Amazon.com, Inc. (AMZN), eBay Inc (EBAY): A SWOT Analysis

Threats

Competition among existing players: Amazon.com, Inc. (NASDAQ:AMZN) has always operated in an intensely competitive environment. The company’s leading competitors–online and offline are trying to keep up with the low prices of Amazon. Wal-Mart Stores, Inc. (NYSE:WMT) has increased its e-Commerce presence substantially in the last few quarters, and Best Buy Co., Inc. (NYSE:BBY) recently unveiled a Price Match Guarantee that will provide consumers the lowest available price at retailers and e-tailers. Also, eBay Inc (NASDAQ:EBAY) competes with Amazon for the marketplaces business in which eBay offers a distinct value proposition to merchants. Ebay doesn’t compete with third party sellers with its own goods, but Amazon competes with seller listings with its own wares. The take-rate, which is the amount of fees charged for selling goods on its platform, is higher at Amazon with an estimated take-rate of roughly 12%, compared to eBay’s take-rate of roughly 8.2% in the marketplaces business.

Entry of newer firms: Google Inc (NASDAQ:GOOG) has been listing products on its platform for a long-time, but has built out a wider offering with its search results called Google Shopping. And it’s placing ads on these product listings by merchants, which takes away advertising dollars and consumer shopping dollars from Amazon.com, Inc. (NASDAQ:AMZN). In addition, smaller competitors like Groupon Inc (NASDAQ:GRPN) are getting solid traction in their own e-tailing efforts with Groupon Goods.

Bottom Line

Amazon.com, Inc. (NASDAQ:AMZN) has a few downsides, but the company’s relentless focus on the customer has built a strong moat around its business. Amazon doesn’t make much in profits, but the durable competitive advantages of its business lines are enormous and growing rapidly. Amazon has a very favorable image in the minds of millions of consumers, which paints a very pretty picture for the company’s fortunes in the long term.

Ishfaque Faruk has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, eBay, and Google. The Motley Fool owns shares of Amazon.com, eBay, and Google. 

The article Amazon: A SWOT Analysis originally appeared on Fool.com and is written by Ishfaque Faruk