PEST Analysis Of E-Retail Leader Amazon

Online shopping has never been so popular. Who doesn’t like to do a quick find what they’re looking for, read a couple reviews, and then buy the product — all without changing out of your PJs? No endless lines of shoppers, no need to talk to pushy salespeople. You can get exactly what you need, when you want it.

Amazon has quickly become the leader in e-commerce shopping. It’s the first stop for everything from books to baby heart monitors. The company is reliable, accessible, and the online catalogue is nothing to sniff at.

But Amazon isn’t just sticking to e-retail anymore. They’ve expanded into grocery territory, and are now knocking heads with Walmart in this space. They’re also facing criticism for impacting customer health (in a bad way ) and tossing jobs into the loving arms of technology.

This PEST Analysis of Amazon examines these issues in detail.

Political Factors: A dependency on stability

Amazon is an e-commerce offering an online catalog of products for users all over the globe. Because they operate overseas, Amazon must abide by political and legal regulations in each location. But many of them can interfere with online purchases. Amazon relies on government support to implement, distribute, and profit — all thanks to the internet. And now they’re expanding into physical locations. Regardless, this company relies heavily on political stability (in all countries) and e-commerce support, but they’re also affected by cybersecurity bills too.

Distributing and expanding into Asian countries can also be “off limits”, even to a company as expansive and influential as Amazon. Chinese companies rise to compete against Amazon, expanding their services to the public, making it easier for them to prosper while Amazon’s services are shoved to the wayside. Not to mention taxes in foreign countries can be drastically expensive. Considering taxes can alternate (depending on the people in power), Amazon must be up-to-date on these fluctuating numbers.

Economic factors: The competition and the competitors

If the economy is positive, businesses flourish. Amazon isn’t an exception to the rule. Luckily, retail is one of those industries that can take an economic beating and still remain profitable. It’s not indestructible, but people will always have a need for items sold by retailers. Disposable income is higher these days, allowing people to spend more frivolously on luxurious items and entertainment — plenty of both found on Amazon.

But that also means more competition for Amazon. For example, Walmart is putting significant focus on their online system. They’re offering more products to be bought online and sent to the home or to their stores. They’ve even redone their website, with improved searchability for purchasing, to be easily accessible for all users. Although few can take Amazon head-on but Wal-Mart is ready for the battle.

On the flip side, Amazon is focusing more on their grocery sector development, battling against Walmart offline. But it’s not necessarily the smartest decision at present. Retail stocks have dropped for Amazon and Walmart, affecting share prices negatively.

Amazon has also faced criticism for reducing job opportunities within the company, employing the use of technology to take over where possible. But the company declares they’re actually creating new jobs in several countries including the UK.

Social factors: So much to shop, so many happy to do so

Most people wouldn’t believe Amazon is negatively impacting the public’s health, but critics say otherwise. Obesity is increasing among adults and children more than ever before. The government is under pressure to improve the lifestyles by introducing new bills and changing how fast food chains manage nutritional information.

And with Amazon introducing more ways than ever to receive your products without having to leave the couch, they’ve come under fire. Their expansion into the grocery industry, enabling customers to receive groceries to their doorstep within hours, may negatively impact the well-being of the consumer because they don’t have to venture outside for food anymore.

But this is what customers want: access to thousands of products with the ability to get them the same-day. That’s what makes Amazon so powerful. Their categories are ever-expanding, and their shipping is typically topnotch. It’s easier now than ever to buy a product. Online shopping is popular because of the ease, the accessibility, and the ability to not have to put on pants just to pick it up. Not to mention Amazon offers free and quick shipping for Prime membership subscribers.

Online shopping is preferred for the younger generation but it’s also easier for the elderly who have difficulty walking or driving. This isn’t just the fact for North America, but it’s also developing in countries overseas as well.

Technological factors: Advancing the ways to meet customer demands

Amazon is a technological company, so these factors can greatly impact their profits. They rely heavily on varying degrees of technology to distribute their products to customers. They’re experimenting with new and creative ways for customers to receive their packages. In 2017, Amazon began testing their new initiative: drone deliveries. It’s not as easy as it sounds. They must comply with government regulations to allow the use of drones in this way. But a major obstacle is how these drones can actually deliver these packages to the customer.

The idea is there. The implementation is quite far off, if it ever makes it off the ground (pun intended). But it does show that Amazon is considering new methods of shipping, clearly displaying their creativity and technological knowledge. That said, if this were to come into play, it could rip jobs away from even more people, since the drones will be carrying all the hard work.

In the meantime, Amazon has doubled their staff in their UK-located Research and Development centre. It’s clear the intention is to discover and manage new technological advancements to keep their customers happy while also improving logistics behind the scenes.

They also use digital technology to build relationships. Amazon emails customers with reminders to buy products they’ve left behind. How this works: Once you sign up for an account, Amazon may send you information about purchases you looked at but didn’t buy. They’ll also mention similar products that might hit the mark the other products missed. Basically, they’re hoping you’ll buy products other people have.

They also offer 24-hour live chat support. Have a problem with your package? Never received it? The customer representatives are there to keep you, the customer, happy. Whether that means a refund or a product exchange, there’s always someone to talk to at Amazon. You can even do this job from home, so long as you have reliable internet.

Photo by Piotr Cichosz on Unsplash