SWOT Analysis of Amazon 2020

NameAmazon.com, Inc.
IndustryOnline Retailer, Cloud Service Provider
HeadquarterSeattle, WA, USA 
CEOJeffrey P Bezos
RevenueUSD 280.5 billion 
ProfitUSD 11.58 billion (4.1% net margin)
CompetitorsTarget, BestBuy, Walmart  

Company Overview

Amazon is one of the largest online retailers in the world. Started as an online bookstore, the company now offer a wide range of products, from book, music, electronic, home furnishing, clothing, jewelry, and hundreds of other product categories. Amazon also develops and sells its own electronic products, notably the Kindle e-book reader, Fire tablet, Echo, and other devices. Amazon is also a cloud service provider with its Amazon Web Service, an entertainment company with its Prime video streaming service, and a worthy competitor in the grocery business, through the acquisition of Whole Foods. Amazon’s operation is divided into three major geographic segments: North America, which is responsible for 60% of revenue, International makes up nearly 30%, and Amazon Web Service (AWS) fills the rest, about 15%. Amazon generates 70% of sales through its e-commerce platforms, 10% from Whole Foods physical stores and more than 5% comes from the company’s subscription services, including Amazon Prime membership, audiobook, streaming services, and others. Today we are performing a detailed SWOT Analysis to understand where the company stands in 2020 and beyond.

Amazon Strengths 2020:

  • Innovation is embedded in Amazon’s corporate strategy, enhancing its operational efficiency, and allows Amazon to expand into other industry segments.

    The company focuses on investing in technologies for its fulfillment centers to help workers pick and packs the orders as fast as possible. Items location is arranged by analyzing data on the likelihood of them being purchased together, allowing workers to pick multiple items at a time without wasting time walking around. Packages are automatically packed and labeled by robots, then transferred to delivery trucks. The company owns Amazon Robotic, a subsidiary that focuses on building robots and enhancing automation. Amazon is testing drones for delivery. 

  • A world-class distribution network helps Amazon dominates the e-commerce market.

    The company currently operates 175 fulfillment centers where it stores, packs, ships items to millions of customers each year, 110 of them are in North America. Once packed, items are moved to trailer trucks and transported to the sorting center. Amazon has its own fleet of delivery trucks and airplanes, as well as partnerships with UPS, FedEx, and U.S Postal Service. For Prime membership deliveries, Amazon mostly uses its own delivery service since it can control the date of delivery, as promised.

  • Market leader in non-core businesses, including smart-home devices and service subscriptions.

    Amazon owns 12.8% of the U.S smart home device market shares by 2019 by expanding sales of Alexa devices, opening the ways to other subscription-based services. More than 100 million Fire TV, a device that turns regular TVs into smart ones, has been sold in 2020, paving the way for Amazon to get into the $148 billion TV advertising market. As the Amazon ecosystem grows among households, Prime Videos subscribers increase in quantity and spending amount. Amazon also dominates in infrastructure-as-a-service as more businesses move to cloud computing and the rising work-from-home trend ensures a stable revenue flow for Amazon. 

Amazon Weaknesses 2020:     

  • Amazon is becoming a conglomerate and spreading its resources across too many industries, which could lead to inefficiency, diseconomy of scale, and failure in certain businesses.

    Started as an online bookstore, Amazon now has footprints in e-commerce, media streaming (video, music), media producer, logistic, hardware developer, groceries, game streaming, cloud service provider, and many more. To enter a new sector, Amazon usually acquires an incumbent player in that market, thus reducing the available capital for growing existing business. The company may lose its core strategies and vision since different industries require different tactics.

  • Amazon is willing to make sales at breakeven prices, or at a loss, and playing with a razor-thin net margin in order to capture market shares and suffocate small competitors.

    The Fire TV, for example, is selling at a breakeven margin so that Amazon can gain the market for high-profitability connected-TV ads. Even though the company’s margin has improved over the last few years, this loss-leader strategy is not sustainable. 

  • Weak representation in Europe and other emerging markets.

    Only 7.9% and 6.2% of revenue come from Germany and the U.K, respectively, in oppose to 61% from North America. Its business model seems to have problems running in Europe, especially with the distribution centers and the delivery network. 

Amazon Opportunities 2020:

  • Cloud computing is here to stay and Amazon should capitalize on this trend.

    Amazon, along with Microsoft and Google, are the major players in the cloud service providers. More businesses, from small to large enterprises, are switching to cloud computing after recognizing its flexibility, scalability, and cost-effectiveness. The work-from-home trend has contributed a substantial chunk to service providers’ revenue in 2020, and this trend is predicted to retain for a foreseeable future.

  • The online grocery market may see strong growth. Grocery is the largest retail segment but has the lowest e-commerce penetration.

    Bolstered by the pandemic-induced habits, customers order groceries online more often, giving Amazon a chance to make headway, while physical stores are playing catch-up. Amazon is currently leading the service, with 62% of eMarketer’s U.S survey respondents indicated they relied on Amazon’s service, followed by Walmart and Target. Despite the trend that may taper once customers are more confident to shop in-store, users of such service are willing to purchase pantry staples and package goods online. 
  • The TV advertising market is a juicy new market for Amazon.

    The $148 billion high-profitability connected-TV ads market could boost the profit margin for Amazon, in which the company is trying to penetrate through its Fire TV device. EMarketer projected 203 million connected-TV users in the U.S in 2020, more than enough space for Fire TV to expand. 

Amazon Threats 2020:

  • Amazon is likely to face antitrust lawsuits as it grows larger and deemed to be a monopoly by the Justice Department.

    Google and Facebook are likely to face antitrust challenges from the U.S government in 2021 because of frequent complaints from customers, industry participants, and politicians. The Justice Department is motivated to investigate other big tech company, and Amazon is possibly the next target.  

  • Amazon is under multiple, possibly overlapping investigations by the U.S Department of Justice and FTC on past acquisitions.

    The efforts are unusual and likely a sign of seriousness to police the company’s conduct. The FTC is examining past acquisitions to determine whether any M&A deal was intended to eliminate competitors.

  • Fierce competitions in e-commerce and media streaming.

    In the U.S market, Target, Walmart, and BestBuy are gearing up to take market shares from Amazon with attractive promotion and express shipping or instant in-store pickup. In the video streaming service business, Amazon is competing with big names like Netflix, HBO, Disney, Hulu, and the latest Apple TV+.      

Amazon SWOT Analysis Conclusion 2020:

Amazon is growing beyond its original online retailer and enters into other growing industries that, with proper investment, will definitely become profitable. The company has enough resources to discourage competitors in every industry it participates in, nevertheless, Amazon has to watch out for possible antitrust litigations from the Department of Justice.

  • If your essay needs some final touches to look professional, our Proofreading & Editing Services will make your professor’s jaw drop!
  • You can also find a SWOT blank template here


Amazon.com, Inc. (2019). Annual Report 2019. 

Poonam Goyal, J. W. (2020). Amazon Research. Bloomberg Intelligence .

Recent Content