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Amazon’s structured & insightful business evaluation

Isabelle Taylor | 30 Mar,2021

Amazon history

Amazon is an American multinational technology company that provides online retailing and cloud services to diverse groups of customers. Further, the company also offers digital streaming services to customers on a global scale. To shed some light on thehistory of Amazon,the company was founded by Jeff Bezos in 1994.

Jeff Bezos has turned out to be a transformational and task-oriented leader who has the ability to innovate the organizational processes. Furthermore, Jeff Bezos focuses on prioritizing customer service rather than its competitors to formulate diverse business plans. Along with this, persuasion and long-term thinking skills have helped Amazon to achieve huge success in the market. Initially, Amazon started as an online marketplace for books but due to the long-term thinking capabilities of Jeff Bezos, the company expanded its operations and started selling video games, software, apparel, food, toys, furniture, jewelry, and so on. Further, the company went public in 1997, and in 1998, the operations of Amazon were spread internationally when the company acquired the online booksellers in the UK and Germany. The company also launched Amazon Web Services in 2002 which provides data on the website traffic, popularity, etc. Along with this, the company also launched the digital streaming app i.e. Amazon Prime Video to further expand its market base and to attract a large number of customers. Also, Jeff Bezos implemented the kiva system in 2012 with the aim to automate its inventory management system. This way the far-sighted vision and fine leadership capabilities of Jeff Bezos have streamlined the path of rapid growth for Amazon.

Amazon mission and vision statement

Amazon’s missionis to foster a culture of top-notch customer service through the use of the internet and technology. The central idea is to deliver a highly enriched and optimized customer experience to users. Further, Amazon also enables customers to explore, and buy from massive catalogs of products and services hence offering a wide range for people of all tastes. Moreover, the key vision of this company is to become the most customer-centric company in the world by offering highly personalized services and allowing customers to buy anything at the lowest possible price.

Amazon core values

The leadership virtues of Amazon include customer obsession, ownership, thinking big, inventing, frugality, trust, long-term relations, etc. Besides, Amazon also strives to build long-term relations with its key stakeholders which include customers, employees, third-party entrepreneurs, etc. Moreover, the key processes of this company are result-oriented which aims to provide exceptional services to customers.

Amazon external analysis

The external analysis can be performed to review and evaluate the impact of various external market factors on the core operations of the organization. Firstly,PESTLE analysisis the strategic framework that can be used to review the impact of macro environmental factors on the operations of the organization. The subsequent section includes a detailed PESTLE analysis of Amazon.

Amazon PESTLE analysis

Political factors

Amazon is one of the most popular e-commerce companies in the world that operates in the US, China, Italy, India, France, Brazil, UK, Canada, etc. Further, the company enjoys governments’ support for the e-commerce channels in different countries. Also, the FDI norms of the US and European Union directly influence the operations of Amazon in the major markets. However, the Indian government imposed various restrictions on the sale of certain products that the government has an equity stake in (Choudhury, 2019). This is likely to dent Amazon’s business in India and necessitate the company to change its business model in the country. Moreover, import tariffs and taxes in the international market are further likely to negatively impact the overall operations and profitability of the organization. Also, the company faced the accusation from the US government for not paying the taxes fairly. Moreover, the US-China war has resulted in an increase in the cost to the Amazon third-party vendors due to an increase in the US tariffs on Chinese goods (KOLAKOWSKI, 2019).

Economic factors

Amazon provides diverse products and services to customers through its online retail channel, prime video app, etc. Further, the disposable income of customers, GDP of economy, employment rate, foreign exchange rate, etc. have been found to have a direct impact on the overall profitability of the organization. Also, COVID-19 has resulted in an increase in e-commerce sales around the world due to the sharp rise in demand for digital services. Also, Amazon has seen an increase in online sales, third-party services, and AWS revenue in the ongoing pandemic period. The revenue of Amazon in the second quarter of 2020 was $70.11 billion which was higher than the revenue of Amazon in the fourth quarter of 2019 i.e. $68.34 billion (Hernandez, 2021). However, the GDP of countries such as the UK has seen a slump by 9.9 % in 2020 due to COVID-19 which may impact the overall demand for Amazon products (WRAP, 2021).

