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University of Nebraska - Lincoln University of Nebraska - Lincoln
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Amazon Strategic Audit Amazon Strategic Audit
Trinity L. Hansen
University of Nebraska - Lincoln
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Amazon Strategic Audit
An Undergraduate Thesis Submitted in
Partial Fulfillment of
University Honors Program Requirements
University of Nebraska-Lincoln
By Trinity Hansen
Bachelor of Science in Business Administration
Accounting
College of Business
May 7, 2025
Faculty Mentor
John Kalu Osiri, Ph.D., Management
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Abstract
Amazon.com, Inc., also known as Amazon, is a global e-commerce company that provides online
retail, digital streaming, and cloud services. Since 1995, Amazon has grown to encompass a variety
of diverse markets while maintaining leadership and competition in each. Although Amazon
competes in several industries, this strategic audit mainly focuses on its pivotal role in the e-
commerce industry and how Amazon has maintained its competitive advantage over the years.
This report will start by overviewing Amazon’s history and business model and exploring the e-
commerce industry overall and the various competitors in Amazon’s e-commerce market. Diving
deeper into Amazon's competitive analysis, this report utilizes PESTEL Analysis and Porter’s Five
Forces to analyze the competitive atmosphere further. This report also analyzes Amazon’s strategy,
competitive advantage, and challenges while looking ahead to Amazon's future. Finally, this report
discusses the “blue ocean” strategy, how Amazon utilized it in the past and present, and how it can
implement another blue ocean strategy today.
Keywords: Amazon.com, PESTEL, E-Commerce, Porter’s Five Forces, Strategic Audit, SWOT
Analysis, Blue Ocean Strategy
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Company Overview
History of Amazon
Amazon began as an online bookstore out of the garage of its founder, Jeff Bezos, in 1995.
According to Waters, Bezos, who is now the third richest person in the world, never viewed
Amazon as strictly a bookseller but instead thought of Amazon as a technology company. This
forward-looking outlook helped Amazon evolve into what it is today, encompassing Amazon
Prime, Amazon Web Services (AWS), Whole Foods, and Amazon Bedrock.
Introduced in 2005, Amazon Prime is widely known for its free and fast delivery and entertainment
options such as movie streaming, Prime Reading, and Prime Gaming. AWS, launched in 2006, is
a cloud computing suite that offers vital statistics on website traffic for developers and marketers.
Amazon acquired Whole Foods in 2017, mainly utilizing it to distribute and fulfill deliveries. In
2023, Amazon introduced Amazon Bedrock, investing further in generative artificial intelligence
and large language models (Waters, 2025).
Amazon’s mission statement is “to be Earth’s most customer-centric company, Earth’s best
employer, and Earth’s safest place to work” (About Us, n.d.). Using the term “Earth,” Amazon
emphasizes its global reach and does not limit itself to one consumer group or region. Amazon
continuously emphasizes its customer focus throughout its website, saying, “leaders start with the
customer and work backwards” (Amazon’s Leadership, 2024). Not only does Amazon’s mission
focus on its customers, but it also aims to be the best employer and safest place for its employees
to work.
Business Model
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According to Amazon’s 2024 10k filing, they have 1,556,000 full-time and part-time employees
in their domestic and international divisions. Amazon has seven executive officers, including Jeff
Bezos, the Executive Chair, and Andrew Jassy, the CEO. There are other roles, such as David
Zapolsky, the Senior Vice President of Global Public Policy, and Douglas Herrington, CEO of
Worldwide Amazon Stores (Amazon.com, 2025). They have different CEOs for their web services
and Amazon stores, which benefits their business model since the two segments are in very
different markets.
Amazon splits its business into three segments: North America, International, and Amazon Web
Services (AWS). In both the North American and International segments, retail remains their
primary source of revenue, with online stores generating $75.5 billion in sales and physical stores
generating $5.5 billion in sales in only quarter four of 2024. Including Amazon’s second-largest
segment, AWS, Amazon’s total net sales were $187.8 billion in quarter four and $638 billion for
the entire year. In only the North American segment, Amazon generated $387.5 billion in sales,
which makes up 61% of its total net sales in 2024 (Johnston, 2025). Given that Amazon’s
headquarters are in Seattle, WA, it is understandable that most of its net and operating sales are
generated in the North American region.
E-Commerce Industry Overview
The e-commerce industry is a relatively new concept, especially in the context of the accessibility
of online shopping and social media. The term “e-commerce” was introduced in the 1960s with
the invention of the electronic data interchange, which made buying and selling goods possible
through data transmission (Smale, 2025). Many consumers prefer e-commerce platforms
compared to in-person retail stores because of the lower prices, accessibility, and wide range of
choices that are available online. With the rise of e-commerce, many mass-market retail industries
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have adjusted their business models to include an online shopping option. This choice ensures they
are not falling behind competitors and can retain their current customer base.
