amazon.com swot analysis
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TRANSCRIPT
Seraj A. FarooquiBusiness Marketing & Logistics 751
March 2012
All Departments Agenda
Brief Introduction
Segment and Customer Analysis
Competitor Analysis
Market and Environmental Analysis
Internal Analysis
Proposed Strategy and Future Outlook
• Founded in 1994– Seattle, WA– Jeff Bezos, Chief Executive
• Expanded to Music and Video Segments in 1998
• Strategic partnerships and acquisitions to expand product bredth, absorb competition, and enhance distribution efficiencies.
• Released Kindle (1st Generation) in 2007– Kindle Fire release in 2011
• International Growth
Brief Introduction
Media
North America: $7,959
International: $9,820
All books, movies, music, digital downloads, software and video games (includes consoles).
Electronics and Other General Merchandise
North America: $17,315
International: $11,397
All electronics/computers, home and garden, toys, grocery, apparel, jewelry, health and beauty, sporting and outdoor equipment, tools, automotive, etc.
Other
North America: $1,431
International: $155
Cloud services, web services, marketing/promotional agreements, co-branded credit card agreements.
Notes: *Market Figures are calculated in millions, and based on Q4 2011 Press Release, http://bit.ly/ymMsOY
Segment Analysis
• Convenience– One-stop shopping, Across retail segments– Product comparisons and reviews
• Promotions– Competitive pricing– FREE Super Saver Shipping (Orders over $25.00)– Amazon Prime Membership Programs– Partner-discounts (Discover Card, etc.)
• Differentiation– Brand reputation– Dependable fulfillment; Pro-active communication– Customer Service / Returns Management– Personalized recommendations
List of Customer Motivations Analysis
• Cost Leadership – Low-Price Guarantee – “Refund the difference” Initiatives
• Segment Differentiation– FREE Enhanced Delivery (White-glove)– Schedulable Delivery Time
• Online Experience– Transactional Security– Order Status Monitoring– Order Management
List of Customer Motivations Analysis
• Tangibility of product offerings
• Returns Management
• Continuous innovation
• Consistency of Customer Service level• Maintaining a “personal” shopping experience
• Regulating Third-Party Sellers
• Low International Scalability
Unmet Needs Analysis
Direct
Competitors
• Target• Walmart• Overstock.com• Barnes and Noble• Apple (Media)• Samsung (Media)• Ebay• Netflix (Media)
Indirect
Competitors
• Google• Brick and mortar store• Third-Party Wholesale
Competitor Analysis
KSFs/Competitors
Brand Recognition
Breadth of Products
Quality Perception/Value
Breadth of Channel Coverage
Geographic Coverage
Financial Performance(POA/ROI), Profitability
Scale Indicator
Very Strong
Strong
Average
Weak
Media Segment
KSFs/Competitors
Brand Recognition
Breadth of Products
Quality Perception/Value
Breadth of Channel Coverage
Geographic Coverage
Financial Performance(POA/ROI), Profitability
Scale Indicator
Very Strong
Strong
Average
Weak
Electronics/General Merchandise Segment
KSFs/Competitors
Brand Recognition
Breadth of Products
Quality Perception/Value
Breadth of Channel Coverage
Geographic Coverage
Financial Performance(ROA or ROI), Profitability
Scale Indicator
Very Strong
Strong
Average
Weak
Other Segment
ASSETS AND COMPETENCIES: Apple Netflix Target Walmart eBay Overstock Amazon Name Recognition Breadth of Product Line Breadth of Channel Coverage
Specialty Financial Resources
Cost Structure Geographic Coverage:
US
International
Key:
Strong Average Weak
Above Normal Below Normal
Competitor Strength Grid
Media
16%
Electronic and other General Merchandises
57%
Other
73%
Domestic Market Analysis
Notes: *Market Figures are calculated in millions, and based on Q4 2011 Press Release, http://bit.ly/ymMsOY
Media
23%
Electronic and other General Merchandises
55%
Other
24%
Notes: *Market Figures are calculated in millions, and based on Q4 2011 Press Release, http://bit.ly/ymMsOY
International Market Analysis
• Barrier of entry – Medium– Kindle Fire vs. Apple iPad– Kindle Apps vs. Apple Apps
• Potential Entrants– Medium to low– eBay
• $3.38B in revenue (Dec. 2011), 19.3% of Amazon’s Revenue
• Threat of substitute – Low– Innovated Service – High Brand Recognition– High Customer Satisfaction– Well Recognized and Trusted Service
• Bargaining power of suppliers – Low– Sales Medium for Third Party Sellers of books, audio, technology– Pay suppliers quickly (35 days after item has been sold)
• Bargaining power of customers – Low– Cost Leadership– Customer Service
Industry Profitability Analysis
• Efficient Supply Chain and Logistics• Product availability, Bredth• Low prices• Innovative new offerings
– Kindle, Cloud, Web Services, etc.• Ease of shopping• Strategic acquisitions and investments
– Woot.com, IMDB.com, Zappos.com, etc.
