Introduction

Amazon is a huge enterprise that is internet-based, which sells music, books, housewares, movies, toys, and household goods either through middlemen or directly between the company and its million customers across the world. The company, through its web service businesses, rents computer resources commonly called cloud computing and data storage over the internet. The company, therefore, relies on online businesses and does not get disturbed by physical changes. Due to this, Amazon is one of the companies that are thriving, while other businesses are declining as a result of the COVID-19 virus pandemic. Customers who cannot go out and shop are now turning to online shops, and that is where Amazon comes to their rescuer hence increasing its sales. Amazon is ranked as the largest online business in the world (Leveque, 2020).

Industry in Which Amazon Operates

Amazon operates in the online retail trade, which comprises of many businesses today due to the proliferation of internet usage and information sharing across the world. Amazon, which started with selling e-books, has grown and advanced to other activities product and service offerings. Due to the increase in usage of the internet, the online retail industry is fast growing. This growth means that Amazon faces competition from many other businesses using the same platforms. The widely known competitor today is eBay.com, Walmart, Target, Alibaba, and Netflix, which has taken the online movie business to another level.

Potential Profitability of the Industry

The industry is fast-growing, with many businesses joining due to the advancement in technology and access to the internet. This growth means that there is a high potential for profitability in the industry. Many people across the world are increasingly gaining access to the internet hence the possibility of becoming consumers to online products (Izogo, 2018).

Critical Success Factors In the Industry

The critical success factor in the online retail industry is the ability to command a large share of the online market. A large market share means that a business will be able to increase its sales volumes and thus better revenues. Also, the creation of convenience for customers is considered a success factor in the online retail industry. Each business seeks to be remembered for how well it responds to its online customer needs (Duch-Brown, Grzybowski, Romahn, & Verboven, 2017).

Political and Legal Forces Affecting the Industry

Just like any other industry, online retailing is influenced by political and legal forces. Some countries impose regulations that censor information for its citizens. As a result, an online retailer may end up unable to sell products to customers in such countries. Also, restrictions on the goods and services may be imposed on certain rights hence rendering them unprofitable to the business (Zhou, Dai, & Zhang, 2017).

Economic Forces Affecting the Industry and Market Structure

Online retail trade is affected by economic forces such as the buying ability of the people. Those people with very low incomes will find it to buy from physical stores, which reduces the costs of the buying. The market structure of the online retail industry depends on the level of technology that has been adopted by people. Today, the market is characterized by a high, increasing number of customers for a variety of goods across the globe (Forman, & Ghose, Goldfarb, 2019).

Social Forces Affecting the Industry

According to Bai, Law, & Wen (2018), people have different cultures that influence what people are likely to buy. The online retail industry is influenced by these cultures. As a result, companies in the online trade are forced to conduct extensive research to identify what goods and services people from different countries are allowed to buy and use by their culture and societies (Nagar, 2017).

Technological Forces Affecting the Industry

The increasing knowledge and application of technology affect the online retail industry. Individuals who are learning how to use the internet and buy items are increasing. However, there is a threat of cyber-crimes and hacking, which means that confidentiality is a problem. Companies and customers are being defrauded hence end up afraid of online transactions.

Strategy, Strengths, and Weaknesses of the Business

Amazon continues to do well during the COVID-19 pandemic because of its corporate level and business strategies. The company is pursuing a corporate strategy of concentric diversification. This strategy allows it to leverage different business capabilities and technologies hence tapping a larger market share (Cort, Dominguez, 2016). Its strength lies in the ability to identify the best technologies that will help in increasing customer attention. The company also has a strength in aggressive advertising and marketing online, which creates unique brand awareness. Amazon has an opportunity for expansion (Gensler, Leeflang, Skiera, 2016). The company, in its growth strategy, should focus on tapping the customers from these emerging markets where internet technology is fast growing. The biggest threat to Amazon is the increasing number of both small and medium online business which are taking its market share. These growing businesses may tap on new technological capabilities and beat the company in the market (Hassanein, Head & Ivanov, 2017).

References

Bai, B., Law, R., & Wen, I. (2018). The impact of website quality on customer satisfaction and purchase intentions: Evidence from Chinese online visitors. International Journal of Hospitality Management, 27(3), 391–402.

Cort, S. G., Dominguez, L. V. (2016). Cross-shopping and retail growth. Journal of Marketing Research, 14(2), 187–192

Davis, L., Wang, S., & Lindridge, A. (2016). Culture influences on emotional responses to on-line store atmospheric cues. Journal of Business Research, 61(8), 806–812.

Duch-Brown, N., Grzybowski, L., Romahn, A., & Verboven, F. (2017). The impact of online sales on consumers and firms. Evidence from consumer electronics. International Journal of Industrial Organization, 52, 30–62. doi: 10.1016/j.ijindorg.2017.01.009

Forman, A. & Ghose, A. Goldfarb. (2019). Competition between local and electronic markets: how the benefit of buying online depends on where you live Management Science, 55 (1), pp. 47-57

Gensler, S., Leeflang, P., Skiera, B. (2016). Impact of online channel use on customer revenues and costs to serve: Considering product portfolios and self-selection. International Journal of Research in Marketing, 29(2), 192–201.

Hassanein, K., Head, M. and Ivanov, A. (2017), “The role of social presence in establishing loyalty in e-services environments”,Interacting with Computers, Vol. 19 No. 1, pp. 43-56

Izogo, E. (2018). Online shopping experience in an emerging e-retailing market. Journal of Research in Interactive Marketing. 10.1108/JRIM-02-2017-0015.

Leveque, F. (2020, March 11). Amazon’s bottomless appetite. Retrieved May 1, 2020, from https://theconversation.com/amazons-bottomless-appetite-116017.

Nagar K. (December 8, 2017). Assessing the Impact of Online Retailer Models on Consumer’s Attitude and Purchase Intentions

Zhou, L., L. Dai, and D. Zhang (2017). “Online Shopping Acceptance Model – A Critical Survey of Consumer Factors in Online Shopping”, Journal of Electronic Commerce Research, Vol. 8, No. 1:41-62.

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