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Thus, based on Porter’s Five Forces Analysis of Amazon, the company must give great importance to the customer to maintain success in the long run.Īmazon competes with substitutes in the online retail as well as with the offline retail market. Amazon Web Services is one such product with a lack of choices for the buyers.
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So, it becomes tough for the buyers to find such level of experience elsewhere.Ĭustomers of Amazon has high bargaining power for household products, Online streaming services, Amazon fire TV stick, Kindle because of the availability of substitute products and high competition.īut customers have low bargaining power for products with less competition or whose alternatives are not available.
It is difficult for any other brand to reach this level. The advantage for Amazon is its capability of providing high range product with millions of choices for its customers at minimum cost with the best customer experience. If Amazon does not provide its customers with high-quality service at the best price, they will go for its substitute in the market.
It guarantees that the company’s products are of high quality and, received on time.Ĭustomers generally have high bargaining power because of the intense competition in the e-commerce industry.Ĭustomers tend to be price sensitive. In other words, the time of entry and customer loyalty act as a significant factor in the e-commerce industry.Īmazon highly emphasises on customer satisfaction and aims in providing high value to its customers.Īmazon runs a customer-centric approach in its e-commerce business. It is also difficult for any other player in the market to invest heavily in customer experience. Amazon gave tried to give its customer the best experience in the market. However, the extensive investment that Amazon makes on its brand development and, on customer experience, it becomes difficult for the competitors to compete in the market.įor any other brand, it would require billions of dollar investment and, years of patience, to directly compete with Amazon.Ģ) Economies of scale: Amazon has an advantage over other brands on economies of scale because of the reputation of being the largest internet retailer in the market.Īlthough new players can comfortably enter the market, they cannot potentially use economies of scale in their favour at the same extent as Amazon.ģ) Customer Loyalty: Amazon gets the advantage of being the first big player in the e-commerce industry.Īmazon knew that customer can make or break a business, and, so it heavily invested in customer experience from the beginning whether it be modifying customer friendly website, Delivery time and return of goods. It would require massive investments in warehousing, distribution, marketing, making user-friendly website, customer service, logistics and many more.ġ) Switching Costs: It is easy to enter the e-commerce industry, and also it is easy to gain competitors, customers, because of the low switching costs in the market. No doubt it is easy to start an online retail store or an e-commerce website on the internet, but it would be difficult for any brand to take on a giant such as Amazon. It has several products and services available such as Amazon Prime, Alexa, Kindle, Fire TV, Amazon Fresh and many more.The company needs to consistently improve customer experience by making the company’s e-commerce website more user friendly.Amazon is the market leader in the e-commerce industry and, to retain its position against the growing competition, it must focus on its brand image.It is considered one of the Big Four technology companies, along with its main competitors Google, Apple, and Microsoft.Īmazon surpassed one of its biggest competitors Walmart in 2015 and became the most valuable retailer in the United States by market capitalisation.įollowing is a detailed Porter’s Five Forces Analysis of Amazon: However, the company also focusses on live streaming, cloud computing, and artificial intelligence. Overview: Porter’s Five Forces Analysis of AmazonĪ is an American multinational technology company based in Seattle.Īmazon was founded by Jeff Bezos in Bellevue, Washington, on July 5, 1994.Īmazon’s prime focus is on e-commerce industry and online retail market. In this article, we will analyse five competitive forces to understand the competitiveness of the business environment of amazon. It helps businesses to learn about the competitors and determine the long-term profitability in the market. Porter’s Five Forces analysis helps organisations to understand the strengths and weaknesses of an industry. In this article, we explore all of Porter’s Five Forces Analysis of Amazon in detail.
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