Social factors

It is a must to consider that the customers in the current times prefer to buy products and services from the digital channels. Also, Amazon delivers everything to customers at their doorsteps which further helps to attract a number of customers. Furthermore, online shopping is not only helpful for the young generation but also is used by the old generation to get the products and services delivered at their doorsteps. As mentioned above, the COVID-19 pandemic has further resulted in an increase in the trend of online shopping which also is expected to further influence the growth of Amazon in the international market.

Technological factors

Technological advancement is a key factor that has influenced the growth of Amazon in the market. Further, Amazon is working on rapid delivery systems such as amazon prime air, drone deliveries, etc. to deliver products weighing up to 30 pounds in 30 minutes. However, the implementation of technological processes such as drones is not much easy for the organization, and the organization is required to comply with various regulations to reduce the risk ofcybersecurity attacksand other issues. Also, the third-party sellers and customers have higher concern for sensitive data which requires the company to ensure the security of sensitive data by continuous enhancement of cybersecurity.

Legal factors

We also need to review that various legal factors such as anti-trust laws, consumer protection, data protection laws, etc. may impact the operations of Amazon. Further, the company already has developed an anti-counterfeit policy to minimize counterfeit sales on the Amazon platform. Further, California Consumer Privacy Act 2018, general data protection laws, and other regulations necessitate the company to control the access and safety of personal information. Along with this, changes in the environment protection regulations, import and export regulations, etc. are further likely to impact the operations of Amazon.

Environment factors

Amazon has a huge negative impact on the environment due to higher traffic emissions, packaging, etc. Moreover, the company has more than 100 million Prime members who expect to receive their product deliveries within 2 days. This further leads to an increase in carbon emissions hence threatening the idea of sustainable practices. Thus, the company needs to improve its environmental management practices to reduce the negative impact on the environment. Having said that, theSustainability Commitment of Amazonneeds a tweak and greater implementation.

Amazon Porter five force analysis

Porter five forcesanalysis is an important competitive model which can help to evaluate the competitive position of the organization. Further, the porter five force analysis of Amazon is discussed as follows-

Bargaining power of suppliers

The bargaining power of suppliers in the industry is very low as there is a large number of suppliers in the industry who are ready to supply their products to Amazon. Further, Amazon emphasizes that the suppliers ensure compliance with the ethical principles which further reduces the bargaining power of suppliers.

Bargaining power of buyers

The bargaining power of customers is high for Amazon due to the availability of a large number of retail service companies and easy access to quality information by the customers. Further, the switching cost for buyers is low in the case of online retailing as the customers can easily switch to other organizations such as Walmart, Flipkart, etc. to buy their products and services.

Threat of new entrants

The threat of new entrants in the e-commerce sector is very low as setting up an e-commerce business requires the company to invest a huge sum of money in warehousing, marketing, digital platform, logistics, etc. Moreover, Amazon has achieved higher economies of scale in this industry due to its reputation, brand image, higher demand, and strong market share in the industry. Thus, the new entrants cannot easily enter the industry due to the established economies of scale of the existing firms in the industry. Moreover, the customer loyalty achieved by Amazon in the industry reduces the threat from new entrants in the industry.

The competitive rivalry among existing competitors

The rivalry among the existing firms is very high as there are a large number of online retail companies setting up in the current times. Further, the main competitors of Amazon include Flipkart, eBay, Alibaba, Walmart, etc. which provide high-quality goods to customers. Furthermore, the low switching cost in this industry has further increased the rivalry among the existing competitors.

