THE INTERNAL ENVIRONMENT / THE ETHICAL AND SOCIAL ENVIRONMENT

SWOT Analysis

Business Ethics and Corporate Social Responsibility

CASE STUDY 2. AMAZON: THE WORLD LEADER IN E-COMMERCE

THE ORIGINS OF AMAZON

In 1994 Amazon was born as a small online bookstore located in Seattle (United States) and directed by Jeff Bezos. The store had its physical space in a garage and its initial capital was just over US$10,000.

In 1997 Amazon went public, with a price of 18 dollars per share, which at that time gave it a market value of 300 million dollars.

In 1999 Amazon patented the 1-click functionality. This is basically the idea that consumers could enter billing, shipping, and payment information once and then be able to buy whatever they want by simply clicking their mouse button, without having to re-enter any data. In 2017 the patent for this technology expired.

It is not until 2002 that Amazon makes the leap to selling clothing, partnering with several major clothing companies, offering up to 400 clothing brands on its platform. Then came electronic devices, toys, kitchen gadgets, and even magazine subscriptions.

E-COMMERCE AND THE PANDEMIC OF COVID-19

In recent years, and especially since the COVID-19 pandemic, e-commerce has become an indispensable part of the global retail market. During 2020, more than 85% of the world's population admitted to having shopped online, which is why it's no surprise that revenue from online sales stood at around US$4.2 trillion in that year. This figure was even higher in 2021 despite the opening of shops, which only goes to show that this change in purchasing habits is almost certainly permanent. (Statista, 2022)

After a five-year ellipsis in which Amazon continues to grow and grow, the coronavirus pandemic hits the entire planet. Although this event has been devastating for most companies, Amazon reported the highest profit in its history. Revenue in 2020 grew 38% to $386 billion as people stayed home and shopped online

Specifically, the giant skyrocketed its income mainly coinciding with the mandatory quarantines that took place throughout the planet in the second quarter of 2020. Its income in that period grew by 40%, reaching a total of 88,910 million dollars.

Because of the above, according to Forbes, in 2020 Amazon was the 4thglobal most valued brand, increasing a 40% respect their 1styear value.

One of the most important disadvantages of Amazon is its low net profit margin, approximately 4.5%, if we compare it with other sectors such as Auto Repair & Maintenance (12%) or Food / Restaurants (15%) (Camino Financial, 2022).

Despite the above, good news for Amazon is its sustained growth in its e-commerce worldwide, as shown in Figure 1.