Amazon currently dominates the retail e-commerce industry, with a market share of 37.6% in 2023.
The next largest market shares are Walmart and Apple, with 6.4% and 3.6% respectively (Statista
Research Department, 2025). During the COVID-19 pandemic, Amazon’s profits tripled and
dominated e-commerce ad spending with a 76% share (Clark, 2023). These significant gaps
emphasize how superior Amazon is in the online retail segment compared to its competitors.
A term widely used to explain the phenomenon of Amazon’s significant impact on the way
consumers interact with e-commerce and retail companies is the “Amazon effect.” The “Amazon
effect” refers to “the impact that Amazon … has had on online consumer shopping habits and
expectations, as well as the pressure it has put on other retailers” (Clark, 2023). Because of
Amazon’s emphasis on being “customer-centric,” customers now expect all companies to provide
quick deliveries, personalized algorithms, and an extensive range of product options. Amazon can
consistently offer the best experience because of its large-scale operations and ability to negotiate
with suppliers to deliver the best prices for its users.
Before Amazon, consumers used to search for specific brands. However, they now head to Amazon
for the best convenience and lowest prices, putting many small online stores at a disadvantage
(Clark, 2023). Many brands have begun adopting customer-centric policies and investing in the
latest technology and most efficient supply chains to compete with Amazon’s offerings effectively.
Competitors
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Amazon is active in several distinct industries, so there is a diverse and extensive group of
businesses against which Amazon must compete. Focusing on Amazon’s e-commerce and retail
segment, its major competitors are Alibaba, Walmart, and eBay (Nowak, 2024).
Alibaba Group is a Chinese-owned company with six major business groups, including Alibaba
International Digital Commerce Group, Taobao, and Tmall Group. Alibaba.com is a B2B
wholesale website where businesses can buy products in bulk from manufacturers and suppliers
(Amna, 2024). AliExpress, under Alibaba International Digital Commerce Group, is more similar
to Amazon because it sells directly to customers, with a B2C business model. Alibaba is considered
Amazon’s most significant competitor globally, with its numerous marketplaces like Taobao and
Tmall offering lower prices on clothing and electronics (Nowak, 2024).
Walmart is the second-largest e-commerce retailer in the United States, behind Amazon. Recently,
Walmart has made several investments, such as acquiring a robotics business for $200 million,
investing in AI for supply chain assistance, and collaborating with IBM’s order management
platform (Haleem, 2025). With these investments, Walmart's online segment has a good chance
for continued growth. While Amazon is still ahead in annual e-commerce sales, Walmart has
consistently brought in more annual sales overall. Amazon is also focusing on revenue streams
other than e-commerce, while Walmart has continued investing in growing its digital sales, making
it a notable competitor.
Founded around the same time as Amazon in 1995, eBay is an online marketplace with a strong
presence in the e-commerce market. Despite revenue declines in recent years, eBay still reported
$10.1 billion in revenue in 2022 (Keenan, 2024). A feature of eBay that differentiates it from
Amazon and other e-commerce competitors is the option to sell goods through an auction or at a
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fixed price (Drexler, 2024). While Amazon has a larger market share than eBay, eBay maintains
its competitive edge by differentiating its service offerings from those of other e-commerce
competitors.
As of 2025, Amazon is the largest and most successful competitor in the e-commerce retail
industry. However, it must also focus on maintaining its competitive edge over competitors such
as Alibaba Group, Walmart, and eBay. With each competitor offering different services and
continuing to invest in growth areas, Amazon must regularly analyze its strategy and maintain its
large market share.
External Analysis
PESTEL Analysis
Political
Amazon’s revenue is heavily impacted by changes in political policies, both in the United States
and internationally. President Trump’s tariff policy, signed on April 2, 2025, is the most recent and
significant political event affecting Amazon. With most Chinese imports now being taxed at 145%
and up to 70% of goods from Amazon imported from China, sellers on Amazon must decide
whether to raise prices or absorb the considerable cost of importing their goods. According to
Amazon’s CEO, Amazon has started to do “strategic forward inventory buys” and renegotiate
terms on purchase orders to maintain low prices (Tarasov, 2024). By proactively anticipating the
cost increases the tariffs will impose, Amazon can retain a competitive advantage over other
companies importing goods from China.
