AMAZON FOUNDER AND CEO JEFF BEZOS.

BACKGROUND AND HISTORY

In 1994, Bezos left his job as vice-president of the Wall Street firm D.E. Shaw, moved to Seattle,
and began to work out a business plan for what would become Amazon.com. After reading a
report that projected annual Web growth at 2,300 percent, Bezos drew up a list of 20 products
that could be sold on the Internet. He narrowed the list to what he felt were the five most
promising: compact discs, computer hardware, computer software, videos, and books. Bezos
eventually decided that his venture would sell books over the Web, due to the large worldwide
market for literature, the low price that could be offered for books, and the tremendous selection
of titles that were available in print. He chose Seattle as the company headquarters due to its
large high-tech work force and its proximity to a large book distribution center in Oregon. Bezos
then worked to raise funds for the company while also working with software developers to build
the company's web site. The web site debuted in July 1995 and quickly became the number one
book-related site on the Web.

In just four months of operation, Amazon.com became a very popular site on the Web, making
high marks on several Internet rankings.

Unlike its large competitors, such as Barnes & Noble and Borders, Amazon.com carried only
about 2,000 titles in stock in its Seattle warehouse. Most orders through Amazon.com were
placed directly through wholesalers and publishers, so no warehouse was needed. Amazon.com
would simply receive the books from the other sources, then ship them to the customer. At first,
the company operated out of Bezos' garage, until it was clear that it was going to be a success,
necessitating a move to a Seattle office, which served as the customer support, shipping, and
receiving area. It was interesting that, because of the Internet, such a small venture could realize
such a broad scope so quickly; within a month of launching the web site, Bezos and
Amazon.com had filled orders from all 50 states and 45 other countries.

As a pioneer in the world of Internet commerce, Amazon.com strived to set the standard for web
businesses. With that goal in mind, Bezos went to work on making the web site as customer
friendly as possible and relating the site to all types of customers. For those people who knew
what book they were looking for and just wanted quick performance and low cost, Amazon.com
offered powerful search capabilities of its expanded 1.5 million-title database. The company also
began offering 10 to 30 percent discounts on most titles, making the prices extremely affordable.
For other customers who were just looking for something to read in a general area of interest,
Amazon.com offered topic areas to browse, as well as lists of bestsellers, award winners, and
titles that were recently featured in the media. Finally, for people who could not decide,
Amazon.com offered a recommendation center. There a customer could find books based on his
or her mood, reading habits, or preferences. The recommendation center also offered titles based
on records of books the customer had purchased in the past, if they were return customers to the
site.

GOING PUBLIC IN 1997

After less than two years of operation, Amazon.com became a public company in May 1997 with
an initial public offering (IPO) of three million shares of common stock. With the proceeds from
the IPO, Bezos went to work on improving the already productive web site and on bettering the
company's distribution capabilities.

FURTHER EXPANSION IN 1998

Amazon.com also expanded its business through a trio of acquisitions in early 1998. Two of the
companies were acquired to further expand Amazon.com's business into Europe. Bookpages, one
of the largest online booksellers in the United Kingdom, gave Amazon.com access to the U.K.
market. Telebook, the largest online bookseller in Germany, added its German titles to the mix.
Both companies not only gave Amazon .com access to new customers in Europe, but it also gave
existing Amazon.com customers access to more books from around the world.

GROWTH CONTINUES: 1999 AND BEYOND

In 1999, it launched an online auction service entitled Amazon Auctions. It also began offering
toys and electronics and then divided its product offerings into individual stores on its site to
make it easier for customers to shop for certain items.

In 1999, Bezos reached the upper echelon of the corporate world when Time magazine
honored him with its prestigious "Person of the Year" award.
 During 2001, the company focused on cutting costs. It laid off 1,300 employees and closed a
distribution facility. The company also added price reduction to its business strategy, which had
traditionally been centered on vast selection and convenience. Amazon.com inked lucrative
third-party deals with such well-known retailers as Target Corporation and America Online, Inc.
By now, products from Toysrus.com Inc., Circuit City Stores Inc., the Borders Group, and a host
of other retailers were available on the Amazon.com site.

