AMPLE SUBSTITUTES IN THREAT OF NEW THE MARKET INTENSE ENTRANTS COMPETITION, 1. Competitor retail BOTH ONLINE 1. Low Entry portals like EBay AND OFFLINEBarriers allows easy etc. entry of other 2. Online portals of players existing retail 1. Retail stores like 2. Existance of outlets like WalMart/Tesco/Relia Specialized walmart.com nce Fresh competitors. 2. Mom and Pop3. Ease of entry and stores inverstment 3. Government Regulation SUPPLIER BARGAINING Amazon POWER CONSUMER BARGAINING 1. The POWER manufacturerscontrol the supply to 1. Availability of Amazon. similar products at a cheaper price 2. Other third-partyservice providers like 2. Consumer delivery, cash Switching costs collection can also are low impact Amazon
Favorable UnfavorableI Strengths: Weaknesses:n Strong Brand Name Low Finance Performancest Strong Infrastructure Lack of language specifice High Quality Mgmt team websiter Customer Service Support Risk of intro. of wrong newn Developed and Upgraded Tech. categoriesa Free Shippingl Shipping costs (high volume / weight products)E Opportunities: Threats:x Growth of Internet Users Competitiont Construction of community of Weak Economic Conditione buyers Low Entry Barriersr Taxes prohibition Segments of populationn E-commerce Expansion uncovered.a Several product categories withl high penetration
STRATEGY: New management discipline to be incorporated through an ongoing process of innovation and renewal. . At its roots Amazon is built to transform. Embracement of transformational growth in its white space. Have a viable and innovative business model built around a market-changing customer value proposition and a radical profit formula. Transformed its business from direct sales to a sales-and-service model, aggregating many sellers under one virtual roof and receiving commissions from the other companies sales.
Extracting new potential markets: In 2002 Amazon launched a web services platform within five years the site used by Amazons web-services platform had grown into the seventh-largest in the world. And Amazon kept going. Continuously renovating the company and its existing products. Company seized its white space when it devised a new value proposition, offering a commission-based brokerage service to buyers and sellers of used books. Moved into its white space again by developing a model to serve an entirely different customer: third-party sellers.
RECOMMENDED STRATEGIES:• Strength: Strong Brand Name• Opportunity: Extensive Community of Buyers• Strategy: Amazon is a big brand as far as e-commerce is concerned.To sustain that image among new age internet users and to build anextensive community of buyers which we see as a futureopportunity for Amazon. Social networking sites likefacebook, twitter should be leveraged in creating anextensive community of buyers.• Strength: High Quality Management Team and Upgraded Technology• Opportunity: Growth of Internet users• Strategy: Asian countries like India as per our external opportunitiesanalysis will see the maximum number of new internet users over the nextdecade. So collaborating with Internet providers and providing insight topeople through various media to shop using internet and introducinglanguage specific websites will facilitate shopping for the local customers.
RECOMMENDED STRATEGIES (CONTINUED) Weakness: Low Finance Performance Threat: Removal of tax-benefits on online sale. Strategy: One of the major strengths of Amazon is the pricing of its offerings thanks to the tax benefits to internet shopping endorsed by many governments. Ethical pitching for those governments across its markets which extend tax freedom for sale of products through internet should also be a long term strategy. Weakness: Risk of Introduction of wrong products/categories Threat: Competition from mushrooming companies Strategy: A wrong product introduced in the market will take a strong beating on the customer’s loyalty on Amazon. Though, Amazon has recently seen success with its kindle e-reader there always exist a risk of introduction of a wrong product. There should be a increase in spend on Marketing Research and introduction of new products should be done with utmost care taking inputs from the research outcome.
• Weakness: No touch and feel of the product• Threat: Competition from brick and mortar companies• Strategy: Evolution of consumer behavior, combinedwith the advance and affordability of technology is startingto pit Amazon against brick and mortar mass retailer likeWal-Mart. As a backup plan to counter a situation ofimposition of taxes on internet shopping in the near futurewhich may force it to lose the price war in comparison toWal-Mart(one of its biggest competitors) ,Amazon will haveto proactively invest for development of company centricworld class supply chain management, warehousing anddistribution logistics.