Another major political challenge Amazon has faced recently is government regulations on
monopoly-like business practices. In late 2023, Amazon faced a federal monopoly lawsuit, with
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the Federal Trade Commission and 17 states suing the company. The FTC stated that Amazon
abuses its power over the thousands of third-party sellers on its site, trapping them with fees and
making it difficult for them to leave (Martin & Selyukh, 2023). Amazon denied the claims, saying
the lawsuit could hurt consumers by raising prices and slowing deliveries. The FTC’s primary goal
is not to break up Amazon, but it wants the court to stop the company’s alleged anti-competitive
practices. This particular political issue will take several years to resolve, making it an important
political factor for Amazon to evaluate and plan for in the upcoming years.
Economic
Several economic factors could significantly impact the stability of Amazon’s revenue. One major
factor is economic fluctuation and, most recently, the possibility of a recession. Consumer
spending habits during recessions historically decrease and shift towards alternative goods and
stores that offer lower prices. With Amazon’s emphasis on low prices and billions of dollars in
revenue, a recession is unlikely to significantly impact its day-to-day business operations. Based
on Amazon’s stock performance in previous US recessions, its stock fell, but immediately after the
recession, it rebounded and returned to a gain (Cimino, 2025).
Inflation is another significant economic factor that directly affects Amazon’s business strategy.
Amazon suffered its first annual loss in decades after inflation caused higher costs. However,
Amazon revamped its cost structure by transitioning from a national fulfillment model to a regional
one, which moved inventory closer to the customer (Cimino, 2025). Taking action to readjust its
processes to continue offering low prices to its customers reinforces Amazon’s mission to be the
most customer-centric company. Amazon can also become more resistant to cost increases caused
by inflation and remain ahead of its competitors in the future because of these changes.
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Because of Amazon’s global presence, fluctuating exchange rates are another vital factor that could
impact its profits. Even though most of its sales are in the US, exchange rates still significantly
impact its profits. During the fourth quarter of 2024, Amazon saw $700 million more foreign
exchange expenses than expected. The US dollar may become even more volatile in the upcoming
months due to increased tariffs and a lack of clarity about US foreign policy (Palmer & Levy,
2025).
Social
Understanding customer demographics and target markets is essential for Amazon's future
marketing and product development. Amazon has over 310 million active users as of 2024, with
the largest age group being 30% of users, who are 25-32, followed by the 32-44 demographic.
While Amazon’s customer base is diverse, over 53% of users are male (Taylor, 2025). Amazon
must continue to monitor these demographics to ensure it addresses accurate consumer trends and
preferences.
Consumer preferences are consistently changing. Therefore, Amazon must adapt to current trends
and consumer preferences. Amazon does a great job of offering personalized recommendations to
its existing consumer base, using data from past browsing history and orders. Amazon also hosts
events like Prime Day, which offers various discounts and sales across its site. Amazon can use
statistics from this day to see which categories and products are the top sellers and utilize its
advertising and product placement to take advantage of that insider information. Examples of top-
selling categories on Prime Day include electronics, home and kitchen, and fashion and beauty
(Basu, 2024). Because millions of users buy items from Amazon daily, Amazon can remain ahead
of its competition with this valuable consumer information gathered.
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Today, a company’s social media presence and involvement are vital to its success. Amazon
remains successful in social media by partnering with influencers to stay relevant. According to
AMZ Scout, over 55% of Amazon customers said social media influencers influenced their
purchases (Taylor, 2025). Amazon utilizes social media platforms such as TikTok to promote
various products (Scale Insights Team, 2022). TikTok’s short-form content is a great way for
influencers to promote items like clothing or home goods and provide direct links to the products
highlighted in their videos. Many influencers also have Amazon storefronts, where people can go
directly to that link and buy any of the items promoted on the influencer’s page. Amazon also uses
Facebook and Instagram to use ads tailored to users' preferences to attract more business.
Diversity, equity, and inclusion programs are important for many employees across the United
States. After the re-election of President Trump, many companies, including Amazon, shifted their
stance on their DEI hiring and training programs. An internal announcement released by Amazon
announced that it will remain dedicated to delivering inclusive experiences, but will alter its
approach to focus on only programs with proven outcomes (Sherman, 2025). Increased public
scrutiny will be placed on Amazon to see how its hiring processes adjust in the coming years, so
Amazon needs to continue emphasizing and developing this area.
Technological
Throughout the years, Amazon has consistently shown that it leads the market in technological
innovations. Recently, Amazon invested resources in creating a new fulfillment center in
Shreveport, Louisiana, which involves a significant advancement in robotics and AI technologies.