Threat of substitutes

The threat of substitutes in the e-commerce industry is very high as there is the presence of a very large number of retail service companies that provide home delivery services. Further, the products sold by Amazon are not unique which further can be purchased through any online and offline retail store. Low switching costs and easy availability of goods further increase the threat of substitutes.

Amazon competitor’s analysis

Amazon is one of the world’s largest e-commerce retail companies that was founded by Jeff Bezos in the US in 1994. Further, the company operates cloud computing, digital content, and home delivery services to customers. The major competitors of Amazon include Alibaba, Walmart, Target, JD, eBay, Flipkart, ETSY, OLX, etc. One of the biggest competitors of Amazon is eBay which is ranked as the second-best e-commerce company in the global market. Besides, the share of the retail sales of eBay was 7.2 % in 2018 with the market share of Amazon equivalent to 48 %. Also, the market capitalization of eBay was $34 billion in the mid of 2019 which made eBay one of the biggest competitors in the global market. Moreover, Walmart has attracted a number of customers to its products and services. Also, Walmart is selling a variety of goods that are not easily found at other stores (Meldner, 2018). Along with this, Alibaba offers both B2B and B2C services to its customers. Further, Alibaba has grown quite quickly in the market due to its strong market presence. Also, the key reason for the success of Alibaba was that Alibaba catered to the local needs of the people (Sivakumar, 2020). Moreover, the other competitor of Amazon is JD which a Chinese retail company that came into being almost when Amazon entered the Chinese market. The current revenue of JD is US$82.86 billion and the company in current times has also invested in new technologies such as drones, autonomous systems, etc. to raise its brand image and to deliver services faster to customers. To elucidate further, the complete competitor analysis of Amazon is performed in the table as follows-

Company nameRevenue (US $)Earnings per share (US $)Operating margin (%)
Amazon386.064 billion41.835.53
eBay10.8 billion3.5426.39
Walmart559.2 billion1.182.78
JD82.86 billion1.181.79
Alibaba72 billion7.919.73

From the above analysis, it is seen that Amazon is at the top of the floor in the e-commerce market as it is seen that Amazon is earning the highest EPS in the market. Also, the revenue of the company is highest except for the revenue of Walmart and the operating margin of Amazon is higher than the operating margin of Walmart.

Amazon positioning analysis

Amazon has been positioned as the world’s best e-commerce company that provides diverse services such as retailing, digital streamlining, cloud computing services, etc. to its customers. The perceptual map for Amazon is shown as follows-

Amazon Perceptual Map

From the above positioning map, it is seen that Amazon has attained a larger brand reputation in the market due to its quality of products and services offered to customers. Furthermore, the company offers hundreds of millions of products to customers over its e-commerce platform and has implemented a user-friendly interface with the aim to achieve a strong brand image in the market (Jordan, 2021). Along with this, the company also aims to provide the best services to its customers with a higher focus on customers rather than the competitors. Further, the Unique selling proposition of this company is that Amazon offers a wide choice of products and services to its customers with the aim to ensure higher customer satisfaction (Dudovskiy, 2020). Further, as compared to Amazon, eBay also has achieved a strong brand image in the market for offering new and used items to customers for auction at very low fees. Moreover, the product variety offered by eBay is also very large which helps the company to maintain a strong brand image. In comparison to this, Walmart is also known for offering a diverse variety of products and services to customers. However, the other firms such as Flipkart, Target, JD have achieved low brand awareness in the market and also rank low on the product varieties in the industry.

Thus, it is seen that Amazon has established a strong brand name and competitive position in the market due to diverse product offerings, customer-centric services, and a strong customer base.

HBO is another video on demand service which is owned by HBO channel and gives access to a number of movies and original content for subscribers on their smartphones, computers, etc. The company has a subscriber base of around 3 million that is very little as compared to Netflix because the availability of HBO is restricted to the US only and there are no services outside the US. (Bhasin, 2020).

