Amazon Company and Its Key Weakness

Customers

Amazon has a diverse customer base, which is mainly due to the full range of products and services provided by the company. According to Kosman (2017), the average age of Amazon’s customers is 37, and the majority of customers (53%) in the United States are between 19 and 44 years old. Amazon is equally popular among older customers and younger people, as it provides discounts for students, as well as a variety of benefits for other customer groups.

Due to the large customer base, there is no distinctive psychographic profile of Amazon’s customers. The company provides access to a variety of products for people with different interests, attitudes, and life situations. However, price sensitivity may be one of the factors affecting the users’ buying behaviors. With frequent sales and lower prices, Amazon attracts customers with medium to low income, who are sensitive to product prices. Also, the convenience of buying products online means that the service is often used by customers living a busy lifestyle, such as new parents, working professionals, and college students.

Amazon allows customers to buy all types of products, including books, electronic devices, accessories, clothing, sports equipment, footwear, and more. Moreover, many of the customers use the benefits of Prime membership, such as free one-day delivery and access to films and TV shows via Prime Video. Subscription services, such as Kindle Unlimited and Amazon Music, are also widely used by customers in the U.S. and Europe.

In the future, Amazon is looking to expand further. Apart from moving into new international markets, which would offer great opportunities, the company is also willing to enhance its investment profile: “First, Amazon founder/CEO Bezos purchased The Washington Post ($250 million), then the e-commerce giant bought Whole Foods ($13 billion), and rumors swirl about a Nordstrom buy” (Flamer, 2017, para. 2). Therefore, there are two separate strands of development that the company could follow in the future: expanding its e-commerce profile and investing. Both of the options present opportunities and threats for Amazon.

For example, although the company’s online sales are growing steadily, the competition in the e-commerce market is increasing due to various brands opening online stores worldwide. Besides, buying other companies means entering a new and unexplored market, which could affect the company’s financial performance. However, extending its e-commerce presence to new countries would allow Amazon to attract new customers and is thus a valuable opportunity for the brand.

Company

Amazon is a stable company with a growing market share and a positive outlook. Its core strength is the range of products offered, which is also Amazon’s unique selling point. By providing a large variety of products, Amazon allows the customers to buy everything they might need on one website and to receive it in one package within a few days. Hence, another two major strengths of Amazon are its developed supply chain and efficient logistics.

However, Amazon also has some weaknesses that could affect its future development. First of all, it does not have a separate retail website for all countries of delivery. For instance, in Europe, Amazon has different websites for France, Germany, Spain, and Italy, whereas the customers from other European countries have to wait longer for the delivery and pay higher delivery fees. Besides, the brand’s business model is rather simple, meaning that countries, where it does not have a strong presence, might develop similar services that would become a significant competitive force is Amazon chooses to penetrate the market.

Furthermore, as noted by Hopelain (2017), Amazon does not have an adequate sustainability strategy in place, which can also be exploited by competitors. Sustainability efforts have a significant effect on the brand’s reputation and image, as more and more customers are growing concerned about environmental issues. Finally, poor mobile shopping experience provided by Amazon apps is also an essential problem (D’Onfro, 2014).

Amazon seeks to become a global leader in e-commerce and online services, which is why it should attempt to address its weaknesses and promote its strengths. Firstly, the company must develop a strategy for penetrating new markets in Europe and other regions of the world. Besides, Amazon should seek to improve its sustainability strategy to avoid damage to reputation and increased competition. Moreover, Amazon should seek to improve its mobile apps to enhance customer experiences with them. Lastly, the company should maintain and grow its reliable supply and delivery chain, by monitoring customer complaints about the delivery process, products, or services and eliminating the problems causing these complaints.

Context

Amazon is currently operating in the e-commerce market. The competition in the sector is rather intense, as most brands now have online shops with either global or national coverage. However, a significant benefit of the current business environment is that it does not have severe political, legal, or economic limitations for businesses operating in it. Also, online shopping is maintaining its popularity in developed countries while rapidly growing in developing regions, thus providing new opportunities. One trend that would likely affect the growth of the e-commerce sector the development of mobile technologies. More and more customers choose to shop on the go via their mobile devices, which is why companies need to enhance the customer’s mobile experience as part of its business strategy.

Collaborators

Amazon is known for collaborating with its key rivals, as well as famous brands. The collaborations result in discounts, unique products, or new services. For instance, the collaboration with Apple in 2007 introduced the Kindle app for iPad and iPhone, whereas the partnership with Borders in 2001 brought Amazon Services into the market (Palmquist, 2014). Recently, the company has announced a future collaboration with Nokia to develop and promote cloud services.

Competitors

Due to the broad range of products and services offered, Amazon has competitors in retail, services, and e-commerce markets. Its main competitors are eBay, Google, Apple, Target, Walmart, ASOS, and Netflix.

Recommendations

  1. Amazon should attempt to penetrate new markets in developing countries by creating separate local websites and enabling fast and cheap delivery for buyers. Despite possible difficulties with developing new supply and delivery chains, this line of growth would help the company to avoid local competition in the future and improve its market share on a global level.
  2. Amazon should revise its sustainability strategy to establish and adhere to environmental goals. In doing so, the company would be able to enhance its image by becoming a pioneer of sustainability in the e-commerce sector.
  3. Amazon should try to improve the customer’s mobile shopping experience continues to remain on track with competitors. Currently, the company’s mobile apps have a relatively low rating, which means that the customers are not satisfied with their experience. Improving the apps by the customers’ suggestions and complaints would help to promote mobile shopping as a new branch of e-commerce.

References

D’Onfro, J. (2014). Amazon has a key weakness. Business Insider. Web.

Flamer, K. (2017). Amazon continues world domination, announces future plans for second $5 billion headquarters. Forbes. Web.

Hopelain, J. (2017). 5 ways to exploit Amazon’s brand weakness. Branding Strategy Insider. Web.

Kosman, J. (2017). Guess how old the average Amazon customer is. New York Post. Web.

Palmquist, M. (2014). The Amazon model: If you can’t beat ’em, work with ’em. Strategy+Business. Web.