Amazon: Company Profile

Amazon is the world’s leading online retailer with many achievements, huge profits and
successful launching of new services and products. Amazon’s popularity has soared around the
world for quite a while. Currently it has over 310 million active users and 100 million
subscribers worldwide. 2021’s first quarter saw amazon rake in a net sales of $108.518 billion an
almost 44% increase from the same quarter in 2021.

Company Analysis Report

Historical Background
Amazon started as a humble online bookstore in July 1995, when the internet was just getting
really popularity. Since then the company has transformed itself to become the largest online
retail company. Jeff Bezos laid the cornerstone of Amazon in 1994.

Mission
Amazon’s mission statement reads as “serve consumers through online and physical stores and
focus on selection, price and convenience.”

Vision
Amazon’s vision statement is stated as follows “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.”

Core Values
The only core value amazon abides by is keeping customers happy.

Marketing Analysis
Offerings
The variety of products one finds at amazon is astounding. This has set the company apart as it
provides customers with products from various brands and varieties which can be compared
against each other through the website giving customers choice and shopping support.

Pricing
Offering the Lowest price possible for products is what Amazon prides itself with. Customers
come from all income levels making amazon the go to website to research products.
Promotional and Distribution Strategy
If one can sum up amazon’s strategy in two words it is “customer obsessed”. Amazon, given its
online front is the main front through which customers access products, had a detailed search
engine optimization (SEO) so as to reach as many customers as possible by being able to appear
first in search engines. Moreover, AdWords and other advertising options online are also made
use of as the other reach out mechanisms for amazon. In terms of services, amazon actively put
effort to create simple and clear customer experiences through testing and learning.

Major Competitors Analysis

The major competitors to Amazon are Barnes and Noble in its book, e-bay in online retailer
business and nowadays Netflix in video and DVD sales. Given amazon’s involvement in so
many business lines that a diverse set of competitors come to mind.

As big as Amazon is, the company still has its fair share of competitors. Streaming service
Netflix competes with Amazon Prime Video. Google Home products compete with Amazon’s
virtual assistant Alexa. In the cloud computing arena, Microsoft Azure and Google Cloud both
compete with Amazon Web Services (AWS). And that’s just on the technology side — there are
plenty of B2B and B2C ecommerce stores going head to head with Amazon and thriving.

Ecommerce Competitors
No one directly monitors the exact number of ecommerce websites across the globe. However,
it’s estimated that there are upwards of 24 million stores selling products on the Internet today.
There is just one Amazon. One of those websites might not take a huge chunk of Amazon’s
market share on its own. But collectively, every online store poses a threat to Amazon.

Niche ecommerce stores.

When Amazon first launched back in 1994, the company specialized in selling books online. But
today, the company doesn’t necessarily have one clear-cut specialty. Some customers will
always prefer buying from niche stores, brands, and manufacturers. In terms of knowledge and
quality, they can’t compete with smaller niche shops that are experts in a particular industry.

A few examples of niche products include beard oil, CBD for pets, and vegan cosmetics.
Consumers are more likely to buy products like this directly from a company that specializes in
those industries.
Furthermore, 66% of shoppers worldwide, and 73% of Millennials say they are willing to spend
more money on sustainability. So niche ecommerce sites can even charge more money for their
products.

Walmart.
Walmart is another global giant. This big-box department store generates $514.41 billion in net
sales per year. That’s more than double Amazon, although a large percentage of Walmart’s sales
obviously come from brick-and-mortar purchases. There are more than 11,000 Walmart physical
store locations across 27 countries. While Walmart is best-known for its physical department
stores, this retail giant also has a significant presence online. Behind Amazon, Walmart is the
second most popular online store in the United States in terms of ecommerce revenue. With
Walmart’s international presence and customer base, they will be a continuous threat to Amazon
in the ecommerce space. Walmart’s online sales are growing at 40% year-over-year. At this
pace, you can expect this giant to take away even more Amazon business in the coming years.

Alibaba / Aliexpress.
Alibaba is a China-based online retailer. This international giant specializes in wholesale selling
online, which is a differentiation factor compared to Amazon. Another unique difference
between Alibaba and Amazon is its overall business model. While Amazon is run entirely under
one roof, Alibaba is split into separate businesses: Alibaba, Taobao and Tmall. Alibaba is the
B2B focus of the company, while the other branches focus on B2C and multinational brands,
respectively. As of June 2019, there are 755 million Alibaba users worldwide. The company is
responsible for 58% of all online retail sales in China.

