy
• Amazon is a huge global brand
– Built on early success
– One of the original dotcoms
• Distribution centers –geographical coverage
• High inventory turnover.
• May risk damaging its brand because of the number of new categories &
retailers coming up.
• May consider offering free shipping (they already partly are) but this may incur
• The site may just become too crowded.
• Too many partners may cause entropy.
• Experimentations with new technology can be overwhelming for existing
• Large Inventory Risk.
SWOT Analysis: Weaknesses
• Cash on its credentials as an online retail pioneer; selling its expertise to major
• Build collaborations with public sector.
• Increased number of internet users and amount of purchases worldwide.
SWOT Analysis: Opportunities
• Attracting competition may result in difficulty to differentiate Amazon from its
competitors (due to competitive pricing).
• International competitors may intrude upon Amazon as it expands.
• There’s a tendency for Amazon to be seasonal.
SWOT Analysis: Threats
Marching Towards Profitability
1. Growing and strengthening customer relationships.
2. Product and service expansion.
3. Operational excellence.
4. International expansion.
5. Expanding partnership program.
6. Use its brand strength and sophisticated personalization algorithm.
7. Focus on supply chain management.
8. Wide selection of merchandise.
9. 8. Add a more third party retailer.
What should Amazon do next?
• Continue international expansion
• Improve existing associates program
• Consider bulk shipment before offering free shipping
• Further improve customer experience
• Sign up more third party retailers