In this facility, 2,500 employees seamlessly work alongside robotic systems such as Sequoia,
Robin, Cardinal, Sparrow, and Proteus to increase efficiency. Sequoia is a multilevel containerized
inventory system that utilizes thousands of mobile robots and robotic arms to bring items to
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employees at various work stations. Robin, Cardinal, and Sparrow are a trio of AI-powered robotic
arms that stack, sort, and consolidate millions of customer orders that use advanced computer
vision and AI software to ensure the robotic arms are versatile and reliable. Proteus is Amazon’s
first fully autonomous mobile robot that transfers packages to the loading dock, saving employees
time and energy (Amazon Staff, 2024b).
Outside the retail and e-commerce industry, Amazon has also invested in and developed a Gen-AI
model called Amazon Nova Sonic that picks up on tone and inflection for a deeper understanding
of human conversation (Amazon Staff, 2025c). This could be incorporated in Amazon’s e-
commerce industry by using this software for customer service calls, gathering more accurate and
higher-rated customer service experiences. Amazon Nova Sonic could be a great development for
the future of AI voice models and could be incorporated further into Amazon’s business model in
future years.
Environmental
In the 21st century, there has been an increased focus on the environment and sustainability for
several companies, especially Amazon. With millions of packages shipped across the globe each
year, Amazon must find ways to reduce waste and reduce its carbon footprint. One way Amazon
is incorporating sustainability is through its packaging. In 2023, Amazon avoided more than
446,000 metric tons of packaging by shipping products in their original packages rather than using
an additional Amazon box. Amazon also removed all plastic air pillows from its packaging used
at global fulfillment centers, prioritizing paper-based packaging when possible (Amazon Staff,
2024c). By finding new ways to reduce waste, Amazon can set a new global standard for other
retail and shipping industries.
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Amazon aims to have net-zero carbon emissions by 2040. To achieve this goal, it launched a carbon
credit service called the Sustainability Exchange in 2024. This service grants access to high-quality
credits for its suppliers and business customers. These carbon credits fund efforts to lower
greenhouse gas emissions and promote social and economic growth. By expanding into the
voluntary carbon market, Amazon aims to boost credible climate action, protect forests, and
support businesses committed to sustainability efforts (Amazon Staff, 2025b).
Another impactful step Amazon is taking to reduce carbon emissions is collaborating with Rivian
to bring 100,000 electric delivery vehicles on the road by 2030. By investing in these vehicles,
Amazon will eliminate millions of metric tons of carbon annually (Amazon Staff, 2024d).
Amazon’s investment in electric vehicles may be a big step toward competing delivery services
using electric vehicles in the United States.
Legal
Governmental regulations are continuously evolving, which could both positively and negatively
impact Amazon’s business. According to Amazon’s 10K filing, there are many risks of increased
regulations involving data protection, data security, taxation, consumer protection, pricing, energy
consumption, and more. Although disputed, they also face many investigations based on claims
that parts of their operations infringe competition or consumer protection rules. Any unfavorable
regulations or enforcement actions by the government could cause Amazon to incur additional
costs, be exposed to unanticipated civil and criminal liabilities and penalties, or diminish the
demand or availability of its products (Amazon.com, 2025).
Fair pay and healthy employment environments are also important legal aspects that Amazon must
focus on. In 2024, the GMB union took legal action against Amazon, accusing it of using tactics
to discourage workers from unionizing. According to the GMB, Amazon displayed anti-union
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messages throughout its workplaces, forced workers to attend hour-long anti-union seminars, and
made QR codes in Amazon fulfillment centers to cancel union memberships (UNI Global Union,
2024). While this was only in the UK facilities, it is part of a global movement to improve labor
standards throughout Amazon’s global workplaces.
Porter's Five Forces
Rivalry Among Existing Competitors
In the e-commerce industry, rivalry among existing competitors poses a high threat to Amazon.
Thousands of competing e-commerce sites offer the same or better prices than Amazon. While
Amazon maintains most of the existing market share, it must continue to find ways to stay relevant
and maintain its status. Amazon’s competitors, such as Walmart and Alibaba, are finding ways to
expand their consumer base, expand their offerings, and gain more attractive features.
Customers’ switching costs are very low for online retailers, making shopping at competing stores
easier and more attractive. To offset this, Amazon must find ways to differentiate its site, product
offerings, and prices to stand out from its existing competitors. Amazon has done a good job in
this area by staying ahead of the competition, but it must continuously evaluate its strategy to
maintain long-term success.
Amazon also competes in industries other than e-commerce, including streaming and cloud
computing, each with its own competitors. The rivalry in these industries is intense, causing
Amazon to evaluate ways to maintain its status in them as well. Competing in several industries is
advantageous for Amazon, as it can spread its risk across various industries. However, it also
involves additional strategic planning and different factors to consider when competing across
industries.