With an international presence, a dominant market share in China, and B2B sales in addition to
B2C focus, Alibaba is a force to be reckoned with. To illustrate the significance of Alibaba, the
company sold $30 billion in one day during a “singles’ day”. Any company that can sell this
much in just a day may definitely win against Amazon.

Otto
Otto is a European online retailer. The company is best known for innovation throughout the
years to keep pace with the times. At its core, Otto is a trading company, meaning that it sells
products from other brands on its ecommerce platform. It’s essentially a one-stop-shop for
buying online in Europe. Some of Otto’s top categories include fashion, electronics (like Apple
and Microsoft products), home goods, and sports. One of the reasons why Otto is so popular is
due to its user-friendly interface. The platform makes it easy for consumers to shop online. In
2019, Otto generated roughly $3.8 billion in revenue from online sales. While this may seem
marginal compared to Amazon, it’s still extremely impressive. Otto has a 13.7% annual growth
rate. 72% of their sales come from furniture, appliances, and fashion purchases. This makes them
unique compared to Amazon.

eBay
This website was a pioneer in consumer-to-consumer selling through an online marketplace.
Over time, eBay has evolved and become more than just a way for consumers to buy and sell
their own new or used merchandise. Today, eBay is used for B2C sales in addition to its
traditional C2C model. In terms of marketplace website visits, eBay is second to Amazon, with
just under 20% of the market share. The site traffic to eBay is impressive. It’s nearly double
Walmart, and we’ve already established how successful Walmart is in the online space.With the
ability to bid on products and the unique way for buyers and sellers to connect online, eBay is a
top competitor to Amazon.

Marketing Practice Report

Core Competencies
Amazons core competencies in its marketing practice are centered around customers acquisition,
customer retention and innovative use of technology and data. Moreover, Amazon puts an
intense effort in product differentiation by investing heavily in innovation and research. The
current trends in Amazon’s efforts indicate an expansion to variety of business types from
grocery to shipping, from manufacturing to web services with 100 entities under the brand’s
umbrella.

The following key items can effectively generalize the core competencies of amazon.

1. Customer convenience and accessibility

2. Unlimited options for selection
3. Custom made services
4. The superiority of the content of the website
 5. The efficient and good quality search tool to find the items of one’s choice
6. Price

External Environment: Process for Identifying and Tracking Trends

Amazon has the biggest, most detailed aggregation of data regarding products, buyers, sellers
that enables one to forecast trends through data mining techniques. Moreover, customer feedback
system through ratings and recommendations was pioneered by the company and continues to be
such a powerful channel to listen into what customers want or prefer driving amazon to create
innovative new products and services. There is no better infrastructure than that of amazon’s to
identify and track trends compared to others.

Credit Crunch 2008: How Amazon Survived? Opportunity or Threat?

Amazon’s profits rose during the credit crunch. Well ahead of Wall Street’s expectations, in
2009 Amazon’s profits were up 24% to 177m with revenues up 18% amounting to $4.89 billion.
One can consider the recession resulting from the credit crunch as an opportunity as many brick-
and-mortar companies went bankrupt including the big electronics sales company circuit city. As
a result of these the sales in the electronics section of Amazon rose by 38%. Moreover,
Amazon’s bet in hardware production, Kindle for eBooks, went on to sell well which can be
considered as an effort to diversify amazon’s investment which payed off.

Amazon’s Marketing Information System

In early stage of the amazon.com‟s journey, the business strategy of amazon.com was very
simple and forward. Their one and only strategy was to sell books to the customer through
online. They invested to the customer and offer them a huge collection of books through online.

“From the beginning our focus has been on offering our customers compelling value. We
realized that the web was and still is the World Wide Web. Therefore we set out to offer
customer something they simply could not get any other way and began serving them with the
book.” Amazon.com attracted customers by offering 1-click shopping, low price and increasing
customer’s value. Creating easy to use and easy to learn customer interfaces was a key aspect of
Amazon‟s strategy.

Amazon web service has become a global platform for individual to retailers to sell their
products. Through reliable, Scalable, and robust web service amazon creates a global
domination. The challenges of amazon.com web services are very prominent. Every second
thousands of customers are searching. For products and ordering products, the systems have to
be fast, reliable and secured. Every second CRM (Customer Relation Management) system is
taking customer information though their searching, data mining, wish list and so on. Whatever
customer buys or not they are providing information about them. Systems are smart enough to
analysis the information and provide service accordingly.

