Amazon versus Walmart project SWOT analysis PDF

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Amazon versus Walmart project SWOT analysis...

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Situation Analysis of Amazon SWOT Analysis Strengths Strong Brand name: Amazon has successful position and a strong brand image in the market due to global e-commerce platform. Brand Valuation: Amazon is ranked at 2nd position with a brand value of $200 million as compared to Apple at 1st and Google at 3rd. Pandemic: Consumer behavior shifted towards online shopping due to lockdown measures in pandemic as they usually buy from retail stores. As a result, consumer spending is increased by 70% year-on year. Diversification: Apart from e-commerce platform, Amazon is a leading player in cloud computing, digital streaming, and artificial intelligence. Amazon cloud’s platform AWS has 32.4% market share. Amazon’s streaming platform, Amazon Prime Video has a penetration of 52.9%. Market Share: As per eMarketer, Amazon has 38.7% of the e-commerce market share while Walmart at 2nd place has only 5.3% of the e-commerce market. Supply Chain: Amazon has partnership with 1300 companies having 85000 employees across 400 delivery stations across US. Its wide supply chain innovations like drone delivery keeps Amazon at the forefront of e-commerce (Business Strategy Hub, 2020). Weaknesses Limitations due to free shipping: As amazon provides free shipping to the customers, it becomes a risk to lose its margins and hence, might not be able to improve on costs due to this strategy. Due to broad delivery network & price wars, Amazon’s margins are declining, resulting in even losses. Brick-and-motor Presence: Due to fewer physical stores of Amazon, it sometimes restricts customers attraction to purchase things that are only available online. Spreading itself too thin in recent years: As a part of diversification strategy, Amazon is spreading itself too thin in recent years. It means it has allowed its focus from core competence of retailing online and allowing itself to merge with new focus areas. This might become a good strategy while Amazon must be aware of losing its strategic advantage as it moves away from its core abilities (Greenspan, 2019). Opportunities Podcasting: Amazon has unified a podcast service with its Amazon Music platform in recent year. The objective of the innovation is to bite into Spotify’s and Apple’s share as the leading podcasting services. The service would work better with Amazon’s Alexa.

Food Industry: Amazon’s deal with food delivery is another aspect to leverage Amazon’s supply chain expertise. For example, Zomato, India’s leading food delivery company, has shown their concerns over Amazon to enter this lucrative business. Small Business Accelerator: Amazon has announced $18 billion investment to help small businesses to sell customers. These investments involve logistics, tools, education programs, services, & people. The aim is to enhance the growth of existing sellers as well as 100,000 new sellers on the platform (Sudhakaran, 2020). Threats Government Regulations: Government makes some rules that results in huge loss to the whole company. For example, in early months of Covid-19, govt of India banned the sales of nonessential goods on Amazon, leads to loss of $398 million. Some policies are also favoring retail stores as compared to e-commerce industry. Such policies and shifts become major threats for Amazon’s growth domestically and internationally. Cybercrime: As an online retailer, Amazon is treated as an easy target for any hackers. It keeps the important information of customers like credit cards and other sensitive data of buying. Loosing data is a major threat to Amazon. Any mishap (privacy violations & DDos attack) is unavoidable and can impact amazon stock, profitability, credibility. Aggressive Competition: The major retail firms like Walmart and eBay can give a tough competition to Amazon in future. Some of other companies that give a competition to Amazon are:

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Apple TV+, Netflix, Disney+ in Video Streaming Services. FexEx in logistics. Tesla, Uber, Ford in Self Driving technology (Greenspan, 2019). PEST Analysis

Political factors Governmental Support for e-commerce.

Political stability of developed countries, especially U.S.A and Europe. Increasing governmental efforts on cyber-security. Overall, the political factors establish an opportunity for Amazon to expand its business in developed countries. For instance, Amazon could diversify its Brick-and-motor operations in US to grow its e-commerce business. It depends on governmental support to implement, distribute, and profit- all thanks to internet. As Amazon heavily depends on political stability in all countries, and e-commerce support, however, they are also troubled through cybercrimes too (Greenspan, 2019). Economic factors Economic stability of developed markets like U.S and Europe.

Potential economic recession of China. Increasing net income in developing countries. The economic stability of developed countries increases the trend of success for amazon. Due to this, Amazon has opportunity to grow in developing countries also. For example, the increasing income in developing countries can expand the financial performance of the company. While, the economic recession of China becomes a threat for Amazon because China is one of the biggest markets that the company concerns to highly penetrate (Greenspan, 2019). Social factors Increasing consumerism in developing countries.

Increasing online buying habits. Increasing wealth variations. The increasing wealth variations means the higher gap between rich and poor in various countries. Higher income levels are helpful in generating revenues of the company. Moreover, increasing consumerism creates opportunities to grow the e-commerce and IT business. It increases the potential success of Amazon strategy of competitive advantage and intensive strategies for growth due to its global expansion of online retail operations in developing countries. Online buying habits are also beneficial for company’s profit, as more and more people prefer to buy products online. One of the major reasons behind online shopping is pandemic which changed the consumer behavior (Greenspan, 2019).

Technological factors: Increasing efficiencies of IT resources. Rapid technological obsoleteness. Increasing cybercrimes. Technology is the backbone of Amazon. It is possible to become a profitable company across the globe due to the technology. As new technologies come into existence, Amazon has opportunities to improve its performance by using new technologies in its business. For example, Amazon implements drone delivery to consumers to enhance the speed of delivering the products and using cloud computing (amazon web service) to satisfy its customers. However, Cybercrime becomes a threat for Amazon because the whole business model depends on stacks. Consumers and third-party sellers are conscious about their personal information like credit/debit card on Amazon website. So, Amazon also faces some issues with the advancement of technology, may leads to decrease their customers preferences (Greenspan, 2019).

Consumer STP Types of segmentation Geographic

Demographic

Behavioral

Psychographic

Segmentation Criteria Region

Target Segment More than 100 countries

Density Age

Urban and rural 14 and older

Gender

Males & Females

Occupation

Students, employees & professionals Switchers ‘Hard- & Soft-core loyals’

Degree of loyalty Benefits

Broad range of products Convenient shopping Competitive pricing

Personality

Easygoing, ambitious

User Status

Non-users, regular users, potential users, first-time users.

Social class

All classes: lower, working class, middle class and upper class

Lifestyle

Explorer, Struggler, Mainstreamer.

References Sudhakaran, A. (2020, September 28). Amazon SWOT Analysis: 2020 A Year to Remember. Retrieved from https://pestleanalysis.com/amazon-swot-analysis/ Dudovskiy, J. (2020, March 29). Amazon Segmentation, Targeting and Positioning: Widest Range of Target Customer Segment. Retrieved from https://research-methodology.net/amazonsegmentation-targeting-positioning-widest-range-target-customer-segment-2/ Business Strategy Hub (2020, September 06). Amazon SWOT 2021/ SWOT Analysis of Amazon. Retrieved from https://bstrategyhub.com/swot-analysis-of-amazon-amazon-swot/

Greenspan, R. (2019, June 22). Amazon.com Inc. SWOT Analysis & Recommendations. Retrieved from http://panmore.com/amazon-com-inc-swot-analysis-recommendations Greenspan, R. (2019, June 22). Amazon.com Inc. PESTLE/ PESTEL Analysis, Recommendations. Retrieved from http://panmore.com/amazon-com-inc-swot-analysisrecommendations...