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Threat of New Entrants
It is becoming increasingly easy for additional e-commerce platforms and retailers to emerge
online. However, the threat is relatively weak because of Amazon’s large market share and wide
variety of offerings. It would take a lot of time and money for a brand-new entrant to be able to
compete with Amazon directly. The significant investments in technology and branding Amazon
has made throughout the years make it even more difficult for new entrants to overtake Amazon’s
market share. Many consumers prefer the reliable brand and fast shipping that Amazon provides,
which would be difficult for a brand-new company to replicate.
Amazon’s economies of scale are one of the main reasons why it is difficult for new entrants to
compete with Amazon directly. Entering the e-commerce industry requires a significant investment
in technology to compete with the major retailers in this space. E-commerce is also a highly
regulated industry with many rules retailers must follow. Amazon is at an advantage in the legal
environment since they have the resources to navigate these regulations and already has processes
in place to deal with these laws.
Bargaining Power of Buyers
The bargaining power of buyers is a high threat to Amazon. Amazon consistently brands itself as
a consumer-centric company, regarding its customers as highly important. With the high variety of
substitute products and suppliers, it is easy for Amazon’s customers to switch to a different supplier
or alternative product sold by a competing company. There is also a large variety of high-quality
information available on different types of products, such as customer reviews and online posts.
Offering unique products or developing services could lessen buyers' bargaining power. One way
it has done this is through the free and fast shipping offered by its Amazon Prime service, which
is an enticing option for Amazon’s buyers. Amazon could also lessen buyers' bargaining power by
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offering superior customer service. This would build Amazon’s customer loyalty and lessen the
risk of customers switching to a different competitor.
Bargaining Power of Suppliers
There is a moderate threat to the bargaining power of suppliers for Amazon. Because of Amazon’s
market share and large variety of suppliers, it lessens the threat of only dealing with one or a few
suppliers. Amazon has an advantage over its competitors since its size and reputation reduce its
suppliers' power. However, a moderate threat remains because Amazon’s business model
somewhat depends on negotiating the best prices from suppliers. Some suppliers may offer
products or brands that are exclusive and harder to substitute, so those suppliers would have more
bargaining power over Amazon in that situation.
Threat of Substitute Products or Services
The threat of substitute products or services for Amazon is moderate. Amazon has an advantage
with its customer loyalty and diversity in business segments. While there is significant competition
in the e-commerce industry overall, Amazon’s brand, fast shipping, and convenience outperform
its competitors in the retail space.
Specific business segments of Amazon may pose more of a risk of substitute products or services.
One example of this would be Amazon’s streaming service, Amazon Prime Video. Since customers
have many options to stream movies and TV shows, such as Netflix, Disney+, and Hulu, the threat
of substitute products is high, with many of its users using more than one streaming service. AWS
is another business segment of Amazon that could be at a higher risk. With the rise of cloud service
providers such as Microsoft and Google, Amazon must uphold its client base and market share in
this area.
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Strategy
Amazon’s current strategy is unique because it does not fit exclusively in one box. Its ability to
retain a low-cost strategy while offering elements of broad differentiation allows Amazon to
maintain an even larger customer base. Amazon prides itself on offering the lowest prices, the
widest variety, and the fastest shipping, with very few competitors being able to compete directly.
Amazon's primary strategy is a broad, low-cost provider strategy. It offers the lowest online prices
among all top U.S. retailers, boasting an average of 14% lower than its competitors’ (Amazon,
2025a). Amazon’s commitment to finding the best suppliers and negotiating prices is key to its
low-cost difference from competitors. After adjusting to a regional instead of national shipping
fulfillment model, Amazon can maintain its low prices by lowering its shipping costs even more.
Continuous improvements in technology and automation in Amazon’s warehouses are also vital in
reducing costs and increasing efficiency. These investments will lower Amazon customers’ costs
in the long term. Many other competitors of Amazon do not have the extensive investments in
technology and efficiency that Amazon has made. This gives Amazon a strong competitive
efficiency advantage, leading to lower costs.
While Amazon’s primary strategy is a broad low-cost provider strategy, it also utilizes a broad
differentiation strategy. Amazon differentiates itself from its competitors through its vast selection,
customer service, convenience, and Amazon Prime. Amazon is commonly called a “one-stop
shop,” since its retail segment offers anything from electronics to clothing. Amazon’s investment
in Whole Foods has expanded its selection into the grocery industry. While its competitors, such
as Walmart, have a wide selection, Amazon still offers an even broader and more diverse selection.
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Amazon’s customer service is another factor that differentiates it from its competitors. Priding
itself on being the most “consumer-centric” company, it offers various forms of customer support
through phone, email, or chat, and quick response times. Returns and refunds are also readily
available on Amazon’s platform, enhancing customer experience. Amazon’s fast, reliable, and free
shipping places Amazon on a different pedestal from its competitors. The company has also
invested in creating a convenient and seamless shopping experience for its customers by offering
one-click ordering and personalized recommendations based on its customers’ past orders and
browsing history.