Amazon.com's strategy worked. In 2001, sales grew to $3.12 billion, an increase of 13 percent
over the previous year.

2000
Marketplace, Amazon's third party seller business, launches. New logo, with arrow running from
the A to the Z in Amazon launches, reflecting desire to sell everything from A-Z.

2001

Signs partnership deal to takeover running of Borders.com; Borders collapses ten year later.
Amazon makes first quarterly profit at end of the year.

2002
Launches Amazon Web Services, its cloud computing platform.

2003
Signs partnership deal to takeover running of Borders.com; Borders collapses ten year later.
Amazon makes first quarterly profit at end of the year.
2004
Sells shoes for the first time.
2005
Amazon Prime, its premium membership package launches in the US, followed in the UK two
years later.
2006

Amazon Fresh, its online fresh food delivery business, launches in Seattle.
2007
Kindle book e-reader launches.
2008
Amazon Games launches.
2010
Amazon Studios launches to create original television content.
2011
Kindle Fire, the company's tablet, is unveiled.
2012
Acquires Kiva, a robotics company, for $775m.
2013

Amazon Art launches. Drone delivery plans unveiled for first time under 'Prime Air' name.
2014
Echo, Amazon's voice-activated information and home gadget device, launches in the US.
2015
Celebrates 20th birthday with market capitalisation standing in excess of $245bn.
 2016 & 2017
In 2016 & 2017, Amazon announced that it would acquire whole foods, a high-
end supermarket chain with over 400 stores, for $13.4 billion
2018
Amazon launched the last-mile delivery program and ordered 20,000 Mercedes-Benz Sprinter
Vans for the service in September 2018

AMAZON.COM’S MISSION STATEMENT

Amazon’s mission statement is “We strive to offer our customers the lowest possible prices, the
best available selection, and the utmost convenience.” This corporate mission promises
attractive e-commerce services to satisfy target customers’ needs. The company focuses on the
variables of price, selection, and convenience. In this regard, the following characteristics are
identifiable in Amazon’s corporate mission statement:

1. Lowest prices
2. Best selection
3. Utmost convenience

The “lowest prices” component of the mission statement guides the pricing strategies included
in Amazon.com Inc.’s marketing mix or 4P. Low prices are a selling point that makes the
company’s e-commerce website and services attractive. A corresponding strategic objective is to
reduce operational costs to enable the business to minimize prices. Amazon’s corporate mission
statement also points to having the best selection. For example, the wide array of products on the
company’s website is a factor that attracts customers. Moreover, Amazon.com Inc.’s corporate
mission emphasizes convenience, such as in accessing the company’s products via the Internet.
This characteristic is a response to consumers’ use of “convenience” as a criterion when
evaluating the quality and attractiveness of online retail services.

AMAZON.COM’S VISION STATEMENT

Amazon’s corporate vision is “to be Earth’s most customer-centric company, where customers
can find and discover anything they might want to buy online.” This vision statement
underscores the business organization’s main aim of becoming the best e-commerce company in
the world. In this regard, the following characteristics are identifiable in Amazon’s corporate
vision statement:

1. Global reach
2. Customer-centric approach
3. Widest selection of products

The “global reach” component of Amazon.com Inc.’s vision statement is all about international
leadership in the e-commerce market. For example, in stating the “Earth” as the market, the
company shows that it aims to continue expanding globally. Thus, a corresponding strategic
objective is global expansion, especially through market penetration and market development,
which are included in Amazon.com Inc.’s generic strategy and intensive growth strategies. The
customer-centric approach in Amazon’s corporate vision statement shows that the company
considers customers as among the most important stakeholders in the online retail business. This
consideration agrees with Amazon.com Inc.’s corporate social responsibility strategy for its
stakeholders. Moreover, the corporate vision indicates continuing efforts to broaden the product
mix. These efforts contribute to business growth and to making the company’s services more
attractive to target consumers.

