Amazon pestel analysis – PESTEL ANALYSIS OF AMAZON Table of Contents – Studocu

PESTEL ANALYSIS OF

AMAZON

Table of Contents

Introduction……………………………………………………………………………………………………………………………..
Background of Amazon……………………………………………………………………………………………………………..
Amazon PESTEL Analysis…………………………………………………………………………………………………………
Political Factors………………………………………………………………………………………………………………………..
Ecological Factors:……………………………………………………………………………………………………………………
Social Factors……………………………………………………………………………………………………………………………
Technological Factors………………………………………………………………………………………………………………..
Economic Factors……………………………………………………………………………………………………………………..
Legal Factors……………………………………………………………………………………………………………………………
References………………………………………………………………………………………………………………………………..

Introduction
The PESTEL or PEST analysis is a planning tool for a company’s future success. This approach,
like the widely used SWOT analysis, helps businesses see the big picture by assessing the myriad
aspects that contribute to or detract from their performance. Companies can’t hope to grow and
prosper without employing methods like these to analyze and better the way they now operate. It
factors in the distant, macro environment, and gives risks and opportunities to the companies
monitoring it. Amazon’s performance is examined from six distinct perspectives in this PESTEL
research (Cuofano, 2020).

Background of Amazon

Amazon is a massive online retailer that has also found tremendous success in traditional brick-
and-mortar stores. Amazon has extended its company over the years and is now active in a
variety of related fields, it includes things like digital streaming and the cloud. The firm has
become well-known in the field of electronic commerce. Despite their dominant position in the

several of them might slow it down. In order to develop, distribute, and make money, Amazon
needs the help of the government, which is only possible because of the internet. They are also
beginning to open brick-and-mortar stores. The firm is highly dependent on e-commerce and
political stability (globally) but is also impacted by cybersecurity legislation (Cuofano, 2020).

Even for a corporation as large and powerful as Amazon, distributing their products and
extending their operations into Asian countries may be considered “off limits.” Chinese
businesses are stepping up their competition with Amazon by broadening the scope of the
services they offer to the general public. This makes it simpler for these Chinese businesses to
thrive, while Amazon’s offerings fall more and further behind. Further, foreign tax rates might be
quite onerous. As a result of the possibility of fluctuating tax rates (depending on who is in
power) it is necessary for Amazon to have an up-to-date understanding of these shifting figures
(Greenspan, 2019).

 In addition to the government’s efforts to improve cybersecurity and the smooth running
of e-commerce, both of which are good for Amazon’s business, the region is also seeing a
significant growth in the e-commerce sector overall.
 Amazon also benefits from the political stability that is more common in nations with
high levels of income. The growth of the internet retail industry may be partially
attributed to the help offered by governments at all levels. (Greenspan, 2019).
 Despite this, the expanding field of online retailing presents Amazon with a potential
threat in the form of intense rivalry from major brands, particularly international
businesses that are beginning to engage in online shopping.

Ecological Factors:

Pollution and climate change are two environmental issues drawing attention. The company’s
environmental effect is crucial to establishing its viability. Amazon pledged to provide all
information before the end of the year. Amazon struggles to decrease emissions companywide
(Frue, 2018). It’s hard to estimate online retail emissions. Buying groceries online saves time and
effort vs. visiting a store. By 2030, Amazon wants 50% of its shipments to be carbon neutral.
Over one hundred million Amazon’s Prime members receive free two-day shipping. Therefore,
“when clients want to acquire a product in one or two days, the carbon emissions increase
dramatically,” he explained. Putting off your decision by a week is the same as cutting down 20
trees rather than 100 (Cohen, 2017).

• An examination using the PESTEL framework reveals that Amazon has room for
  expansion considering the company’s ecological factors.
   The organization’s increasing focus on green causes, advocacy for environmentally
  responsible corporate practices, and promotion of low-carbon ways of living and
  effective waste management strategies may provide a boost to the company’s expansion
  prospects.

Social Factors

Insight into consumption patterns might shed information on resource requirements. The local
population’s history and culture have a significant role in this. Market potential may be estimated
by thinking about demographics, levels of cultural development, and education. Many people
disagree with the view that Amazon is harmful to public health. Worldwide, record numbers of

Technological Factors

The state of the art in technology is another major consideration in analyzing the viability of a
company. Business futures may be planned more strategically with the use of automation,
technological innovation, change, and technical knowledge. It aids in the incorporation of new
technology and the preparation of production, distribution, and logistics strategies (Greenspan,
2019). Amazon has taken some heat recently for expanding the number of methods by which
customers may order things without leaving the comfort of their couches. There is concern that
Amazon’s foray into grocery delivery might have a detrimental effect on consumers’ health since
they would no longer need to leave their homes to buy food (Cuofano, 2020).

