Detailed Analysis: Woolwoth vs Amazon

Introduction

The underlying report is aimed to conduct analysis of business issues experienced by Woolworth, such that strategy can be devised to assure competence of business. Woolworth is supermarket and grocery chain of Australia, which has been operating in duopoly market, along with its competitor Coles. Woolworth was enjoying market share of 80%, until the emergence of Amazon, which poses great threat to existing marketing condition of Woolworth. In the following report, situational analysis of Woolworth has been carried out to assess the issues experienced by company, along with identification of opportunities for development. Additionally, objectives are defined to undertake plan through which Woolworth might retain its existing competitive position, regardless of entry of Amazon. 

Situational Analysis 

Internal Analysis 

Woolworth is one of the most recognized brand for Groceries within Australia (Merrett, 2019), yet the internal analysis of company shows that there are some weaknesses which need immediate attention. The online retailing platform of company is one of its major weakness, as it is unable to assure two way and effective engagement with customers. The queries and concerns of customers are not addressed in effective way, which creates sense of dissatisfaction among customers. The website is not user friendly and customers have to struggle a lot for ordering their needed items. Based on this nature of website, the customers are likely to switch towards brands which have user friendly features on digital platforms. Additionally, as noted by Wu et al., (2015) the employees are one of the core assets of business to compete, however, in case of Woolworths the employees are not well trained. In the contemporary business environment of digitalization, the skills and knowledge regarding web based operations is crucial to ensure success of business. The incompetency of staff is likely to lower the effectiveness of online operations of Woolworth and it is likely to lag behind its competitors, such as Amazon. Likewise, limitations also pertain to insufficient loyalty of customers and declining brand reputation of Woolworth.  Two chosen issues to be addressed in this plan are; lack of under-friendly nature of website of Woolworth and incapability of online platforms to maintain communication with consumers. 

External Analysis

Although Woolworths has maintained substantial market share within FMCG market of Australia, yet the company is exposed to numerous external issues, which are beginning to question the future competitiveness of company. With respect to external environment, any changes in; policies of Government, economic growth, social trend and taste of consumers, technology, environmental and business regulations; can affect the internal growth of company (IBIS, 2018). The current COVID-19 pandemic situation is considered as challenging for businesses, but being operating in Groceries market Woolworth is not affected much by the lockdown situation in the country. However, based on pandemic situation, people have turned more towards online shopping options, which required Woolworth to focus on its digital selling platforms. 

On the other hand, the competition is considered as significant force which is likely to influence the capacity of Woolworth to compete. Woolworth has also faced strong competition from Coles and with entry of Amazon into FMCG market of Australia, the company is likely to lose its existing customers, as Amazon has well established online platform, user friendly website, well trained staff and experience of operating in digital space (Merrett, 2019). The analysis further shows that suppliers are beginning to engage in better terms with Amazon than Woolworth and customers’ loyalty is also turning more towards Amazon (Jie and Gengatharen, 2019). It is notable that there is huge threat of competition for Amazon.