AMAZON’S 4 PILLARS OF BUSINESS SUCCESS

Amazon’s 4 pillars are universally the best way to operate and grow a profitable business today.
They work equally well for digital and physical businesses. And they’ll keep you focused on
what matters most, guiding your decisions, your priorities and your day-to-day operations.

PILLAR #1: CUSTOMER CENTRICITY

For Bezos, customer centricity is WIIFM on steroids.

Rather than trying to stay ahead of his competitors, he tries to stay one step ahead of his
customers. Essentially, to be like Amazon, you’ve got to be obsessed with your customers’
experience, prioritizing their needs and desires above everything else. Amazon, is after all, the
most customer-centric company is the world.

For instance, Amazon puts a chair in every boardroom to represent the customer — a physical
reminder to innovate on their behalf. And Amazon Echo, which began as a simple virtual
assistant, has evolved into Echo Look, a hands-free camera and style assistant, and Echo Show, a
communal household computer. Amazon doesn’t even consider starting a new project until
they’ve looked at it through the customer’s eyes. If someone wants to recommend a new product,
they must write a (pretend) press release outlining the benefits of the product they envision.

Only after reviewing it from the customer’s perspective can they talk about code or get input
from designers.

PILLAR #2: INNOVATION

This is about coming up with new ideas and new ways of doing things, but not for the sake of
creativity or impressing stockholders. True innovation is about bringing value to your customers —
because innovation that doesn’t benefit and serve your customers won’t help you grow. Today,
Amazon flexes its innovation muscles by exploring artificial intelligence(AI) and outer space
(through Blue Origin, Bezos’ private space company).But innovation isn’t confined to radical
new ideas. It happens anywhere you creatively serve your customers, from your office cubicles
to your meeting rooms.Here’s how Bezos has explained  his approach to innovation: “I like to
wander” down the paths of ideas. Wherever he wanders, he likes to leave room for inspiration,
preferring “loose” meeting agendas over rigid ones. And when it comes to project management,
he likes to be “stubborn on the vision, but flexible on the details.”
P ILLAR #3: C ORPORATE AGILITY

Corporate agility is about speed of execution, the ability to remain flexible and adaptable
regardless of your business’ stage of growth.Often, as businesses grow, they lose that ability, and
as soon as they do, it’s often the beginning of the end. As an example, after a Kodak employee
invented the digital camera in 1975, management promptly killed it. They were afraid digital
innovations would cannibalize film sales. Is it any surprise they filed for bankruptcy in 2012?
Since then, the Kodak brand has done a complete 180, following this Bezos pillar.

To be like Amazon, you need to be so agile, you’re willing to disrupt your own business. Bryan
Eisenberg even recommends you create a team whose sole job is to put you out of business —
because if you don’t come up with the innovations that shake up your status quo, someone else
will. “Give them the resources they need and cut them loose,” he says. “Then be agile and
execute their ideas.”

PILLAR #4: CONTINUOUS OPTIMIZATION

Continuous optimization is hard for most businesses because it means you’ll never be satisfied or
settle for “good enough.”From messaging to packaging and returns, from your business
operations to how your bathrooms are cleaned, there’s always room for improvement.
Optimization is about improving processes so you can become more efficient and bring more
value to your customers. Emphasis on bringing value to your customers. Though each
improvement may only shave percentages off your time or costs, over time, they add up. The
result is higher profits and, if you’ve implemented the first pillar, happier customers too.

BOTTOM LINE + NEXT STEPS

Many businesses start out strong. In their first year or so, they’re great innovators with good
customer service. But as they grow, they begin to add layers of management and bureaucracy,
making innovation all but impossible. The original passion for the customer often dissipates.
Profits become the highest priority, and innovation and optimization grind to a halt. Amazon’s 4
pillars are designed to keep your focus where it belongs: on the foundational principles that spur
growth and profits. Make them the pillars of your business, and you’ll easily Be Like Amazon.
Or don’t, and you’ll be like Blackberry, Kodak, Blockbuster, and other brands that failed to
innovate.