Many do not think of Amazon without thinking of Amazon Prime, a membership that grants
Amazon customers various benefits. Members get free shipping and unlock access to Amazon’s
streaming service, exclusive deals, Prime gaming, Rx savings, fuel savings, and free Grubhub+
(Amazon Prime, n.d.). Amazon’s partnerships with Walgreens, Grubhub, Twitch, and various gas
stations are great incentives for customers to get an Amazon Prime membership. These
partnerships further differentiate Amazon by partnering with unrelated industries, expanding its
market reach.
Amazon’s combination of a broad low-cost strategy and a broad differentiation strategy has led to
its extensive success in the e-commerce industry. The company’s ability to adapt to the industry
and continuously find ways to enhance its product offerings and operational efficiency has proven
to be a successful strategy. Putting customer needs first and incorporating the customer into its
mission statement have also elevated Amazon’s strategy.
Competitive Advantages
Customer Loyalty
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Customer loyalty is one of a company's most valuable competitive advantages. Amazon has
excelled at retaining its customers and finding ways to attract new ones. According to statistics
gathered by Inmar Intelligence, 87% of respondents prefer buying from Amazon rather than
directly from a brand’s website, and 74% said they would still purchase from Amazon even if the
price is lower on other sites (Nevin, 2024). These high percentages show that Amazon's reliability
and convenience outweigh its competitors' lower prices.
Statistics have repeatedly proven that retaining repeat customers is more profitable than
continuously searching for new target customers. According to a study done by Harvard Business
Review, a 5% increase in customer retention can boost profits by 60%. An Adobe e-commerce
study found that repeat customers spend 153-397% more than first-time customers (Barron, 2023).
Based on these statistics alone, customer loyalty is vital to Amazon’s success. Offering
memberships such as Amazon Prime and developing product suggestions and advertisements
tailored to each customer are vital ways Amazon retains its customers.
Technology and Innovation
Amazon’s continuous improvements and innovations have set a new standard in the e-commerce
and retail industries. Since Amazon emerged at the top of the market, customers’ expectations of
delivery, customer service, and order accuracy have dramatically increased. This new standard of
expectations is due to Amazon’s significant investments in technology, which have drastically
improved its efficiency.
Amazon’s success with technology and innovation goes back to its commitment to being Earth’s
most customer-centric company. Staying ahead of technology trends and taking risks sets Amazon
apart from its competitors. This culture of customer satisfaction is vital to Amazon’s success.
Amazon employees also continuously follow its leadership principles, one of them being to
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balance innovation with process development. Jeff Bezos emphasizes that employees should not
only focus on the end goal but make sure the process is being done right, where principles and
processes can continuously evolve. Amazon also hires creative builders and trains them to work
backwards when changing a process (Bieler, 2022). Consistently hiring motivated and creative
thinkers is important for Amazon to maintain its innovation.
Alexa and Prime are key examples of innovations that Amazon has introduced over the years.
Before Prime, many other competitors did not have subscription-based services that offered two-
day shipping. With Alexa, it influenced other companies, such as Google, to create their Google
Assistant. Amazon’s investments in other markets outside the retail space, such as its AWS
segment, the acquisition of Whole Foods, and Amazon Prime Video, help with further investments
in technology and innovation. The company culture of continuously looking for different avenues
leads back to how Amazon started as a book retailer and has now evolved into the industry leader
it is today.
Massive Selection at Low Prices
Amazon's selection and low prices outperform its competitors consistently, making it difficult for
competitors to compete. Customers can get the best deal by choosing from a selection of products
through Amazon retail and independent sellers. Independent sellers can set their own prices, with
Amazon offering tools to help them maintain competitive and low prices (Amazon Staff, 2025a).
Few competitors offer both products from their own company as well as from independent
retailers. It is also rare to find a site that offers the massive variety of product types that can all be
shipped in a single package. By combining the appeal of great deals and a wide selection,
customers can do most of their shopping on one site, Amazon. Prime members get even better
benefits, with over 300 million items available for free and fast shipping (Amazon Staff, 2025a).
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Challenges and Future Positioning
Major Challenges
Today, Amazon faces many external and internal challenges that the company must evaluate and
find solutions for in the upcoming years. One increasingly relevant challenge is tariffs on imported
goods. Amazon and independent sellers on the site must be aware of the increased costs of
importing outside the United States. The independent sellers will most likely have to raise product
costs, indirectly affecting Amazon’s profit and causing customers to switch to more affordable
retailers and sites.
