Amazon Travel Club Case Study

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Amazon Travel Club Introduction

Amazon is a multinational e-commerce company based in America which focuses mainly on cloud computing, e-commerce, artificial intelligence, and digital streaming. The company has been regarded as one of the Big Four companies based on Technology along with Facebook, Google and Apple. Amazon is well known for its disruption of international industries through innovating their technology and mass scale. It is considered as one of the largest Artificial Intelligence and e-commerce providers in the world as measured by market capitalisation and revenue. It is one of the largest Internet companies in terms of their revenues and regarded as most valuable companies in the world.

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Company Name

Amazon

Type of Industry

E-commerce, cloud computing, artificial intelligence

Headquarters

Seattle, Arlington, Washington, United States, Virginia

Sales/Revenue

$232.887 billion (2018)

Areas served

All over the world

Number of Stores

Online

Competition

Walmart, Staples, SysteMacs, Big Lots

USP

Innovation and customer service

Target Groups

Wide audience especially younger generations

Products

Apparel, consumer electronics, gourmet food, health and personal care, kitchen items, household items, baby products

Website

www.amazon.com

Amazon Travel Club SWOT Analysis

Strengths

  • Strong background
  • Cost Leadership
  • Customer centric leading to 55% of repeat buyers
  • Structured network for distribution
  • GLOCAL Strategy

Weaknesses

  • High debt due to losses of $359 crores
  • Issues of Tax avoidance
  • Shrinking profit margins

Opportunities

  • Establishing physical stores outside United States
  • Global expansion
  • Backward Integration

Threats

  • Regulations placed by government
  • Lower barriers of entry
  • Local competition

Table 1: SWOT Analysis of Amazon

(Source: Influenced from Phadermrod et al. 2019)

Amazon Travel Club Analysis

Strengths

With its early success attained in books, Amazon has extended their product line ranging from electronics to kitchen and home appliances. As per the case study of Amazon, the company has evolved themselves as one of the largest e-commerce companies in the world. The Customer Relationship Management of Amazon has established a process which is customer centric, for recording data on purchasing behaviour of its customers (Au-Yeung et al. 2016). In this way, they are able to offer individual customers with products, related products and providing discounts on products as a bundle on the basis of the products they have viewed or purchased. It has been reported by the company that 55% of its buyers are repeat customers which has in turn lowered their acquisition cost.

Weakness

Due to the existence of price wars and extensive network of delivery for Amazon, their profit margins are shrinking, resulting in greater losses for the company. As per the case study of Amazon, the company has incurred a loss of $359 crores in India in the year 2016-17. Negative publicity has been attracted by the company on the issues of Tax avoidance in countries like the United Kingdom and the United States. Moreover, the company has been struggling to make profitable businesses which are in turn impacting their overall profitability.

Opportunities

Amazon has extended their product line and has been offering products belonging to different categories. By differentiating their offering, the company will be able to make substantial profits in a highly competitive market. As per the case study of the Amazon, by expanding their businesses in developing countries, they will be able to expand their market due to the presence of low competitions. Amazon is also able to engage their customers with brands by opening stores outside the United Kingdom for creating loyal customers and increase in repeat purchases.

Threats

With lower barriers to entry of the industry, companies like Amazon will experience greater amount of competition, shrinking profit margins, price wars and losses. When the companies are not clarified with issues which exist within the retail sector, it can prove to be a hurdle for Amazon to achieve success in various developing nations (Aboutamazon.com, 2019). The local E-commerce companies like Flipkart and Snapdeal, who are acquiring majority of the shares within India. Similarly, various local players exist within the market who takes portions from market share making it harder for Amazon to achieve profits and expand.

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Amazon Travel Club PESTLE Analysis

Political

  • Political Stability
  • Support from government for e-commerce
  • Enhanced cyber security efforts by the government

Economic

  • Economic stability
  • Retail sales in the US expected to rise up to $3.8 trillion by 2019
  • Potential economic recession
  • Enhanced disposable incomes of consumers in developing countries

Technological

  • Rapid emergence of advanced technologies
  • Enhanced IT resource efficiency
  • Increased cybercrime rates
  • Loss of monthly sales by almost 20%

Socio-cultural

  • Enhanced consumerism in various countries
  • Increasing disparity of wealth
  • Increased purchasing power of consumers

Legal

  • Changing regulations regarding export and import
  • Rising regulations in products
  • Integration of Consumer Privacy Act 2018

Environmental

  • Increased emphasis on sustainability in businesses
  • Rising interest in environmentally friendly products

Table 2: PESTLE Analysis of Amazon

(Source: Influenced from Onyusheva and Seenalasataporn, 2018)

Amazon Travel Club Analysis

Political

Amazon is one of the largest e-commerce companies in the world and has been serving millions of customers all over the world. As per the case study of Amazon, they have to face government activities and political influences which could hinder their success and growth within the market. Hence, it can be stated that political stability can create major impacts on its businesses. For instance, stable political environment in Australia enabled the company with an opportunity to expand their businesses in the region. The European Union has been investigating the company related to use of data for retailers who are selling their products on Amazon marketplace. If the company is found guilty, they are at risk in facing substantial consequences.

Economic

The disposable income of customers has been increasing which can be a great opportunity for the business which suggests that consumers are now able to purchase products on the basis of their personal choice. As per the case study of Amazon, it will provide them with an opportunity for expanding their shares within the market. It has been forecasted by National Retail Federation, retail sales within the United States is expected to reach $3.8 Trillion by the end of 2019.

Social

With the emergence of e-commerce and greater internet access, the customers are more engaged on online shopping. As per the case study of Amazon, they have exploited this opportunity for reaching maximum number of people all over the world.

Technological

Cybercrime is one of the biggest threats for Amazon and third party sellers as well as consumers of Amazon are concerned about their sensitive data like debit card and credit card and any personal information that is stored at the website of the company (Onyusheva and Seenalasataporn, 2018). Several clients have reported hacking of their data which resulted into loss of monthly sales by almost 20%.

Legal

Various regulations adopted by the government like Consumer Privacy Act, 2018, which proposes that companies like Amazon, Facebook and Apple must inform their users about the type of data is collected by them and the way they will be using or sharing the data.

Environmental

With increasing demands of sustainability in business, Amazon is seeking for reducing their emissions from shipments by half until 2030. As per the case study of Amazon, more than 100 million customers of the company are prime customers who are eligible for receiving their products within two days, which in turn will increase sustainability.

Reference List

Aboutamazon.com (2019), About the Company. Available at: www.aboutamazon.com. [Accessed on: 29th June 2019]

Au-Yeung, B., Chu, D., Enfante, M., Logan, G. and Saelee, K., (2016). Industry Analysis: Cloud Computing, 5(3), pp. 23-79

Onyusheva, I. and Seenalasataporn, T., (2018). STRATEGIC ANALYSIS OF GLOBAL E-COMMERCE AND DIVERSIFICATION TECHNOLOGY: THE CASE OF AMAZON. COM INC. The EUrASEANs: journal on global socio-economic dynamics, (1 (8)), pp.48-63.

Phadermrod, B., Crowder, R.M. and Wills, G.B., (2019). Importance-performance analysis based SWOT analysis. International Journal of Information Management44, pp.194-203.

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