AMAZON'S STRATEGY TO SUCCESS

AMAZON FOCUSES ON THE LONG TERM NOT THE SHORT TERM
“We are comfortable planting seeds and waiting for them to grow into trees,” says Bezos. “We
don’t focus on the optics of the next quarter; we focus on what is going to be good for customers.
I think this aspect of our culture is rare.” 
A perfect example of the long-term focus is Amazon Web Services (AWS) and how it started
with startups and developers and has now expanded to million of customers.  Companies of all
sizes use AWS such as Pinterest, Airbnb, GE, Capital One, Johnson & Johnson, McDonald's and
Time Inc.
AMAZON SEES OPPORTUNITIES AND NOT FAILURES
Instead of focusing on setbacks, Jeff Bezos the founder of Amazon sees opportunities and
solutions. This is evident in how Bezos talks about failure and planting seeds. "If you invent
frequently and are willing to fail, then you never get to that point where you really need to bet
the whole company. [Amazon Web Services] also started about six or seven years ago. We are
planting more seeds right now, and it is too early to talk about them, but we are going to continue
to plant seeds. And I can guarantee you that everything we do will not work. And, I am never
concerned about that. We are stubborn on vision. We are flexible on details."  Bezos made risky
moves early on in the establishment of Amazon that helped in the long-run.  It is noted that
Bezos invested in warehouses, which caused the stock prices to drop significantly at first, but
this contributed to their journey to become the leader in online retailing. 
AMAZON STRESSES THE IMPORTANCE OF CUSTOMER SATISFACTION INSTEAD OF THE
COMPETITOR
"If you're competitor-focused, you have to wait until there is a competitor doing something.
Being customer-focused allows you to be more pioneering." 
"Each year the University of Michigan calculates a customer-satisfaction index for 225 of
Americas largest companies. Amazon has led the online retailing category for years and has
repeatedly placed in the top 10 among all companies." 
Bezos adopted an approach to help never lose the importance of customer satisfaction and
Amazon narrows in on eliminating the risk of unsatisfied customers. As you can see from the
quotes above, Amazon walks the talk in being successful in maintaining customer satisfaction
(See Michigan Study for further details). Amazon strives for excellence in customer satisfaction,
perhaps one could say a strive for perfection. Bezos states that “We’re not satisfied until it’s
100%.” It is noted that Bezos would have an empty chair to remind staff in the meeting to
imagine a customer present and to consider what they would want.  He called the customers
"“the most important person in the room. Bezos describes the importance of knowing your
customer and things that will not change.  He notes customers want "selection, low prices, and
fast delivery." He shares how these three consumer desires are likely not going to change. 