In addition to the above, YouTube is another famous platform that is basically an American video-sharing site where users can upload and share videos to view. This online video app is a subsidiary of Google which acquired it in 2006 for $1.65 billion. It has been analyzed that the app has more popularity than any other video app in the world. There are around 800 million users of this app who visit it to either upload videos or watch them (Bhasin, 2020). YouTube is a major competitor of Netflix since its initial days because the company is improving its features with each passing day by adding new opinions such as live events, music streaming, etc.

Based on this, Hotstar is another online video streaming app that gained immense popularity with live streaming of the Indian Premier League that is the most famous domestic cricket league in the world. The IPL enjoys a viewership worth millions each year from all parts of the world, especially cricket-loving nations. This Indian app is a subsidiary ofStar Indiaand has managed to expand its business in the US and Canada as well. It has been analyzed that the app has 340 million viewers during ICC world championships matches. Besides this, it also streams a wide spectrum of TV serials, movies, web series, and other content in multiple languages.

Amazon internal analysis

The internal performance of Amazon can be evaluated by reviewing the core capabilities, resources, and competencies of the company. For this purpose, VRIO analysis for the company is performed as follows-

Amazon VRIO analysis

VRIO analysis is an important strategic analysis tool that can help to review the internal situations of the organization by reviewing the resources and capabilities of the organization. The VRIO analysis of Amazon is shown as follows-

Resources and capabilitiesValuableRareEasy to imitateOrganizedCompetitive advantage
Brick and mortar presenceYesNoNoNoCompetitive parity
Technological advancements such as drones, etc.YesYesNoYesPermanent competitive advantage
Brand equityYesYesNoYesPermanent competitive advantage
Product variety and product portfolio of private brandsYesYesYesNoUnused competitive advantage
Market capitalizationYesYesNoYesPermanent competitive advantage
Warehouses and distribution networksYesYesNoNoTemporary competitive advantage
Human resourcesYesYesNoYesPermanent competitive advantage

Amazon non-core competencies and competitive disadvantage

VRIO Analysis of Amazon shows that the resources or capabilities of Amazon may not necessarily serve as the core competency of the organization. The organizational resources and capabilities such as technological advancement, etc. help Amazon to achieve a strong competitive position in the market. However, these resources and capabilities may be imitated by the competitive firms which may result in a competitive disadvantage for Amazon. Further, the Amazon e-commerce platform is non-core competency as this provides a strong competitive position to the company but rival firms such as Walmart may come up with advanced strategies and may develop their own e-commerce capabilities. Also, the brick and mortar stores of the company include Amazon go, amazon book store, amazon 4 star, whole foods, amazon pop up, etc. (WHITE, 2019). Along with this, the artificial intelligence capabilities of Amazon are not effectively used which only provides a competitive advantage to the company and does not act as the core competence of the company. Amazon has implemented the use of artificial intelligence which helps the company to predict the number of customers willing to purchase the company products. Also, the AI product of the company is Amazon Alexa which is virtual assistance AI technology that helps users to set alarms, play audio, stream podcasts, etc. However, the other firms may also implement AI-based products and services. Thus, it is reviewed that there are various resources that provide only a competitive advantage to Amazon and are not parts of the core competence of the company as competitive firms such as Walmart can imitate them through advanced strategies.

The major areas of competitive disadvantage to Amazon include the litigation charges and problems faced by the company. The company is currently losing operating margins in some regions such as India due to change in the government policies that are negatively impacting the overall growth and profitability of this company. Further, the company has faced tax avoidance issues in Japan, the US, and the UK which further has resulted in the government‘s criticism across the social media channels. This has negatively impacted the competitive position of the company. Along with this, Vox also published negative reports on the HRM practices of the company in 2018. The major problem relates to poor employee treatment and poor workplace conditions which also had resulted in an increase in the number of employees going on strike. Along with this, the company also faced antitrust charges filed by EU regulators for trying to gain an unfair competitive advantage (CHAN, 2020). All these factors have caused a decline in the reputation of the company and have granted a competitive disadvantage to Amazon. The other key factors of Amazon which act as the competitive disadvantage to Amazon include warehouse network, brick and mortar presence, product portfolio, and artificial intelligence. Although Amazon has established a strong warehousing and distribution network, the distribution network of the company is not imitable and organized which creates a competitive disadvantage to the company. Also, the brick-and-mortar presence of Amazon is not strong which may act as the major competitive disadvantage for Amazon as the competitor firms such as Walmart is one of the largest brick-and-mortar retail companies that is growing across the e-commerce channels as well. Moreover, the product portfolio of Amazon is wide which is valuable, rare, and not easily imitable. However, the company has not effectively organized its resources which may lead to a competitive disadvantage for Amazon.

