1
SWOT Analysis- Taylor
Strengths
● Largest online retailer
● Growing revenue
● Large target market and product
selection
Weaknesses
● Patent infringement issues
● Decline in liquidity
● No brick-and-mortar stores
Opportunities
● Increase in societal
technological dependency
● Increase in demand for online
retailers
● Strategic initiatives
Threats
● Increase of competition
● Government regulations
● Changes in seasonality
Strengths:
Amazon is one of the world’s largest online retailers. According to MarketLine, as of
2017, Amazon has a revenue stream of $177,866,000. Some of their most influential
competitors, such as eBay and Barnes and Noble, don’t even come close, with revenue streams
of $956.7 million and $389.4 million. Amazon was also ranked top 5 amongst the top 100 most
valuable brands in the world. Being an online retailer also allows Amazon to sell inventory and
receive funds quickly with little to no hassle. As for revenue growth, they had a reported growth
of 30.8% from 2016 to 2017, which also represents growth in other non-financial aspects of the
company. As for a large target market and product selection, the large product selection of
electronics, home goods, toys and more, allows for a larger target market. They compete in
several different Millenials and Baby Boomers alike can easily find what they’re looking for on
Amazon’s easy to navigate website with a large selection of products. They also gain revenue
from third-party sellers due to price reductions. The revenue growth reflects the decisions being
2
made in the company, which gives consumers and stakeholders a positive outlook on the future
of Amazon.
Weaknesses:
According to MarketLine, Amazon has been involved in several patent infringement
issues. Octo LLC claims that their operating systems, are the same as Amazon’s, and causes a
patent infringement. This causes stakeholders in Amazon to doubt the company, as these issues
have affected their brand image in the past, and may harm future equity. If their stakeholders
doubt the company, they will be more likely to pull out, weakening Amazon as a whole. As for
decline in liquidity, Amazon reported that in 2017, their current ratio was 1. Their liquidity is
lower than some of their competitors, Best Buy and eBay, with ratios of 1.3 and 2.2. With their
ratio being low, this means that Amazon is in a weak financial position, which is bad for the
company as they depend on generating cash from their buyers as well as cash reserves. Lastly,
another weakness Amazon has is that it has no brick-and-mortar stores. While there is an
increase in demand for online retailers, Amazon often loses out on not having any physical
stores. There are many people from the older generation that don’t buy products online because
they aren’t as technologically capable, or because they enjoy getting out of their house to run
errands. They are losing out on some that particular target, and competitors like Target and
Walmart are able to capitalize from that.
Opportunities:
As our world has become more technologically dependent, Amazon has stepped up and
delivered to their customers. For example, they developed and use cloud computing services,
which allows them to “expand (their) operations instantly, handle demand fluctuations, and also
3
access systems and services over a variety of devices at a lower cost” (MarketLine, pg. 6). Also,
the market for global cloud computing is expected to increase by 28.3% by 2020. Amazon can
use this to their advantage and expand even further. Not only is there an opportunity in cloud-
based computing services, the demand for online retailers is also growing. According to in-house
reports from MarketLine, the demand for online retailers has grown by 15.5%, and is expecting
to reach a 50.3% increase by 2020. This is a billion dollar industry, and Amazon is already the
largest company in it. With the use of smartphones, tablets, and computers on the rise, this will
also positively impact the online retail economy, and allow for Amazon to expand its operations
even further. Along with those other opportunities, Amazon is using strategic initiatives to grow
their business other than taking advantage of our technological realm. For example, they have
multiple partnerships with companies such as Ring Inc, a global home security company that