AMAZON ACHIEVES EXCELLENT CUSTOMER SATISFACTION THROUGH SPEEDY SERVICE

It is noted that Amazon is very focused on preventing any delays (in products, delivery, web
page loading).  "Amazon has metrics showing that a 0.1 second delay in page rendering can
translate into a 1% drop in customer activity."  Amazon stresses the importance of fast delivery
for the consumer. In addition to fast delivery, they also value efficiency within the operations of
the company and affordability for the consumer.  
AMAZON ACHIEVES EXCELLENT CUSTOMER SATISFACTION THROUGH COMPETITIVE PRICES
Bezos tries to keep all costs low within the business to allow for him to provide the low prices.
Frugality” is one of eight official company values as stated earlier - This will align for how
Bezos operates the company and ensures unnecessary expenses are not occurring which would
result in the consumer having to pay more. For example, he is known for keeping old black-and-
white printers and other office equipment at low cost, no one in the company flies first class, and
keeping the size of the teams small.  He also has a "two pizza rule" which essentially is that if
you require more than two pizzas to feed a team, it is too big.  Bezos restricts his salary to
$81,840 as well as his management team's salary to help keep costs low. It appears that
employees get some ownership in the company (stock options) to counter the lower salaries. 
AMAZON TRAINS EMPLOYEES TO UNDERSTAND THE CUSTOMER EXPERIENCE TO GET
ALL EMPLOYEES TO UNDERSTAND THE CUSTOMER
Jeff Bezos ensures managers and all staff understand the experience of the customer. He arranges
for them to take a two-day training at a call center to allow them to understand what the customer
goes through and to ensure humility.  Bezos not only encourages his managers to be sensitive to
the customer experience, but he also has role modeled this in his interactions with the consumers.
This can be seen when Bezos showed humility to his consumers when Amazon made a mistake
of deleting e-books of their customers and he sent out a personable apology. The apology is
noted to make customers remain loyal and quickly forget about the issue. 
AMAZON'S MARKETING STRATEGY IS PROVIDING GREAT SERVICE THAT CREATES
POSITIVE WORD OF MOUTH AND FOCUSING ON SEO & PPC
“If you make customers unhappy in the physical world, they might each tell six friends. If you
make customers unhappy on the Internet, they can each tell 6,000.” 
Amazon focuses on making the customers happy. Their budget for advertising is small for its
size of the company, but they focus on word-of-mouth being an essential part of their success. "If
you do build a great experience, customers tell each other about that. Word of mouth is very
powerful."  Amazon spent 2.8 billion dollars on digital marketing. If you look at their sales from
2014-2015, it was $71.84 billion in sales. 

HOW DOES AMAZON RESPOND TO COMPETITION

“What’s really happening out there is that Amazon is shredding the competition, and the
competition just doesn’t know what to do about it.”  
Amazon expanded their services quickly and have caught competitors by surprise by some of the
industries they have invested in (such as making movies). By expanding quickly and taking
minimal profit, it is hard for competition to keep up with Amazon. 

HOW DOES AMAZON POSITION THEIR BRAND

In 2015, Amazon's brand was worth $176 billion USD.  Amazon has developed their brand story
through how Jeff Bezos started the business. An entrepreneurial story about how he started
selling books from his garage to an extensive successful online store that sells a vast amount of
selection. The brand of Amazon is also strongly associated with putting the customer at the
center. Jeff Bezos has focused on getting his brand to be associated with having a vast variety of
products, low prices, and customer satisfaction. 
HOW DOES AMAZON MAINTAIN LEADERSHIP ?
AMAZON MAINTAINS LEADERSHIP WITH THEIR PRODUCT SELECTION
Amazon maintains their leadership by creating a diverse product selection.  They have moved
from the arts (literature, music, movies) to online groceries, cloud computing, and film/TV
production.  Amazon is known as the "everything store". There are some odd selections of
products as well that can be found on Amazon, such as a model of fat replica or inflatable
unicorn horns for cats.
AMZN FINANCIAL SUMMARY
 For the nine months ended 30 September 2018, Amazon.com, Inc. revenues increased 37% to
$160.5B. Net income increased from $1.18B to $7.05B. Revenues reflect North America
segment increase from $47.82B to $97.24B, International segment increase of 79% to $45.04B,
Retail Sales, Total increase from $1.28B to $12.82B, Online Sales, Total increase of 14% to
$83.17B. Net income benefited from North America segment income increase from $548M to
$5.02B.

EXAMPLES OF AMAZON'S MARKETING

 Below you can see how Amazon utilizes Online and Offline Marketing. 31 
 
AMAZON.COM INC. OPERATIONS MANAGEMENT STRATEGIES
Amazon.com Inc.’s e-commerce success depends on the high efficiency achieved in its
operations management (OM), which directly determines productivity. The company must
address the concerns of the 10 strategic decision areas of operations management to optimize
productivity. As the leading player in the e-commerce industry, Amazon is an example of the
significance of technologically supported productivity for optimal efficiency of services. These
10 strategic decisions of operations management become increasingly complex, as the
organization continues to expand and diversify its business. Continuous improvement can help
enhance the capabilities of Amazon in maintaining adequate support for operations despite
global expansion and the broadening of the product mix [Read: Amazon’s Product Mix,
Marketing Mix]. Through effective operations management, Amazon keeps its lead in online
retail and the e-commerce market.