Amazon core competencies

The core competencies of Amazon are discussed as follows-

Strong brand name

A strong brand name is one of the main competencies of Amazon which helps the company to attract a large number of customers. Amazon is one of the world’s largest e-commerce companies that has established a strong brand name in the market for its customer-centric approach. Also, the number of factors and resources such as technological innovation, international presence, experienced staff, marketing strategies, etc. helps the company to develop strong brand equity.

Customer experience

The main focus of business organizations in the current times is on improving the customer service experience. However, Amazon is ahead of its competitors in terms of offering a memorable service experience to customers as Amazon has implemented the use of various technologies and processes such as drones, free delivery, prime membership, etc. to provide premium customer services. Moreover, the company provides an Omnichannel shopping facility to its customers which further helps to provide a seamless customer service experience.

Research and Development

Research and development is an important core competency of Amazon as the company regularly spends a huge sum of money in the R&D processes to innovate and offer quality products and services. In 2019, the R & D expenditure of Amazon was $36 billion which was the highest among all its competitors. Further, the R & D expenditure of Google was also only $26 billion in 2019. Thus, R&D processes help the company to achieve a sustainable competitive advantage in the industry.

Distribution network

The strong distribution network of Amazon includes 175 fulfillment centers which help the company to connect millions of sellers and buyers. Further, the online delivery services help the company to attract customers not only from the US market but also from the international markets (Gupta, 2021).

Marketing

Amazon uses diverse marketing channels such as paid advertising, social media advertising, affiliate marketing, email marketing, and other channels that drive the sales and profitability of the company.

Product portfolio and customer loyalty

Amazon has developed a strong product portfolio in its e-commerce channel by developing relations with 2.5 million sellers. Also, on average, SMEs in the US sold around 4000 items each minute in 2019 (Mohsin, 2019). Further, the company also has developed strong customer loyalty for its products and services. Moreover, Amazon Prime is the key driver for customer loyalty as the company offers diverse benefits at low cost to customers.

Amazon Core resources and capabilities

The core resources and capabilities of Amazon include marketing effectiveness, human resource management, customer loyalty, a strong product portfolio, research, and development, etc. The VRIO analysis of the company helped in reviewing the core resources of Amazon where it is found that brand equity, market capitalization, human resource effectiveness, and technological advancement provide a permanent competitive advantage to the company. Also, the company attracts a large number of customers to its online service platforms due to its strong product portfolio and brand image. Further, these resources and capabilities of Amazon are not easily imitable and are properly organized by the company which further helps to effectively manage the core operations of the organization. Moreover, the market capitalization empowers the company to engage in further expansion and diversification business plans. However, it is reviewed that Amazon can work on the non-core competencies to further improve its brand image and compete for a position in the market.

