Amazon PORTER’S FIVE FORCES MODEL

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  • Topic: Electronic commerce, Bookstores of the United States, Amazon.com
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  • Published : March 24, 2013
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AMAZON.COM
PORTER’S FIVE FORCES MODEL

Bargaining power of suppliers
The power of suppliers is medium-high. Suppliers have a medium power in the sense that much of Amazon’s own inventory could be obtained from numerous suppliers across the country or even across the globe. Suppliers have a higher power given that Amazon.com cannot compete with suppliers. Amazon.com does not run any production plants. Bargaining power of buyers

The bargaining power of buyers is high. Amazon.com’s customers have the option of buying the products and services they desire on the hundreds of thousands of other retail web sites on the internet. If Amazon.com does not offer low prices to satisfy the customer then the customer will search the Internet until they find that low price. 

Rivalry among competing firms
Despite Amazon.com is one of the first companies into the e-commerce field, rivalry is high (Barnes and Noble , Google, Walmart, Ebay etc.)

Threats of substitute products
Amazon.com has innovated their services and products along the years and the name of amazon.com is well recognized and trusted into the field, but still the threat for substitutes is high (Books can be purchased at Barnes and Noble Books, Books-A-million, and Half Price Books. Books are additionally sold at newsstands, drugstores, and discount stores. Books can also be borrowed for free at university libraries, music can also be purchased at discount retailers)

Threats of new entry
Threat of new entrants is low. It would be virtually impossible for a new company to reach the magnitude of inventory and status that Amazon.com maintains. Amazon.com has been in the internet marketplace for about thirteen years now- it would be extremely difficult for a start-up company in the industry to raise enough capital to even compete with Amazon.com on a lower level. 
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