Amazon ensures that its operations management (OM) efforts satisfy the 10 strategic decision
areas of its e-commerce business. With expanding operations in addition to online retail
business, Amazon.com Inc. must continue adjusting its operations management approach for the
corresponding changes in these strategic decision areas

. D ESIGN OF GOODS AND SERVICES. The design of organizational output is covered in this
strategic decision area of operations management. Amazon addresses this concern primarily
through technology. For example, the company uses advanced information and communication
technologies to ensure that its online retail services are efficient and convenient for target
customers. Such technologies are also used to support maximum efficiency of Amazon’s e-
commerce operations.

QUALITY MANAGEMENT The objective in this strategic decision area is to maximize quality of
operational output to satisfy the expectations of customers. Amazon.com Inc.’s operations
management approach involves continuous improvement efforts in its e-commerce business. The
company uses its organizational culture to support innovative idea creation among employees
[Read: Amazon’s Organizational Culture]. For example, Amazon encourages employees to be
bold and pioneering in creating new ideas to solve problems and improve the business.

PROCESS AND CAPACITY DESIGN. An objective of operations management is to optimize

production processes and capacity. In this strategic decision area, Amazon applies extensive
automation to streamline its business processes. For example, considering online retail service as
its main organizational output, the company automates the ordering process to increase the
capacity to accept as many simultaneous orders as possible. This approach to operations
management highlights the importance of automation and related technologies in enhancing
Amazon’s process and capacity in e-commerce.

LOCATION STRATEGY. The accessibility of resources and markets is considered in this strategic
decision area of operations management. In the case of Amazon.com Inc., the emphasis is on the
strategic location of warehouses or fulfillment centers. For example, Amazon must maintain
warehouses that are optimally near the largest possible number of customers of the online retail
business.

LAYOUT DESIGN AND STRATEGY. In this strategic decision area, operations managers have the
objective of optimizing the movement of human resources, materials, and information. Amazon
addresses this objective through efficient layout designs that align with computer-assisted
processes. For example, in the company’s warehouses and fulfillment centers, items are
organized according to a computerization policy. The corresponding layout involves
maximization of shelf space and minimization of aisles to achieve optimal capacity without
reducing process efficiency in Amazon’s online retail business.

JOB DESIGN AND HUMAN RESOURCES . Human resource development is the focus in this
strategic decision area. Amazon’s operations management uses a combination of in-house
employment processes and third-party employment agencies. For example, workers from these
agencies fill temporary positions and are evaluated to determine suitability for permanent
positions, especially in warehouses and fulfillment centers. Amazon’s recruitment and hiring
processes are aligned to organizational growth and human resource needs in corporate offices.

SUPPLY CHAIN MANAGEMENT . The operations management concern in this strategic decision
area is to streamline the supply chain to support organizational objectives. Amazon does so
through automation and enabling suppliers and buyers to access some of its IT assets. For
example, sellers adjust supply levels based on demand data available from the company’s online
retail website. Also, buyers can track order and communicate with suppliers through data
available from Amazon’s website.

INVENTORY MANAGEMENT . In inventory management, operations management’s focus is on

maintaining optimal inventory ordering and holding. Amazon addresses this strategic decision
area through a finished goods inventory using just-in-time inventory management in some areas.
For example, in just-in-time inventory management, some goods that arrive at the company’s
fulfillment centers are immediately shipped to fulfill customers’ orders. Amazon holds other
goods as part of its finished goods inventory. In addition, to ensure optimal inventory ordering
 and holding, warehouse employees are trained to maximize the speed of order fulfillment
through mobile computers linked to a central computer and database. In this way, Amazon.com
Inc.’s operations management optimizes its online retail inventory size to minimize costs while
satisfying market demand.