Amazon swot analysis

SWOT analysis is an important strategic management tool that can help to review not only the current strengths and problems in the organization but also can help to identify the market opportunities and threats that may be faced by the organization. The SWOT analysis of Amazon is performed as follows-

StrengthsWeaknesses
  • Strong brand image
  • Low-cost structure
  • Increase the minimum hourly wage rate to $15
  • Market capitalization worth $ 1 trillion
  • Ranked at 2nd position in Interbrand’s global brand ranking 2020
  • Revenue of more than $ 386 million
  • Brand value of $200 million
  • Customer-oriented strategies
  • Innovative systems such as Withings Aura smart sleep and drones
  • Cost leadership and economies of scale
  • Low inventory replenishment time
  • High traffic volume and number of third party sellers
  • Strong product portfolio with the availability of around 2 billion products
  • Go global and act local policies
  • An easily imitable business model
  • Product failure such as Fire phone launch in the US.
  • Losing operating margins in some regions
  • Tax avoidance issues in japan, the US, and the UK
  • Poor brick and mortar presence
  • Poor human resource treatment declining
  • Antitrust charges in EU
OpportunitiesThreats
  • Setting up brick and mortar stores
  • Penetrating and expanding the operations in emerging countries
  • Developing environment management practices to reduce a negative impact on the environment
  • Acquisitions
  • Increase in controversies against the organization
  • Change in government regulations
  • Increase in cybercrime
  • Competitive pressures from eBay and Walmart
  • Imitation of the business model

The above SWOT analysis of the company exhibits that despite the development of a strong brand image in the market, Amazon is facing various issues in the current times and the major issues related to the losing operating margin, changing government regulations, competitive pressures, tax avoidance issues, poor brick, and mortar presence and poor HRM practices. Thus, it is recommended to the company that the company should set up more brick-and-mortar stores to raise its brand name and uplift its financial performance. Further, the company also has the opportunity to engage in various environment management initiatives to reduce the negative impact of its operations on the environment. Amazon business strategy analysis.

Amazon business strategy analysis

Amazon Strategic analysis

Amazon has adopted customer-centric strategies where the company aims to offer convenient services to customers. Further, the amazon brand image is established on the basis of strong customer satisfaction and elaborative product offerings. Along with this, the key aim of the company is to be positioned as the most convenient company with the best customer service platforms and low pricing strategies (Baldwin, 2021). Also, Amazon has adopted a strong competitive position in the market for offering free shipping facilities to customers. The pricing model of Amazon is aimed at offering products and services at the lowest possible price to customers. Along with this, repricing is one of the main strategies adopted by Amazon which also is aimed at offering the lowest price for its goods and services at a particular time (Masson, 2021).

Amazon business model canvas

The business model canvas of Amazon is shown as follows-

Key partnersKey activitiesValue propositionsCustomer relationshipsCustomer segments
  • Logistic partners
  • Third-party sellers
  • Affiliate
  • Developers of Amazon web services
  • Subsidiaries such as Kindle, Alexa, Amazon essentials, etc.
  • Content creation through kindle direct publishing
  • Merchandising
  • Marketing
  • Digital streaming
  • Logistics
  • Content creation
  • Supply chain management
  • Customer-centric strategies
  • Low-cost strategies and competitive pricing
  • Faster delivery
  • Convenience
  • A wider selection of products
  • Automated services
  • Self-service
Key resourcesChannels
  • Physical resources
  • Warehouses
  • Human resources
  • Technological infrastructure
  • Supply chain structure
  • Automation
  • Affiliates
  • Amazon Prime (streaming, subscription, and entertainment platform)
  • Ecommerce platform
  • Application interfaces
  • Affiliate program
Cost structureRevenue streams
  • Software development
  • Technological cost
  • Customer service cost
  • Research and development expenditure
  • Operational expenditure
  • Marketing cost
  • Information security
  • Software development and maintenance
  • Sale of products
  • Commission on reseller sales
  • Digital streaming
  • Monthly subscription revenue through Amazon prime
  • Amazon web sources
  • Amazon kindle
  • Amazon ad platform
  • Amazon patents licensed by other companies

