8.

0 Porter Five Forces Analysis

Competitive Rivalry Competitive Rivalry is referring to an understanding of forces of

competitor and ability that could be threaten.
In retail industry, oligopoly is the nature of current market which
indicate that highly aggressive competitor arises to expand the
market share. A strong force of competitor that online retailer will
face such as Alibaba, E-Bay or Walmart. To be able sustain the
current market, further investment based on the market demand is
necessary for being competitive advantage. For instances,
Amazon has further invested on FBA for convenience and rapid
service to customer for being competitive.

Threat of Substitution Threat of substitution is threat of the similar product or service

that offer by competitor which can be take over.
Threat of substitution is strong as in online and physical store
market. The market has become more optional to customer to buy
or sell their goods which indicate customer has no switching cost
position to purchase or sell their goods on the platform that they
are preferable at. For instances, same product may available
between ‘Amazon Go and Walmart’ or ‘Amazon and Alibaba’,
customer will buy the product whichever pricing is low.
Bargaining power of Bargaining power of consumer is refers to the bargain of customer
Consumer being optional to switch to another competitor.
The bargaining power of consumer is high as substitution has
significantly increase, customer has high bargaining power to
choose whichever they prefer to use or consume due to no
switching cost position, it’s always optional to them. For
instances, customer switch the E-Bay to buy a product causes of
better offer.
Bargaining power of Bargaining power of supplier is refers to how much power of
Supplier supplier that can be drive over a company with prices.
The bargaining power of suppliers is low due to numbers of
suppliers has increasing significantly and it’s become competitive
 to suppliers. For supplier perspective, if supplier do not offer
better option to retailer, it will fail the business of supply. For
instance, retailer can always obtain from any supplier whichever
offer better instead of relying on single supplier.
Threat of New Entrants Threat of new entrants is refers to a barrier of entry level to enter
the marketplace.
In retail industry, new entrant has significantly increase due to
low entry barriers. The market is getting more competitive but to
be able sustain for the current market, it requires the new entrants
to get more capital to further invest on marketing and overcome
aggressive competitor for being competitive advantage. Yet, new
entrants are recognised as medium force causes of there is still
high opportunity for new entrants grow rapidly causes of
innovation business model or new potential business strategic.

Referring the table above, competitive rivalry is strong and new entrants is at medium force,
the current market is highly competitive for retailer due to aggressive competitor and
potential new entrants. The bargaining of consumer is high due to the substitution is increase
significantly and no switching cost which outcoming consumer being more optional to
choose the platform whichever offering the best. For bargaining of suppliers is low due to
large numbers of supplier is available in the market, retailer is optional to obtain or source
goods from any supplier whichever is offering the best.