MAINTENANCE . This strategic decision area emphasizes the reliability and stability of business
processes. Amazon.com Inc.’s operations management involves specialized teams for
maintaining technological assets. In addition, workers are regularly trained to maintain human
resource capacity to satisfy the company’s needs for its e-commerce business. Moreover,
Amazon is always on the lookout for advanced technologies to improve its operational
efficiency.

AMAZON.COM INC.’S PRODUCTIVITY MEASURES

Amazon’s business productivity mainly refers to the productivity of its personnel and automated
systems in fulfilling customers’ orders. In online retail operations, the company’s employees
must move fast in packing and shipping items to fulfill customers’ orders. The following are
some of the measures or criteria used to determine productivity at Amazon:

1. Inventory items processed per hour (inventory productivity)

2. Orders fulfilled per hour (Amazon Fulfillment Center productivity)
3. Inquiries answered per day (customer service productivity)

SWOT ANALYSIS OF AMAZON 2018

INTRODUCTION:
Amazon is the leading e-commerce brand of the world and a leading cloud player too which was
incorporated in Washington first in the year 1994 and then in Delaware in 1996. Its website was
launched first in 1995. The brand has seen a lot of growth since its inception. Introduction of
prime has helped the brand find faster growth by growing the number of prime members. E-
commerce industry has grown intensely competitive and Amazon invests a large sum in research
and development for providing its customers with a superior experience. 2017 was a great year in
terms of financial performance and membership growth for Amazon. The brand sold tens of
millions of Echo devices, and Echo Dot and Fire TV Stick with Alexa. The popularity of
Amazon as a shopping destination for music and fashion lovers has also grown. This is a swot
analysis of Amazon highlighting its strengths, weaknesses, opportunities and threats.

STRENGTHS:

E-Commerce leader Amazon is the leading commerce brand globally and also a major cloud
player. Rising cloud business and the success of prime are driving the brand’s fast growth. Its
prime memberships globally have exceeded the 100 million mark. In 2017, it shipped more than
5 Billion items globally through the prime service. It is just the number of Amazon customers
that has kept increasing, but its product range and the variety of products available on its e-
commerce platform too.
Significant cloud player Amazon is also a leading player in the cloud industry. Amazon Web
Services is a leading provider of cloud based services. The brand has brought a wide range of
cloud based services aimed at maximizing the efficiency of its clients.

 Customer base & loyalty Amazon’s one major strength is its large base of loyal customers.
Too drive customer loyalty apart from focusing on convenience and customer experience the
brand has used prime memberships which is driving the addition of new as well as retention of
old customers. Other factors that have kept driving customer loyalty at Amazon include a
superior customer experience (this is an area that  Amazon takes seriously and continues to drive
the bar higher), customer service, quality of merchandise as well focus on innovation (high
investment in R&D)
Global presence Amazon is a global e-commerce platform that has sellers and buyers from
around the globe. Apart from sellers from all the states of US, sellers from 130 countries are
listed on its platform selling their products to a global audience.
Large range of products The range of products Amazon sells is very large. Hundreds of
millions of unique products are available on its e-commerce platform. Amazon is a favourite
destination of shoppers from around the globe in several categories including fashion, music and
electronics. The range of products in these categories available on its website has also continued
to expand. The number of third party sellers on its website has also continued to grow faster.
Strong financials The financial position of the brand is also a key strength. It achieved fast sales
growth in the recent years. While its operating margins are weak, the brand still achieves high
level sales leading to high profits which more than makes up for the thin operating
margins.   Compared to 2016, Amazon sales found a growth of more than 40 Billion dollars in
2017. Net sales of the brand touched 177.9 Billion dollars rising from 136 Billion last year.
During the same period, its net income grew from 2.4 Billion dollars to 3 Billion dollars
Focus on innovation
Amazon’s strong focus on innovation over the years has resulted in a better experience for the
consumers. the brand invests in several areas so as to continuously improve the customer
experience. AI is a key area in this regard and apart from that investment in other modern
technologies has also helped Amazon retain its competitive advantage. Amazon is trying to bring
its e-commerce experience to the next level. In the cloud business too, it is making huge
investments in innovation. The total sum that Amazon invested in research and development in
2017 equalled 22.6 Billions which was around 6.5 billion higher than its R&D costs in 2016.
Amazon has continued to raise its investment in R&D every year. It is the technology brand with
the highest R&D expenditure.
WEAKNESSES
Weak operating margins Amazon’s Operating margins  have remained weak traditionally. The last two
quarters saw a small rise but before that its operating margins stayed below 3% since the middle of 2016. In
last quarter of 2017, its operating margins grew to 3.5% and then in the first quarter of 2018 to 3.8%. Compare
it with the 45% operating margins of Facebook and there is a wide difference.