The business model canvas of Amazon shows that amazon is an e-commerce retail technology company that has established a strong brand image in the market for its diverse products and services. The key components of thebusiness model canvasare directly related to each other as the key partners of Amazon have a direct influence on the key activities and business processes of the company. For instance, partnership with Kindle Direct Publishing helps the company to regularly publish its content and attract aspiring authors with self-publishing opportunities. Furthermore, the key activities such as effective logistics, digital streaming, etc. help the company to achieve its key value proposition and setting up of strong customer relations through fast delivery, convenience, wider product opportunities, etc. In addition, the key resources of the company include physical, financial, technological infrastructure, etc. helps the company to effectively manage its revenue streams. Moreover, the revenue streams of Amazon such as AWS, Kindle, ad platform, Amazon Prime, direct selling, etc. directly influence the overall cost structure of Amazon. Thus, all the components of Business model canvas are directly related to each other and one element of business model canvas has direct influence on the other determinants of cost structure, revenue streams and other verticals.

Amazon marketing analysis

Amazon Marketing mix/ marketing strategy analysis

The marketing mix of Amazon includes different strategies which directly influence the overall brand image of the company. The marketing mix of Amazon is discussed as follows-

Product verticals

Amazon is an e-commerce company which started its journey with offering books to customers. However, the company expanded its product base over the period of time and currently, the company offers millions of products and services to customers under different categories such as clothing, jewellery, kitchen, electronics, sports, car accessories, books, home appliances, tools, etc. The product base of this company is very wide and the company mainly sells its products to customers through its online website, Amazon Web Services, etc. (Dudovskiy, 2020). The Amazon platform helps third party sellers to sell millions of products to customers. Further, AWS offers a range of cloud computing services, storage and database services to developers and other enterprises. Moreover, Amazon continues to expand its product base in the market and in 2014, the company also entered the smartphone market by launching its fire phone. Furthermore, the electronic devices offered by Amazon include Kindle, fire TV, Fire tablet, echo devices, etc. Further, the revenue distribution of Amazon from different revenue streams is shown as follows-

Amazon Revenue 2020
Pricing strategies

The company has adopted varied pricing strategies such as low pricing, discounted pricing, value based pricing, dynamic pricing and psychology based pricing strategies. Furthermore, Amazon has a complicated pricing model as the company not only emphasizes low pricing or discounted price strategies but also pioneers to offer dynamic pricing to customers (Baldwin, 2020). The company changes its product prices every 10 minutes which makes the pricing strategies of Amazon more complicated. Furthermore, the company also has adoptedpsychology based pricingto attract a large group of customers. For instance, Amazon launched the new fire TV stick at $29.99 to attract a large number of customers by offering the streaming devices at a price just under $ 30 (Welch, 2020). Furthermore, the company is continually planning for the 2021 Amazon Black Friday sale and the company sold the 3rd generation Echo Dot at $29.99 as compared to its actual price of $49.99. Along with this, Amazon Kindle was offered for $59.99 at Amazon in the 2019 black Friday sale event despite its listed price of $89.99 (Frazier, 2021). Along with this, the company also provides value-added services to customers through the prime membership where the prime members pay the subscription charges for early access to various deals.

Place

Amazon is one of the largest e-commerce retail companies that has established a strong global presence by offering diverse products and services to customers through digital channels. Furthermore, the company has 300 million active customer accounts and 150 million paid prime members who buy Amazon products and services through the e-commerce channel. Also, Amazon products are shipped to more than 200 countries internationally through the use of extensive distribution strategies. Moreover, Amazon has adopted an omnichannel sales strategy as its customers can easily access the diverse product offering through its website, Alexa, amazon stores, and mobile apps (shoppre, 2021).

