2.0. Analysis of The Internal Environment
2.1. Analysis of Amazon Strengths
The first strength that Amazon possessed is in terms of its first mover advantage. Amazon was
founded by Jeff Bezos in 1994 at the back of his house garage. As reported by Business Insider
(2010), starting from 1997 until 2010, many economists have speculated that those periods are the
starting and the burst point of the dot-com bubble which is the economic bubble that marks the start of
internet usage and adaptation by businesses and consumers. As the Amazon was founded in 1994, it
literally even established prior to this trend and ride on the train of the opportunity back then.
In terms of Amazon product and service offering, despite all the risks and costs that were being
presented and encountered by them, Amazon then eventually enjoy the benefits of being a pioneer and
as the market responds well to this initial move and starting to become a monopoly on its own
industry. In late 1990s Bezos took an initiative to add five more new warehouses and fulfilment centre
which costs him $300 million at that time. This additional warehouses was even purchased before it
was needed as simply a preventive act to the potential rivals risen and making sure the to meet the
demand that was growing at that time and offer them the best prices and most convenient delivery
(Quittner, 2008). By doing so, Bezos may achieve benefits of hitting two birds with one stone;
defending itself and limiting the gap for late movers and at the same time secure the market share in
the industry as shown in Figure 2.1, Amazon growth rate, shown in the blue line is even in a higher
position compared to the red line which represents the U.S. e-commerce growth rate.
Figure 2.1. Amazon Growth Rate Compared to U.S. E-commerce Growth Rate Within a Decade
In relating to the first mover advantage, there is another benefit that the pioneer can enjoy which is the
establishing a strong reputation and branding. Another possibility resulted from a satisfactory product
and service offering is in terms of the reputation. It is a fact that Amazon is now the market leader in
the e-commerce industry in U.S. and because they are the pioneer in this industry, it gave them the
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- Spring '17
- Dot-com bubble, First-mover advantage, Analysis of Amazon Strengths