Key Successful Factors (KSF)
Objective Area Objective Status and Comment
Sales Steadily Increase General merchandise and Kindle sales shows growth
Profits Improve Profit Margin Taking a hit on profit margin to increase market share
Quality/service Maintain Customer Fulfillment strong, Improving products through R&D
Cost Maintain or Raise Lowing price to customers but absorbing costs
New Products Diversify Constant Innovation and new products needed (Kindle=Success)
Customer Satisfaction Build Brand Loyalty Amazon is continually working to improve customer satisfaction and build brand loyalty
People Hire Leaders Continue to hire the best, Have drastically increased # of employees
Performance Analysis
Competitive Position
Mark
et
Gro
wth
Rate
High
Hig
h
Low
Low
E-Book (Kindle)
Music downloads
Online Book Sales
Online consumer goods
StarsProblem Children
Cash Cow Dogs
Amazon On Demand
Portfolio Analysis
• Global Expansion (BRIC)
• Video-On-Demand Segment
• Kindle Segments
• Seasonal• Brick and Mortar
Stores• E-Commerce
Maturing
• Free shipping leads to profit losses
• Possible Brand Confusion
• Customer Service• Diverse Product
offerings• Constantly Evolving
Strengths
Weaknesses
Opportunities
Threats
Portfolio Analysis
Industry Median is 3.6%
ROA Trends
Competitor ROA
Stock Prices (2007-2011)
2007 2008 2009 2010 2011SG&A Expense 2.69B 3.45B 4.3B 3.23B 8.84BResearch & Development 818M 1.03B 1.24B 1.73B 2.91BOther SG&A 1.87B 2.42B 3.06B 1.5B 5.94B
Operating Expense Analysis
Low Prices
Large Selection
Greater Convenience
More DistributionChannels
Larger Reach
More Third Party Sellers
More Customers
Current Strategy
Aquisition
• Increase collaboration with channel partners.
• Enhanced integrated marketing – Communicate to more clients in the global markets
• Forward-integration – Promote and manipulate where products and services are
being sold
• Continued focus on R&D– Innovative strategies and devices to provide a
competitive advantage in the electronics marketplace
• Customer Service
Proposed Strategy
Continuous Innovation, 2020+
• http://www.bloomberg.com/news/2011-10-25/amazon-profit-plunges-after-new-products-increase-expenses-shares-tumble.html
• http://www.amazon.com/Values-Careers-Homepage/b?ie=UTF8&node=239365011
• http://www.phonesreview.co.uk/2012/02/17/amazon-kindle-fire-2-possible-may-release/
• http://marketingteacher.com/swot/amazon-swot.html • http://www.smartmoney.com/invest/stocks/jeff-bezos-on-the-future-of-amazon-co
m/• http://www.minyanville.com/businessmarkets/articles/amazon-ebooks-kindle-e-b
ooks-ebook/5/27/2011/id/34815• http://en.wikipedia.org/wiki/Amazon.com• http://www.huffingtonpost.com/2012/02/06/amazon-retail-stores-seattle_n_12580
32.html• http://www.amazonstrategies.com/• http://mashable.com/2012/01/31/amazon-q4-results/• http://www.helium.com/items/1901369-amazon-kindle• http://www.sramanamitra.com/2011/02/02/amazon-aligned-with-multiple-major-tr
ends/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+sramanamitra+%28Sramana+Mitra+on+Strategy%29
All Departments References
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