Porter 5 Forces and SWOT Analysis

Competitive Rivalry

The competitive rivalry in the online retail industry is extremely high as the number of market players has grown. Besides, the traditional brands also offer online sales, hence further heightening the competition. Amazon China faced fierce competition from rivals such as Alibaba, JD, Taobao, e-Bay, and others. For Amazon, the competition does not only emanate from the market giants such as Alibaba; the company also battles for the market share with other brands, small-scale retailers, and online stores targeting particular products such as apparel, electronics, auto parts.

Supplier Power

The supplier power as for the case of Amazon China is low. Amazon is such an established player in the online retail industry. As such, the company has an upper hand when it comes to suppliers in the supply chain. Despite the large number of suppliers Amazon manages, they all follow certain policies and regulation, and ethical principles stipulated by the company. It is not easy for the any supplier to think of forward integration, and the switching cost is also very low as several companies are ready and willing to supply Amazon with the necessary products.

Buyer Power

The buyer power for the Amazon China is high as the switching is almost zero. Online customers are well informed, and because of growing trend in online retailing, clients have several options to switch to. However, Amazon stresses mostly product quality and customer satisfaction. The company invested heavily on warehouses to ensure timely delivery and effective management of returns and replacement to boost customer satisfaction and repeat sales.

Threat of Substitute

Threat of substitute is high as Amazon does not specialize in any product unique. Substitution to Amazon include several local retailers such as Walmart, other online stores of similar brands that Amazon sells, branded outlets, and many others. Many people also prefer to shop at a retail store than online hence creating high threat of substitution to Amazon.

Threat of New Entrant

Threat of new entrant is low as it is challenging to build an online store to the level of Amazon, which require significant investment. Online shopping platform requires extensive investment in logistics, warehousing, marking, distribution and other factors, making market entrant low.

SWOT analysis of Amazon China

Strength

One of the key strength of Amazon China was its superior distribution and logistics system aided by its extensive investment in warehouses. Joyo Amazon took advantage of 6he company’s superior logistics and distribution systems to revolve the increase cases of customer complaints concerning the slow and unreliable delivery that afflicting e-commerce across China; hence gain more competitive advantage over the rivals by actualizing customer fulfilments. Amazon has significantly invested in warehouses and fulfilment centers aided by its strong supplier power in the supply chain.

Amazon also derives its strength from its power to leverage information technology and its application of e-commerce as scalable platform that is easier to ramp up. This has ensures that Amazon is always ahead of its competitors in the online retail store. Also being the world’s largest online retailer, Amazon also derives its competitive advantage from two-pronged strategic push, which include cost-leadership and focus.

Weaknesses

Amazon China had a weak marketing strategy. Amazon focused significantly on customer experience while shopping online, investing much on logistics and distribution networks while neglecting other aspects such as marketing. Joyo Amazon spent every little on advertising and marketing during Amazon’s earlier years in China.

Amazon China also maintained its global policy of not sharing consumption data with the third-party sellers on its platforms, a weakness that Alibaba exploited to its advantage. Alibaba begin to share consumption data with third-party sellers to foster healthy competition and gained more trust.

Opportunities

Growing purchasing power was one big opportunity in the Chinese market for Amazon. By 2009, Joyo Amazon and other competitors begin to reap significantly the benefits of growing purchasing power of Chinese market and faster growing middle class. Amazon also entered the China market as the world’s largest online retailer brand, which provided an opportunity to rapidly diversify is product portfolio by levering its power over suppliers and its robust technologies.

Threat

Competition was the biggest threat Amazon China faced from other giant online retailers such as Alibaba, e-Bay, JD, Taobao, and other local brands that also offered online sales. Alibaba finally overtook Amazon to become the largest online retailer in China.

5 Forces by Porter of Amazon India

Competitive Rivalry

Amazon also faced high competition from rival companies on its late entry into Indian market in 2012. The largest rival was the Flipkart, a popular Indian e-commerce platform launched in 2007 by two Amazon’s former staffs as an online bookstore that later expended into other product categories.