If these suppliers have problems, Amazon cannot supply products and services in an efficient way. Low margin products Amazon’s business foundation is low cost, which results in high growth in sales and market share, but also leads to a very low profit. Besides, free delivery can cause a negative effect on the profitability. Amazon operating margin stood at 0. 95%, while it was 20. 8% of eBay and 24% of Google ((eyelashes Fraud, 2013). Only online existence Amazon cannot give users the feeling of being touched and tried. Access to Amazon’s products is also limited to internet users.
This means Amazon is ignoring a large umber of shopping customers 2. 3. OPPORTUNITIES E-commerce development customers get used to shopping online will bring more opportunities for the business. Online advertising Amazon has opportunities to take benefits of its reputation and huge customer database for placement of online ads. This can create significant profit like eBay or Google (about 85% of Google’s revenues is from online advertising) (Sisyphus Fraud, 2013) Develop private brands With the existing advantages of reputation and systems worldwide, Amazon can save huge expenses in marketing when introducing new products.
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Launching its own brands will benefit Amazon both profit and image, Kindle is an example. 2. 4. THREATS Intense competition Amazon has many competitors in different industries like Wall-Mart, eBay or Google… Moreover the enhanced technologies also increase competition because of convenient Internet facilities entry and easy shopping comparison. This may decrease the company’s sales and profit. Government regulations The company depends on various regulations related to both general and internet business such as taxation, privacy, data protection, pricing, content, copyrights.