4. Developing more local sites in international markets is an attractive business opportunity
Amazon has to explore. Currently, the range of Amazon’s internationally-focused websites are
limited to , , , ,
,
,
,
,
,
, and . The largest internet retailer in the world needs to
increase the level of geographical service personalization by launching more region-oriented
websites. Specifically, Amazon needs to focus on developing countries and former USSR blog
countries.
5. Engagement in strategic collaborations with companies in e-commerce and affiliated
industries is also an opportunity worthy to be considered by Amazon strategic level
management. A range of businesses that Amazon could cooperate with include but not limited to
online and offline retailers, entertainment organizations, media organizations and others. A range
of potential benefits to be gained by Amazon via engagement in strategic collaborations include
cost saving in marketing, supply-chain management, distribution and others.
7.4 Threats
1. A loss of profitability due to low profit margin is one of the most noteworthy threats faced by
Amazon. “Spending on things like merchandise warehouses, web video programming and
computer data centres slimmed its operating profit margin to a tiny 1.7%. The spending is even
more flush than it appears. Unlike its peers, Amazon.com Inc. also expands its warehouses and
data centres through capital leases, and when those costs are included, Amazon’s free cash flow
was just USD1.5 billion in the last 12 months. That means out of every USD1 in cash coming
41
Brooks, L. (2017) “How Whole Foods Can Keep its Identity After the Amazon Deal”
Fortune,
Available at:
16
into Amazon, it’s left with 1 cent after accounting for all its cash expenses.”
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Such a low profit
margin makes Amazon vulnerable to emergence of competitors with more cost-effective
operations due to disruptive innovation or their access to cheaper resources.
2.
Amazon has been involved in a set of expensive lawsuits in the past. Complaints against
Amazon were filed by Austro-Mechana, Austrian copyright collection society in 2007, Big
Baboon, Inc. in 2009, Walker Digital LLC in 2011, OIP Technologies, Inc. in 2012
and Smartflash LLC in 2014 to name just a few. Additionally “beginning in August 2013, a
number of complaints were filed alleging, among other things, that Amazon.com, Inc. and
several of its subsidiaries failed to compensate hourly workers for time spent waiting in security
lines and otherwise violated federal and state wage and hour statutes and common law.”
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There
is a threat of more lawsuits against Amazon in the future on various grounds with negative
implications in terms of finance and damage to the brand image.