Another challenge that Amazon faces is the increased government scrutiny of data collection and
protection. While collecting data from online purchases and customer demographics has been a
competitive advantage for Amazon, it could become a weakness if more comprehensive data
protection laws are passed. In 2021, Amazon was fined $887 million for violating the GDPR,
which was made to ensure companies must notify data protection authorities about data breaches
within 72 hours of knowledge. As of 2024, a new class-action lawsuit emerged against Amazon,
alleging that it collects personal data from cookies and tracks customers’ behaviors on all websites
to sell targeted advertising spots without their permission (Burkhart, 2024). Amazon must find
ways not to violate these data regulations, especially with a global reach and differing laws across
countries.
The evolving e-commerce landscape and increasing competition are significant challenges for
Amazon. Although its market share is still the most considerable compared to other competitors,
it must be aware of its major competitor, Walmart, and emerging Chinese competitors like Alibaba
Group, Shein, and Temu. Walmart has gradually increased its e-commerce market share by
investing in its online and delivery platform and offering Walmart+, similar to Amazon Prime.
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Chinese competitors can offer similar products at even lower prices than Amazon, which could
lead to customers purchasing from these competitors instead. The one advantage Amazon has over
the Chinese competitors is the level of quality it offers, since many of the products from the
Chinese companies are made of cheaper materials. Still, Amazon must monitor these competitors
and stay ahead of the market trends so these competitors do not overtake Amazon’s top spot.
These challenges are external and difficult to control, so Amazon executives must remain proactive
and find ways to address and overcome them. In the past, Amazon has made changes to its structure
and taken into account customer feedback, so if it can continue to adapt to challenges, it can
maintain its competitive advantage.
Major Objectives
Amazon is constantly setting new goals and objectives to meet. One area that Amazon wants to
enhance in its operations is sustainability and environmental efforts. Amazon aims to reach net-
zero carbon emissions by 2040, 10 years ahead of the Paris Agreement (Amazon.com, n.d.).
Amazon has taken steps to reduce plastic packaging, purchase renewable energy alternatives, and
spread awareness of climate solutions through Amazon Science. Amazon’s dedication and research
on sustainable alternatives will influence other e-commerce retailers to do the same.
Further implementation of AI systems and programs is another objective of Amazon. Amazon
combines AI and environmental sustainability by using generative artificial intelligence to help
solve climate change. Amazon’s AWS segment has partnered with tech startups, such as BrainBox
AI, Pendulum, and VIA, to find solutions to reduce greenhouse gas emissions and product waste
for commercial companies (Kaufman & Chateauvieux, 2024). Amazon also uses AI to enhance its
operating efficiency by implementing it into warehouses nationwide. Not only is Amazon
leveraging AI internally, but it has also released a new generative AI assistant called Amazon Q to
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help software developers, business intelligence analysts, and other AWS customers (Amazon Q,
n.d.). Amazon’s continued and increased investment in these AI initiatives will enhance its
offerings and success in the technology industry.
For a decade, Amazon has been innovating its drone technology to ensure accurate and safe
deliveries by partnering with teams of aerospace, robotics, software, and manufacturing experts
(Amazon Staff, 2022). As of 2025, Amazon has resumed testing its drone deliveries in Tolleson,
Arizona, and College Station, Texas, after potential safety concerns with its most recent drone
model. Amazon continues to test the safety and limits of drone deliveries, conducting over 5,100
test flights totaling over 900 hours in the air (Duckett, 2025). With further testing, Amazon may
be able to implement drone deliveries in additional cities throughout the US and worldwide.
Opportunities for Expansion
Amazon’s current market position offers several expansion opportunities. Expanding
geographically, further involving itself in grocery markets, and exploring new business lines are
all great strategies Amazon could implement to increase its success.
Amazon is already considered a global competitor, with Amazon marketplaces in 22 countries and
shipping to over 100 countries (Shvartsman, 2025). Amazon could expand its business even more
by offering services like Amazon Prime and having more physical centers in countries without
marketplaces. For consumers in the countries where Amazon currently ships to, the cost of
purchasing could be higher than in their local stores, which makes customers less likely to shop
on Amazon. However, if Amazon partnered with these local marketplaces or researched cultural
trends and preferences, it could significantly expand its market reach in these areas.
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Amazon’s expansion into the grocery industry with the purchase of Whole Foods in 2017 was a
significant step in the right direction for competition in the grocery market. Currently operating 62
Amazon Fresh stores, 535 Whole Foods locations, and 15 Amazon Go convenience stores,
Amazon has significantly grown its presence in the grocery store segment (Moss, 2024). In order
to expand, Amazon can further incorporate its existing site and Amazon Prime with deals from the
grocery and convenience stores it already owns. It can also look into expanding their Whole Foods,
Amazon Fresh, and Amazon Go stores into additional markets throughout the US and globally,
with a strong demand for organic foods and a strong Amazon presence.