Promotion

Amazon also has adopted integrated marketing strategies with the aim to communicate its product offerings and deals on Amazon to customers and to raise its brand image. Further, the company also carries out regular advertising campaigns, social media strategies, TV ads, billboards, etc. Moreover, the marketing spending of Amazon in 2019 was $18.80 billion and the company invested a huge sum of money in public relations and sales promotion strategies to influence its overall sales. Along with this, the smart promotion strategy of Amazon is search engine marketing where the customers get the company name in the top list which directly influences their purchase decision. Also, words of mouth is another important strategy of the company which also helps to influence the purchase decision of customers. Not only this, the company has adopted different marketing campaigns such as ‘Gift a Smile’ to promote charity and the overall brand image of the company. Further, the company also has invested a huge sum of money in social media strategies to benefit from theamazing merits of social media.For instance, the search list of Amazon on the Facebook page is shown as follows-

Amazon pages on Facebook

The above figure shows that the company has different pages on Facebook with the same logo which helps the company to promote its products and services. Furthermore, the company also has separate social media pages for different locations. For instance, the official Twitter page of the company is shown as follows-

Amazon Twitter

The above figure shows that the official Twitter handle of Amazon has more than 36k tweets with a follower base of 3.5 million individuals. Also, it is noteworthy that Amazon not only promotes its products through social media channels but also promotes its apps or other platforms to attract a large number of customers.

Social media marketing strategies

Amazon also has implemented social media marketing strategies with the aim to improve its brand image and reputation in the market. Furthermore, Spark is one of the main social media platforms of the company which help to create user-generated content. Furthermore, Spark allows users to tag the Amazon products, like or smile on the posts, etc. Also, the spark platform helps the company to engage 80 million prime members (Melamed, 2017). The following table shows the comparison of different social media channels of the company-

SparkPinterestInstagramFacebook
ChannelMobileMobile, laptop, tablet, desktopMobile first, desktop and tabletMobile first, desktop and tablet
Post engagementSmiles, like, commentPinsLikes and commentsLikes, comments, feeds, etc.
Social feedUser generated contentUser generated contentUser generated contentUser generated content
Follow topics or usersYesYesYesYes
Content searchYesYesYesYes
Active users (per month)80 million175 million700 million29.6 million likes

Thus, it is seen that Amazon has implemented use of differentsocial media marketing strategiesto raise customer awareness and maintain its brand image. Further, Unmetric also has revealed that Amazon has 188 social media profiles which include 72 Facebook pages, 25 Instagram accounts, 5 LinkedIn accounts, 69 twitter accounts and 17 YouTube channels. Moreover, the company uses different social media analytics such as mention, mention over time, engagement rate, engagement over time, etc. to regularly review and improve its social media performance. Further, the social media performance of this company is shown as follows-

Amazon’s social media performance

Recommendations

After reviewing the current market performance and marketing strategies of Amazon, it has been found that Amazon is one of the largest eCommerce retail companies which is currently facing the issue of limited brick and mortar stores in current times. Thus, it is recommended that the company should set up more brick-and-mortar stores to further raise its brand image. Also, the company should expand its operations in emerging countries to further improve its market share and financial performance. Along with this, major actions need to be adopted by the company to implement environmental management practices to reduce the negative impact on the environment. Furthermore, the company can also acquire some of SMEs to improve its market presence. Also, the company must implement various cybersecurity measures and auditing practices to reduce the chance of various controversies against the company. The company should focus on reducing plastic and paper consumption in its product delivery strategies by implementing some sustainable options. Also, GHG emissions can be reduced by investing in sustainable delivery vehicles or technological options.

Conclusion

In nutshell, it has been found that Amazon is a growing e-commerce company that has achieved a strong market presence as a result of its effective marketing strategies. Further, it is found that Amazon is at the top of the floor in the eCommerce market due to its effective marketing, customer-centric, and product delivery strategies. However, it is seen that the main limiting factor for the company is limited brick-and-mortar stores. Thus, it is recommended to the company improve its market presence by establishing the brick and mortar stores and by acquiring other organizations. Along with this, the company can improve its market position and financial performance by further improving its sustainability practices and reducing negative impacts on the environment.

References

  • Baldwin, G. (2020). An Introduction to Amazon Pricing in 2021. Omniaretail.com. Retrieved 11 March 2021, from https://www.omniaretail.com/blog/an-introduction-to-amazon-pricing.
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