PESTLE analysis technique for Amazon Inc.

by Idalia Stillman, May 2015

1200 words

4 pages


Amazon Inc. is an American multinational online commerce retailer headquartered in Seattle, Washington. The company was incorporated in 1994 in Washington and later re-incorporated in 1996 in Delaware. Having gone online in July 1995, at the moment Amazon is considered to be one of the largest online retailers in the world. Apart from that the company is also involved into consumer electronics manufacturing, with its Amazon Kindle e-book reader being one of the market leader products. Also, the company manufactures the Kindle Fire Tablet computer and is a major provider of cloud services. All this enabled Amazon to enter Fortune 500 and Nasdaq National Market lists.

At the moment the company together with its affiliates operates several retail websites: (the core one),,,, and, a well-known movie database. Also, Amazon has separate retail websites for the following list of countries: Germany, France, Canada, Spain, Japan, China, UK, and US.

The company's motto is 'to focus on customer experience by offering low prices, convenience and a wide selection of merchandise'. Initially, the company was a pure online book retailer. However, the retailer soon started to expand its product and service offering, establishing more and more web hosting and fulfillment service partnerships with traditional retailing companies and consumer portals.

It is worth mentioning that the initial business model of the company was a truly unusual one. Even its name was picked with a certain purpose – the founder wanted its company to appear early in the alphabetic lists. Another interesting fact is that the initial business plan did not expect any profits for four or even five years. The first profit actually appeared only in the fourth quarter of 2001, but the business model proved to be well-thought and sustainable, helping the company to preserve during the dot-com bubble burst on the stock market. The proper profitability was reached only in 2003. However, the company is the largest Internet retailer since 2000 and is currently operating a customer database of more than 27 million accounts.

In order to better understand the company's current environment, it is necessary to look back to the years when the Amazon project went online. In those days the book industry was highly fragmented, with the largest retailer Barnes & Noble representing not more than 11% of the market sales. The leading bookstore model back then was a mall-based store, or superstore where up to 175,000 titles could be represented in a moment. Also, the practice of using various catalogue mail-ordering services was quite widespread. The most successful companies were those which managed to organize centralized logistics and distribution and cut costs on sourcing books from publishers. The most powerful marketing tool used was a discount system

Amazon completely redefined book retailing through an innovative online, Internet-based approach, thus avoiding physically limited store spaces and huge investments into real estate, personnel and inventory. Also, the online-based approach enabled the company to create a customized store for every customer and to provide customized recommendations without significantly increasing selling costs. Also, …

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