Product failures All the products made by Amazon have not been a huge success like Kindle or Alexa.
Some of its products have also failed in the past. Technological development is happening at a fast rate and
amid the huge competition sometimes all your products are not successful as you exp

Opportunities
Diversification Amazon is both a cloud player and an e-commerce brand. It can further diversify
its brand to find faster growth. Diversifying into new and related technological areas can help it
achieve after growth.
Forward integration Amazon can also achieve faster growth through forward integration.
Developing its own logistics and distribution network as well as opening its physical stores like
its fulfillment centers can help the brand achieve faster growth. This will also bring it closer to its
customers.
Acquiring new businesses Acquiring new businesses too offers new opportunities of faster
growth. Amazon acquired Whole Foods market recently and one other company named Ring that
operates in Home Security. Amazon can expand into newer areas that can help it grow its market
size and sales faster.

Releasing new products Increasing the range of products made by Amazon can also help it
improve its profit margins and revenue. Alexa has been a success but still there is intense
competition from the likes of Google. However, releasing new products also requires an accurate
understanding of consumers’ preferences. Otherwise, product failures too may result in losses.

THREATS
Heavy competition Amazon is facing heavier competition in both retail as well as cloud
business. the competition is growing intense day by day and there are several e-commerce brands
as well as cloud businesses competing with Amazon. Bay, Flipkart, Alibaba as well as IBM,
Oracle and Microsoft are also among its major competitors. Apart from them there is strong
competition from the physical retail brands. The threat from the physical retail brands has
intensified with the entry of Costco and Walmart into E-retail.
Regulatory threats Growing legal and regulatory pressures are also erecting barriers and
causing troubles for the big technology brands including Amazon. Especially, it is the European
Union where the environment has kept changing fast and where top technology brands have
faced the biggest challenges including large fines. In 2017, Amazon was hit by a fine of 250
million Euros in back taxes.
Stronger dollar The strengthening of dollar is affecting Amazon’s profits internationally.
Fluctuation in the foreign currency exchange rates has had potential negative impact on profits of
the large technology brands like Amazon.
Dependence on American markets
America is still the core market of Amazon and accounts for the largest proportion of its sales. Its
net sales in North America were close to double that of its net sales globally. Its 2017 Net sales
in North America were 106 Billion dollars while global sales amounted to 54.3 Billion dollars.
To reduce its dependence on the American markets, Amazon must focus on deeper penetration
internationally as well as marketing.

CONCLUSION

Amazon is a leading e-commerce and cloud brand that is operational globally. However, the
main market which accounts for largest proportion of its earnings. Around 2/3rd of Amazon’s
earnings in 2017 came from the North American markets.  The e-commerce market is intensely
competitive and Amazon’s operating margins are low. Increased sales of Alexa enabled devices
and higher prime memberships have driven the growth of Amazon’s revenue in the recent years.
Apart from the high competition, there are other challenges before Amazon too like a stronger
dollar as well as currency fluctuations. To find faster growth Amazon can try acquiring new
businesses as well as diversification and  release of new products.
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