Challenges and Opportunities of Amazon
Challenges 1 (Wallace Lee Kar Shing)
High Degree of Competition
One of the key difficulties is that Amazon sellers face substantial challenges due to the platform's low entry barriers and flexibility to allow several merchants to sell the same things. They are constantly confronted with an unlimited amount of competitors unless they supply something distinctive, making it difficult for them to stand out and earn revenue. Furthermore, there is local rivalry, while a large proportion of American Amazon sellers are from China, where lower production costs give them a pricing edge. In 2020, a stunning 25% of Amazon FBA sellers expressed anxiety about decreased prices as a result of greater competition. Sellers may make a reputation for themselves, stand out from the throng, and effectively navigate Amazon's harsh competition by building their own distinctive sales channels and marketing plans. (Hopstack, 2024)
Opportunity 1 (Wan Ping Yao)
Technology and Innovation
Amazon provides many opportunities when it comes technology and innovation. Firstly, Amazon in the retail industry provides Amazon Go. Amazon Go is a digital retail store where customers enter the retail store to purchase day-to-day items and groceries by simply walking in and walking out of the store after they are done shopping. How this works is that there are surveillance cameras all across the store to scan all the items that the customers have took from the shelfs or put back. Before the customers walk out of the store, the system that runs Amazon Go will calculate the total price of the items taken by the customer and it will deduct the equal amount of balance from the customers' Amazon account. There are no physical contact with other people throughout the entire shopping process. (Amazon, 2024) Amazon Go allows its customer to shop very efficiently as customer are no longer required to queue up to pay for the items and it was very useful during the Covid-19 pandemic as no physical contact between people were allowed. Moreover, Amazon also provides online shopping options. All the user has to do is to go on the Amazon website which is amazon.com, and choose the item that they would like to buy. Within a few days after purchasing the item, the item will be at the customer's doorstep. Amazon utilizes several types of vehicles for online delivery depending on the distance such as trucks, vans, airplanes, and sometimes drones if the destination is not far from the warehouse. All in all, the services that Amazon provides focus on mainly automation and is the reason for the high efficiency of Amazon services. With these technology and innovations that Amazon has, it provides many opportunities that can lead to many technological advancements across many industries. (Amazon, 2022)
Challenges 2 (Teh Yin Xin)
Counterfeit of Product
Amazon, one of the giants of e-commerce, has revolutionized
the way we shop. However, its massive online marketplace faces a growing
threat, which is counterfeiting goods. These counterfeits can erode brand trust,
and customer satisfaction and damage Amazon’s reputation. (Corsearch, 2018) Counterfeit
goods are a double-edged sword for Amazon. On the other hand, they can attract
bargain hunters seeking lower prices. However, this benefit is short-lived.
Counterfeit products are often lack of quality control and can pose safety
risks to customers.
(ICE, 2022)
Additionally, counterfeit products can hurt legitimate brand owners who rely on
Amazon as a sales channel. Customers who unknowingly purchase the counterfeits will
be dissatisfied and less likely to trust Amazon in the future. This erosion of
trust could lead to customer churn and in the end cause a loss of revenue for
Amazon. (Pymnts, 2024)
Opportunities 2
Currently, Amazon requires sellers to register and provide basic information but this can be a loophole for bad actors. Hence, Amazon should explore stricter verification processes by demanding additional documentation like business licenses, manufacturing certifications and having random product inspections before allowing the seller to sell the products. Although this might increase the complexity of the process, it can go a long way to deterring counterfeiters and boosting the customer confidence in Amazon. (Cello Square, 2022)
Challenges 3 (Tan Shu Rou)
Supply Chain Distruptions
Due to the sudden pandemic, the supply chain distruptions have been made more difficult especially for Amazon. As many as 93% of e-commerce sellers lost revenue and the majority of commerce sellers said their inventory was delayed for 2 months or more. This was mostly due to factories in China having to stop work due to the spread of Covid 19 causing manufacturing facilities to stop productions. As a result, ordering inventory from a supplier became a very long process due to the various delays which in turn affected seller's revenue and Amazon as a whole. (Polansky, 2022)
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