Customers want tens of thousands of options and same-day shipping, and retailers are giving
them both. Because of this, Amazon is such a formidable company. Their product categories are
always being expanded, and they provide excellent delivery services. Purchasing an item is
currently more convenient than at any other time in history. Online shopping’s rise to prominence
could be attributed to its user-friendliness, availability, and the fact that buyers don’t even have to
wear pants to collect their orders. Not to add, subscribers to Amazon Prime get both free and
speedy delivery options from the company. The younger generation favors doing their shopping
online, but the elderly who have problems walking or driving may find that this method is more
convenient. This is not only truth for nations in North America; it is also becoming more
prevalent in countries all over the world (Farooq, 2019).

 Due to its rapid expansion, the corporation is now facing tough competition from various
fields, particularly the technological one. The company’s ability to connect with buyers in

fresh and engaging ways is unparalleled. They are always exploring new distribution
channels to better serve their clientele.
 You may easily contact them using the chat option, making them very accessible. As a
result, Amazon plans to expand its workforce in key areas of technological development.
Because of this, they will be able to provide superior service to their clients.

Economic Factors

The raw material costs, borrowing rates, and unemployment rates are all part of it. Because of
this, the business can gauge the purchasing capacity of its customers and adjust its pricing,
product lineup, and service delivery appropriately. Positive economic conditions are good for
business. When it comes to this, Amazon isn’t unique. The retail sector, fortunately, is one that
can weather economic storms without suffering significant losses. It’s not bulletproof, but retail
will likely always have customers who need the products it offers. Now that consumers have
more disposable income, they can splurge on things like electronics and media, and both
categories are well represented on Amazon (Dailey, 2021).

• A customer’s attention might be piqued by Amazon’s large range even if they aren’t in the
  market for something especially expensive. Amazon provides development opportunities
  in countries that are still expanding economically.

Legal Factors

When operating in a new territory, businesses need to familiarize themselves with the local
regulations to ensure they don’t break any of the rules. Consumers have made it clear that more
prohibitions on fake goods are required. This might be an opportunity for Amazon to take a more
active role in preventing the sale of counterfeit items on its site. Amazon’s Anti-Counterfeit
Policy is now active. On the Amazon marketplace, only authentic goods may be sold. Under no
circumstances is it permissible to sell products of this kind (Dailey, 2021).

Several Consumer Privacy Acts indicate that Amazon’s worldwide ecosystem presents risks to its
customers. The EU’s General Data Protection Regulations (GDPR) also pose challenges for
Amazon and other businesses that store personal information about their customers. All
information pertaining to customers must be kept secure. Google and Facebook were penalized
after an inquiry was opened by the European Union. This poses a significant danger to Amazon
(Cohen, 2017).

• Amazon follows all of the laws and guidelines even as it continues to grow its business
  throughout the globe. It places an emphasis on cybersecurity while also taking into
  consideration the protection of customers.
• It has strengthened its brand image via a variety of efforts, including making
  environmental protection requirements more difficult to comply with. In addition, the

corporation will be able to better deal with the challenges faced by its competitors as a
result of changes to its laws on import and export.

References
CADELAGO, C. (2021). Inside Joe Biden’s decision to dive into the Amazon union drive.
POLITICO. politico/news/2021/03/01/biden-amazon-union-video-
472315
Cohen, P. (2017, June 28). Trump, Amazon and “Internet Taxes”: What Did He Mean?. The New
York Times. nytimes/2017/06/28/business/trump-internet-tax-
amazon
Cuofano, G. (2020, October 8). Amazon PESTEL Analysis In A Nutshell. FourWeekMBA.
fourweekmba/amazon-pestel-analysis/
Dailey, N. (2021, April 15). Amazon reveals how much it paid its median employee last year:
$29,007. Business Insider. businessinsider/amazon-employee-salary-
pay-median-worker-compensation-compared-jeff-bezos-2021-
Dudovskiy, J. (2020, March 27). Amazon PESTEL Analysis. Research-Methodology.
research-methodology/amazon-pestel-analysis-2/
Farooq, U. (2019). StackPath. Marketingtutor. marketingtutor/pestle-
analysis-of-amazon/
Frue, K. (2018, May 29). PEST Analysis Of E-Retail Leader Amazon. PESTLE Analysis.
pestleanalysis/pest-analysis-of-eretail-leader-amazon/