Amazon Strengths and Weaknesses Analysis

Jeffrey P. Bezos is the president, Chief Executive Officer (CEO) and Chairman of Amazon.com Inc. Before Bezos became the founder of Amazon, he had a job from Intel, Bell Labs and Anderson Consulting. However, Bezos refused to invest those business for starting at fintech telecommunication which is Fitel. From 1998 until 1993, he transitioned to become a product manager at Bankers Trust and he quitted the job of Bankers Trust to become next hedge fund’s fourth senior vice-president, D. E. Shaw & Co. In 1994, Bezos finally starts up the Amazon business plan on a road trip from New York to Seattle.

Issues

Due to COVID-19 pandemic outbreak, Amazon has faced one issue that led a dramatically dropped on its reputation. A team of warehouse’s employees worked in Amazon.com Inc sued this digital retail giant, Amazon because of its workplace conditions have a very higher risk of getting COVID-19 infection. This is because one of the warehouse employee’s family member had died after touch-contacted with Amazon’s employees (Eidelson, & Soper, 2020). This issue shows that Amazon has failed in doing safety protection in its warehouses, fulfilment center and for its employees. For example, during the extremely bad environment condition, Amazon still encouraged employees to continuously attending the works and does not emphasize on the importance of washing their hands, social distancing and sanitizing their workspaces. Besides that, Amazon had provided employees the false information and force employees to work over the hourly quotas by using company’s discipline policy. This issue caused Amazon to temporary closed its facilities and faced a growing pressure between Amazon and its warehouse’s employees nationwide.

Major Strengths of Amazon

Some of the major strengths of Amazon are having low cost structure in the market, a huge number of third parties’ sellers and being the largest merchandise selections. Amazon is mainly focusing on selling at online. This is because it doesn’t incur larger costs related to operate in physical retail stores and it can sell more units of products without rising in marginal costs. This shows that, the reduction of costs enables Amazon to sell lower price to customers. Furthermore, compared to Walmart, Amazon is selling approximately 356 million of various products in Amazon.com while Walmart is only providing 16 million in its e-shop (Scrape Hero, 2017). From that, it is clear that more online customers are more likely to visit Amazon.com rather than Walmart’s digital stores. Furthermore, third party sellers are able to sell their own merchandise on Amazon’s websites and compete against Amazon’s own product. Third party sellers also have power to decide their product categories, set prices and the minimum advertised price (MAP). This attract more thirty party sellers to engage with Amazon to start their businesses. Thus, the above strengths can increase the growth of Amazon.

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POLC Lead to Success or Failure

Amazon’s POLC can lead to its current success whereby other online retail companies have failed is due to its customer-centric focus, which means makes the customer services at the cornerstone of Amazon.com. For instance, customers are profiled in order to retrieve their births with promotions given, offers newsletters to get latest information and develop a space for customers to read them. Next, Amazon has organized to increase the number and usage of Alexa skills, subscribers of Amazon Music unlimited and Amazon Prime subscribers in order to achieve the goals. Apart from this, leaders of Amazon always think ahead and do not sacrifice long-term value for short-term results. They motivate and encourage the entire company by giving incentives to the employees. Lastly, Amazon is measuring the success of Amazon by compete the sales of products with other company. For example, Amazon compared its device sales with the similar product’s sales from Google such as Google Home. Although device sales do not reveal insights into customer behavior but it offers a high-level measure of competitiveness.

Most Important Thing Leads to Success or Failure

With Amazon edging towards the world’s first trillion-dollar company, Amazon has emerged as the new model of innovation effectiveness. It able to move ahead of others, produce innovative products, implement process and business model innovations. This shows that, Amazon has an essential competency and innovations abound. Amazon has innovated the services which started from one-click ordering for purchasing to the extended marketplace of individual resellers, to provide the warehousing and fulfilment services to its reseller partners, to its accommodating returns policy of products, to Prime. This indicates that Amazon has continuously innovating across the product areas and business policies and over the logistics and distribution. Therefore, each of the products innovated by Amazon has succeeded and the overall quality of products and the company’s supply chain flow has become better.

Major Challenges Facing Amazon in the Next Five Years

As Amazon provided hundreds of millions of products at competitive prices and became the dominant e-commerce marketplace in the world, it also has a huge number of third-party sellers. However, the trust worthy of third-party sellers could be the major challenge for Amazon in the next 5 years. Although third-party sellers have generated an increasing revenue of products on Amazon in 2019 which is approximately 53 billion U.S. dollars, compared to previous year which is approximately 42 billion U.S. dollars but it could brings serious problems such as fake, unsafety, unregulated and counterfeit products that could lead to damage in Amazon’s image. Amazon may receive lawsuits in the future by customers who complains Amazon’s products are counterfeits and it require to spend a lot of money to address the problems (Gaus, 2019). Hence, not only Amazon’s reputation will be destroyed but also it have to waste more resources to settle these problems.

Besides that, COVID-19 pandemic outbreak will cause Amazon to be challenging in the next 5 years. As COVID-19 pandemic outbreak roiled Amazon’s businesses, customers have complained about shipping problem from the third-party sellers on the site. Due to the widely spread of infectious COVID-19, government will restrict the rule and regulations for safety protection. This will cause Amazon unable to conduct large events such as annual shareholders meeting, pause tours of its fulfilment centers and headquarters as usual and was forced to hold it virtually at online. Not only that, Amazon’s delivery services will also be blocked from importing and exporting. Thus, it is certain that Amazon will incur a losses. Amazon will have to consider ways such as lay-offs its employees in order to control the costs.