Analyzing Your Amazon Competition [Example SWOT Analysis]

This post will guide you through running a SWOT analysis for your Amazon business. It’s a straightforward practice that will prepare you to make better business and marketing decisions, and better prepare you to take on competitors.

Not many Amazon sellers go through a formal exercise like this. By taking the time to do this, you are taking one step ahead of the competition. Taking a high-level view of your business and the competitive landscape helps clarify your strategy. It also helps pinpoint your niche for sustained success.

It’s easy to get caught up in the day to day activities of your business. But it’s important to keep the ‘Big Picture’ in mind – to work on your business rather than working in your business. SWOTs are great for this.

What is a SWOT Analysis

A SWOT analysis is a tool for businesses to analyze their current situation. You do this by clarifying your strengths, weaknesses, opportunities and threats.

• Strengths & Weaknesses are internal to your business (things you are good/bad at).
• Opportunities & Threats are external to your business.

Successful organizations have been using SWOT analyses since the 1960s to clarify their strategies. It’s a very efficient practice for helping you to move forward towards your goals. 

Clearly articulating your business’s situation allows you to better make decisions going forward to further improve your situation. Understanding your strengths & weaknesses better equips you to take advantage of opportunities and to minimize threats.

It also helps with positioning. So you can better differentiate yourself from competitors. And carve out a niche that is sustainable.

How to do a SWOT analysis for your Amazon business

Sit down and start writing. It’s easy. And doesn’t need to be complex.

The purpose here is to brainstorm each category. Then you can analyze the information. And make much more informed decisions going forward.

You can make a 2×2 graph as above, or just list them each out.

Strengths

These are internal factors that are positive for your business. Ask yourself the following questions and write down your list of answers.

• What advantages does your business have?
• Does your business do anything better than anyone else?
• Which resources do you have that others don’t?
• What do customers see as your unique benefits?
• What factors help you win customers over competitors?

When compiling your list of strengths, consider three different perspectives.

1. Your business
2. Customers
3. Competitors

Some examples of strengths:

• High barriers to entry
• Highly experienced owner-operator
• Limited competition in this niche
• Very high gross margins
• Highly visible / recognized brand (branded keywords perform very well in Sponsored Products)
• High percentage of repeat customers
• Lots of reviews / high average review
• Branding / logo / labeling
• 1st page ranking for main keywords
• Reliable supplier relations

Weaknesses

These are factors internal to your organization that are negative. Write down your list of answers to the following questions.

• What is your business poor at?
• What would competitors/customers consider your weaknesses?
• Which factors prevent you from winning sales?

The truth can hurt. But ignorance hurts even more. Becoming aware of your weaknesses is essential to minimize their impact.

Here are some examples of weaknesses for Amazon sellers:

• Competitors can offer similar products quickly
• High shipping costs
• Limited flexibility in pricing
• Not much marketing (dependent on Amazon algorithm)
• Very limited website
• No Amazon storefront / not brand registered
• Not much experience with copywriting
• Weak branding / undifferentiated
• Low margins
• Low number of reviews
• Negative seller feedback

Opportunities

These are external factors (outside your control) that work in your business’s favor.

• Are there any interesting trends that can help your business?
• What opportunities can improve your business?
• What changes in technology/markets can help your business?

Some examples of opportunities:

• Ability to sell on other channels (Walmart, Jet, BestBuy, Shopify)
• Ability to develop new/proprietary products, or sister brands
• Affiliate partnerships for promoting products
• Development of wholesale distribution relationships
• Sale of the business for a significant P/E
• Ability to enter other markets (Australia)
• New technologies to implement (email autoresponder, LandingCube)
• Ability to use social media to build audience / promote products
• Events to go to / sponsor
• Communities to integrate brand with (Facebook groups, local clubs, etc.)
• An aging population means more product demand

Threats

These are factors external to your organization that hurt your business.

• What obstacles put your business at risk?
• What are competitors doing?
• Are any governmental/ technological/economic/social changes happening that could harm your business?

Some examples of threats:

• Changes in regulations can impact the business
• Products are already sold by major competitors
• Competitors can start making similar products and beat you on price/name recognition
• Insurance costs are continually increasing
• Increases in price inputs can cause upward pricing
• Trends that work against your company’s favor
• Increasing costs of running ads

How to use your SWOT to move forward

After compiling a list of strengths, weaknesses, opportunities & threats, look at how all these factors interact. This is where you will make actionable, well-informed plans for the future of your business.

Do your Strengths open any Opportunities?

If you get a lot of repeat business, you could create a loyalty program? Or maybe even offer discounts for current customers referring friends?

Increase social media presence. Add new sales channels to drive traffic to your listing. And try new technologies to promote your products/brand (LandingCube) for instance.

Create partnerships with relevant influencers / other brands?

Can your Weaknesses be converted into Strengths?

If your website is basic and brand recognition is low, how can you build an audience? You can use social media and other marketing channels. Or you can leverage existing partnerships to promote your brand.

What is needed to take advantage of Opportunities?

If you have an opportunity to use Facebook Ads, what do you need to do to actually start running Facebook Ads? You need to set up a Facebook business account. Maybe buy a camera for quality pictures? Hire an assistant to manage the ads?

Check out this traffic guide for a step-by-step process for Amazon sellers to start running their first Facebook ad campaign.

You have the opportunity to sell on another platform or another market? You need to research details. Check your eligibility. And take the necessary steps to get started.

To create a partnership with another company, you’ll have to reach out to the decision maker and propose an offer that will be valuable to all parties.

How can Threats be neutralized?

If you are selling in a niche that Amazon is considering starting to produce their own products in, how can you neutralize that threat?

One way is to collect emails. Building an email list allows you to develop long-term relationships with customers. So even if you get kicked off Amazon, or if Amazon starts directly competing with your brand, you can stay in touch with past customers.

Example SWOT Analysis for Amazon FBA business.

For an Amazon FBA business, a typical SWOT analysis might look something like this:

Strengths Quality products High margins Good cash flow	Weaknesses Branding undifferentiated No assets outside of Amazon High stock-out rate
Opportunities Expand into international markets Increase advertising on and off-Amazon New supplier relationships	Threats Low barriers to entry High brand competition Trend of decreasing demand

With lots of cash and high-quality products, this business would do well to expand into international markets.

How can they neutralize the weakness of lack of differentiation? One way is through advertising. Amazon offers various types of ads to position your products and brand. You can also advertise Amazon products on Facebook or even Google AdWords.

There are many ways to differentiate an Amazon brand. And numerous channels outside of Amazon to drive product sales and build email lists. 

Each business faces its own unique challenges. But everyone who sells on Amazon has to deal with FBA costs and the threat of high competition. Utilizing marketing channels outside of Amazon to drive traffic to your product listings is a great way to combat the general threats faced by most Amazon sellers.

In Summary: Assessing Your Amazon Business

Having a solid understanding of your business’s strengths, weakness, opportunities & threats gives you the knowledge to make more informed decisions.

Evaluating your current situation will help you differentiate your brand from the competition. So you can adjust your position and achieve sustainable success.

Operating with your strengths, weaknesses, opportunities, and threats in mind will ensure you are moving in the right direction as you plan for the future. And it will help you keep the big picture in mind as you carry out your day-to-day business tasks.