Healthcare is a business line that Amazon has not explored extensively, but it could be even more
successful if it were invested in further. Amazon currently offers PillPack through Amazon
Pharmacy. In this service, Amazon customers can “receive their medications packaged into
personalized, tear-away packets organized and labeled by date and time” (Amazon Staff, 2024a).
Not only are the prescriptions packaged all in one, but a significant discount is offered to PillPack
users. Amazon can expand this offering by partnering with existing pharmacies for in-store pickups
or investing in its own Amazon pharmacies.
An additional business line that Amazon could further invest in is financial services, such as
Amazon Pay. Currently, Amazon customers can use Amazon Pay on thousands of websites
worldwide. Amazon Pay quickens the checkout process on these sites by using the payment and
address information in the customer’s Amazon account and is a secure option for eligible purchases
(Amazon Pay, n.d.). An opportunity for Amazon to expand in this area is to offer physical Amazon
credit cards that customers can use at various stores, while earning credit and incentives to use at
Amazon stores. Amazon could partner with well-known credit card providers such as Discover,
Mastercard, or Visa to develop this offering.
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By investing further in these business segments and opportunities, Amazon can maintain its
competitive market share and expand into even more diverse markets.
Blue Ocean Strategy
Past and Present
Amazon is a prime example of a company that has successfully created and maintained a blue
ocean strategy. With its massive market share, competition from other e-commerce retailers is
minimal, if not irrelevant. While there are countless other online retail stores today, Amazon
created a new market space online before anyone else did. By selling books in the 1990s, Amazon
used a blue ocean strategy to create a brand new space that did not compete directly with physical
bookstores like Barnes and Noble and public libraries. Not only did Amazon create a blue ocean
strategy by selling books online, but it also provided competitive advantages of a larger selection
at lower prices delivered directly to customers’ houses. No other bookstore was able to compete
directly with Amazon at that point in time.
During Amazon’s expansion outside of the book-selling industry, Amazon was the first company
to introduce the third-party seller model. Selling products besides books was a strategic move on
Amazon’s part. It used the delivery system with books, but applied it to a wide selection of various
products. This substantially widened its target market and customer base, appealing to many more
consumers. However, selling a large variety of products would take substantial inventory space
and overhead expenses. Therefore, the option to utilize third-party sellers to give customers more
variety and convenience was a notable move to enhance its blue ocean strategy.
Amazon Prime is another key example of an offering that no other competitor was doing before
Amazon introduced it. Amazon integrated this subscription service with its usual online product
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offerings and created new services, such as Amazon Prime Video. Before Amazon, free and fast
shipping on products ordered online was scarce. Because of the reputation it had built and its level
of operations, Amazon was able to successfully provide free and fast shipping to millions of
Amazon Prime members. Combining the benefits of shipping and great offers on TV shows and
movies through Prime Video was a great way to utilize the blue ocean approach.
Finally, AWS is a significant segment of Amazon that created an entirely new market for cloud
computing infrastructure. Before AWS, small businesses struggled to afford IT infrastructure for
their operations. Amazon’s AWS gave them scalable and affordable access, opening a blue ocean
in tech services.
Future
Given Amazon’s past and present success as a blue ocean company, it has various paths and
opportunities to implement a new blue ocean strategy today. A market that is currently in its early
stages and has the potential to grow is the sustainable energy market. Amazon could provide a new
offering by bundling sustainable home products, energy-saving devices, and AI into an integrated
offering called Amazon Smart Living.
Amazon sells its Alexa through its Echo devices and has an app where you can chat with Alexa
directly. Amazon also integrates its Alexa into a Smart Home, which can change the thermostat,
turn on the lights, and start the coffee maker. It can also connect to Ring cameras to easily switch
between modes and views (Meet the new Alexa, n.d.).
To create a new market space, Amazon can enhance its current offering with its Alexa smart home
capabilities by incorporating sustainable energy sources like solar panel technology. It can also
partner with Ring or create its own camera version that works directly with Alexa, and customers
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can buy the two simultaneously. There can also be a bundle option where the customer can buy
the Alexa, ring, and solar panel system together, and an Amazon representative can go directly to
the customer’s home to set it up for free. Doing this can eliminate the problem of having a
disconnected smart home system and non-sustainable energy from various brands and platforms.
It can also reduce the complexity and cost of setting up a smart home by having Amazon provide
a service to set it up directly.
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