Amazon’s founding strategy that digital commerce will radically reshape our marketplace based
on Jeff Bezos’ three ideas.

1. Digital enables limitless inventory (Diversification Strategy),

a. Amazon has a total of 573 million products on sale on its platform in 10+ segment
as of Nov 2017
2. Digital boosts customer care (Retention Strategy),
a. For the ninth consecutive year, Customers Rank Amazon #1 in Customer
Satisfaction (Foresee Experience Index) (Amazon.com, no date)
3. Digital allows high margin, lowest prices
a. Internet, AWS, KIVA Robotic Fulfilment, Digital Content and Services support
to achieve economy scope and scale by reducing cost and increasing selection

Amazon’s Social Responsibility Work

Environmental Protection and Society’s Long term Well Being
Amazon has a dedicated section in its “about amazon” website regarding concerns of
sustainability. Here amazon explains a number of steps it has taken towards becoming a green
company with zero carbon footprint across all its business ventures by 2040.

Strength and Weakness of Amazon’s Marketing Practice

Strength in Internal strategic factors
1. Strong brand name: Amazon has an already well known and respected brand name as a
globally successful e-commerce giant. The brand has been valued worth 200 billion
dollars just second to Apple according to Interbrand’s Global Brand ranking in 2020.
2. Customer centric: Amazon services large variety and number of customers for everyday
need with inexpensive prices.
 3. Differentiation and Innovation: Amazon heavily invests in creative ideas to its product
line and services creating a differentiation that sets it apart from other companies.
4. Cost Leadership: Amazon sells everything online so does not incur costs typical brick-
and-mortar retailers have to. This saves the company significant expenses. Moreover
amazon has efficient control mechanism for its inventory replenishment time and cost
management. To add to this, Amazon has managed to form strategic alliances with a
number of companies which helps the company in maintaining a low-cost strong value
chain system.
5. Largest Merchandise Selection: through ownership of extensive product mix which
tends to influence to get their shopping done at amazon.com rather than other online
retailers. To support this data shows that as of 2018, Amazon has managed to sell 562.3
million products in its Amazon.com Marketplace.
6. Large number of third-party Sellers: as a result of high traffic volume on Amazon’s
sites, quite a large number of third party sellers have chosen as it to be their platform for
selling their merchandise. Currently, one can find over 2 billion products from different
third party sellers in amazon’s e-commerce site.

Weaknesses of Amazon
1. Easily imitable business model: Online retail businesses have become quite common in
this digital world. So imitating Amazon’s business model for rival firms is not so
difficult. A few businesses are even giving Amazon a tough time. These include Barnes
& Noble, eBay, Netflix, Hulu, and Oyster etc.
2. Losing Margins in Few Areas: In few areas such as India, Amazon has faced losses. It’s
free shipping to customers can be one of the reasons that expose the risks of losing
margins in some markets.
3. Product Flops and Failures: Its Fire Phone’s launch in the US was a big failure while its
Kindle fire device didn’t even grow well.
4. Tax avoidance Controversy: tax avoidance in Japan, UK and US has sparked negative
publicity for Amazon.
5. Limited brick-and-mortar presence: Amazon owns very limited physical stores. This
sometimes hinders to attract customers buy things which are not sellable on online stores.
 6. Unfair use of third party data: Engaging in unfair trade practices undermines trust and
increases legal risks.
7. Declining consumer safety: As its offerings increase, it is becoming a challenge for
Amazon to vet each product and guarantee the highest level of safety.
8. Overdependence on distributors
9. Employees Strike

Suggestions on Marketing Practice for Better Global Competitive Advantage

Amazon needs to strengthen its key areas, minimize its weaknesses, avail opportunities, and
counteract threats for future progress.

1. Consolidate the market dominance by boosting its marketing efforts, promotional

activities, and competitive advantages.
2. Strategically deal with global controversies. Amazon needs to resolve tax issues and
manage its app’s features efficiently to diminish negative publicity in the market.
3. Increase its limited presence through opening physical stores outside the U.S. This will
augment brand popularity and market reach.
4. Enhance its strategic entry in developing countries where many growth opportunities are
available.
5. Increase competitive edges and enlarge the gap between Amazon and its biggest
competitors.
6. Address the issues of counterfeit sales and cybercrimes by upgrading technology
measures.
7. Enhance network security systems for the protection of consumers’ rights.