Amazon SWOT Analysis In A Nutshell

Amazon is among the most diversified business model in the tech industry. The company is well-positioned to dominate e-commerce further. And while its online stores have tight profit margins, Amazon still unlocks cash for growth, while consolidating its dominance in the cloud and grabbing new opportunities like voice.

Amazon strengths

Amazon has a diversified business model. In 2019 Amazon posted over $280 billion in revenues and over $11.5 billion in net profits. Online stores contributed to over 50% of Amazon revenues, followed by Physical Stores, Amazon AWS, Subscription Services, Third-party Seller Services, and Advertising revenues.
  • Strong brand: Amazon is the most valuable brand on earth. Launched as a bookstore, it eventually became the “everything store,” and from there, it dominated several other industries. Amazon today is exceptionally well-positioned to keep expanding its online stores’ capabilities.
  • Diversified business model: Amazon is among the tech giants who have the most diversified business model. Spanning from e-commerce to cloud, advertising, and more.
  • Massive growth potential: While Amazon passed the trillion-dollar in market capitalization, it is also positioned on several markets that might become trillion-dollar industries.
  • Direct distribution/flywheels: Amazon enjoys massive flywheel effects thanks to its built-in growth mechanisms, which made it the company we know today.
The Amazon Flywheel or Amazon Virtuous Cycle is a strategy that leverages on customer experience to drive traffic to the platform and third-party sellers. That improves the selections of goods, and Amazon further improves its cost structure so it can decrease prices which spins the flywheel.
Amazon is a consumer e-commerce platform with a diversified business model spanning across e-commerce, cloud, advertising, streaming, and more. Over the years Amazon acquired several companies. Among its 12 subsidiaries, Amazon has, Audible, CamiXology,, IMDb, PillPack, Shopbop,, Twitch, Whole Foods Market, Woot! and Zappos.

Amazon weaknesses

Amazon is a profitable company. Its operating income and net income passed $12.4 billion and $10 billion respectively in 2018. The operating income was driven primarily by Amazon AWS, contributing $7.29 billion. Amazon has been consistently profitable since 2015 when it posted 596 million in profits.

Amazon threats

Google and Amazon are fighting for dominance between e-commerce and advertising. Where Google has a monopoly in the search market. Amazon might gain a monopoly in product searches. In 2020, Google opened its Google Shopping for free to contrast Amazon dominance on e-commerce and prevent Amazon from taking more space in the digital advertising industry, the core business fo Google.
  • Global competition and tech wars: As tech giants try to consolidate and keep the dominance in their industries, they also move in adjacent markets, thus overlapping part of their value proposition to consumers. This triggers expensive tech wars that might end up causing losses for Amazon as well.
  • Regulation: Amazon has become a massive company made of many moving parts. This raises the question of whether it makes sense to break it up to prevent the company from abusing its dominant position in several industries (e-commerce, cloud voice).
Amazon is a consumer e-commerce platform with a diversified business model spanning across e-commerce, cloud, advertising, streaming, and more. Over the years, Amazon acquired several companies. As it operates across several industries, Amazon has a wide range of competitors across each of those industries. For instance, Amazon E-commerce competes with Shopify, Wix, Google, Etsy, eBay, BigCommerce.

Amazon opportunities

Amazon runs a platform business model as a core model with several business units within. Some units, like Prime and the Advertising business, are highly tied to the e-commerce platform. For instance, Prime helps Amazon reward repeat customers, thus enhancing its platform business. Other units, like AWS, helped improve Amazon’s tech infrastructure.
  • Global expansion: While Amazon has been growing at a crazy speed, its space for global expansion is still wide.
  • New industries consolidation and definition: As Amazon expands, it also develops new markets. For instance, Amazon is a key player in the cloud industry. And it’s a dominant player in the voice industry, among the most interesting in the coming years.
In 2019, Alphabet’s (Google) Cloud Business was an almost $9 billion unit within Alphabet’s Google overall business model; to gain a bit of context; Microsoft intelligent cloud netted nearly $39 billion and Amazon AWS $35 billion in the same year.

Key takeaways

  • Amazon is among the most valuable companies on earth built during the web era.
  • Amazon has a diversified business model made of many moving parts. Its core is the consumer e-commerce platform, on top of which Amazon has built several new parts of the business model over the years.
  • Other parts comprise its subscription-based service, Amazon Prime, its Cloud platform, AWS, and its product Advertising machine.
  • While Amazon is among the most valuable brands, it also formed a monopoly in the digital e-commerce space, increasing the chances of potential regulation and breaking up of some of its parts.

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