Amazon.com, Inc. (AMZN): 5 FORCES Analysis [Nov-2025 Updated]

You're looking past the headline numbers-like the $180.2 billion in net sales for Q3 2025-to see where the real profit pressure is building for Amazon.com, Inc. Honestly, mapping out the competitive landscape using Porter's Five Forces framework right now reveals a fascinating tension: while its 250 million+ Prime members offer a moat, the company is simultaneously facing a nearly 91 basis point hike in supplier trade terms and the rising threat from nimble entrants like TikTok Shop. To truly understand where the margins are headed next, you need to see how these structural forces are shaping its dominance across retail and AWS, so let's break down the reality below.

Amazon.com, Inc. (AMZN) - Porter's Five Forces: Bargaining power of suppliers

Amazon.com, Inc.'s 2025 Annual Vendor Negotiations (AVNs) were confrontational. Trade terms were driven up by an average of +91bps year-over-year, a sharper jump from the +69bps seen in 2024.

Nearly half of the vendors felt the pinch. Specifically, 49% of suppliers reported a drop in profitability coming out of the 2025 negotiations.

The push to move 1P vendors to Seller Central offloads costs. This transition requires vendors to independently manage inventory forecasting, pricing, marketing, customer service, and FBA logistics. The termination of 1P sourcing for many vendors began around November 9, 2024.

Here's a quick look at the negotiation landscape:

The sheer size of the third-party ecosystem dilutes any single supplier's leverage. As of early 2025, Amazon hosted approximately 9.7 million total registered seller accounts globally. Only about 1.9 million of those are considered active sellers worldwide.

The reliance on Amazon's massive reach means switching to other platforms is often not viable for sales volume. The scale is the deciding factor.

• Third-party merchants supply over 60% of all sales on the platform.
• Amazon's estimated U.S. eCommerce market share stands at 40%.
• The estimated global user base for 2025 is about 321M.

Finance: draft 13-week cash view by Friday.

Amazon.com, Inc. (AMZN) - Porter's Five Forces: Bargaining power of customers

Power is high due to extremely low switching costs across the retail segment.

Customers can easily compare prices. Amazon is, on average, 14% lower than major U.S. retailers, based on a 2025 study analyzing over 10,000 items across 16 categories and 23 online U.S. retailers. For fashion items, the average price difference was 16% lower. For frequently purchased everyday essentials, prices were up to 5% lower than the next closest competitor.

The 250 million+ Prime members have reduced power due to the high value of bundled services like free shipping. The annual membership fee is $139. Estimates for U.S. Amazon Prime members reached 200 million as of the September 2025 quarter.

Amazon dominates the U.S. e-commerce market with a 37.6% share, limiting alternatives for selection. Bank of America estimates put Amazon's share of U.S. e-commerce Gross Merchandise Value (GMV) at 44.5% in the third quarter of 2025.

Cloud customers (Amazon Web Services or AWS) face high switching costs due to deep integration with their IT infrastructure. AWS generated $30.9 billion in revenue in the second quarter of 2025. The customer base is estimated at 4.19 million businesses with a physical address in 2025.

The high integration creates stickiness, evidenced by migration success stories. For example, one customer achieved an 85% reduction in monthly infrastructure costs after migrating to Amazon OpenSearch Service.

The factors influencing customer power in the retail segment include:

• Price comparison ease.
• Low cost to switch platforms.
• Value proposition of Prime bundling.
• Amazon's market share dominance.

Conversely, for AWS, the cost of re-architecting and migrating complex, deeply integrated systems acts as a significant barrier to exit. It's a defintely different dynamic than buying a toaster online.

Amazon.com, Inc. (AMZN) - Porter's Five Forces: Competitive rivalry

Rivalry for Amazon.com, Inc. (AMZN) is at a fever pitch, particularly in the core retail space where giants like Walmart are aggressively integrating omnichannel retail. Walmart's U.S. e-commerce sales jumped 28% in Q3, and its global e-commerce operations accounted for approximately 18% of its total company revenue in fiscal 2025. This constant pressure forces Amazon to defend its market leadership through continuous price adjustments across nearly all segments.

In the cloud infrastructure market, Amazon Web Services (AWS) remains the leader, holding a 29% market share in the worldwide cloud infrastructure market for Q3 2025. However, Microsoft Azure is closing the gap, reportedly showing a 40% year-over-year revenue growth for its Azure and other cloud services in Q3 2025. The collective 'Big Three'-AWS, Azure, and Google Cloud-captured 63% of enterprise cloud infra spending in Q3 2025.

The digital advertising segment presents another fierce battleground against Alphabet (Google) and Meta. Amazon's advertising revenue is projected to hit a staggering $94 billion globally by 2026. This growth occurs while Amazon is competing with established players who command significant portions of the overall digital ad spend.

The competitive landscape is further defined by global e-commerce rivals. For instance, Alibaba, which owns the world's number one and number two online marketplaces by gross merchandise value (GMV) in China (Taobao and Tmall), held an estimated 32% share of the Chinese industry's GMV in 2024.

You need to keep an eye on these key competitive metrics:

• AWS Q3 2025 Market Share: 29%
• Microsoft Azure YoY Growth (Q3 2025): 40%
• Projected Amazon Ads Revenue (2026): $94 billion
• Walmart Global E-commerce Penetration (FY2025): ~18%
• Alibaba China E-commerce Market Share (2024): 32%

The intensity of this rivalry is best summarized by comparing the market positions across key segments:

Finance: model the impact of a sustained 40% YoY growth rate for Azure on AWS's long-term revenue multiple by end of Q4.

Amazon.com, Inc. (AMZN) - Porter's Five Forces: Threat of substitutes

High threat from physical retail, as 45% of American consumers prefer to shop in brick-and-mortar stores. In 2025 Q2, consumers spent $1.887 trillion on retail items, with e-commerce accounting for 15.5% of that total. By early 2025, approximately 80.8% of total retail sales were still expected to occur in physical retail stores. In 2024, 83.7% of retail sales in the US happened in physical retail stores.

Direct-to-Consumer (DTC) websites offer exclusive products and discounts, bypassing the marketplace entirely. U.S. DTC e-commerce sales are expected to hit $212.9 billion in 2025. DTC ecommerce sales for established brands and digitally native companies are projected to exceed $226 billion this year. The average annual revenue growth rate for DTC stores slowed to just 10% in 2024, the lowest in five years.

• Customer acquisition costs jumped 12% in the past two years, making traditional ad-heavy strategies less sustainable.
• 77% of companies use AI to predict customer needs and adapt in real-time.

Streaming substitutes (Netflix, Disney+) compete for Prime Video's share of consumer entertainment time. The U.S. streaming market shows intense competition as of late 2025.

For new paying subscribers in Great Britain during Q1 2025, 83% of those choosing the ad-supported tier were new to Prime Video, and 65% of new Netflix subscribers chose the ad-supported plan. Netflix maintains a churn rate around 2% per month.

Cloud computing faces substitution from on-premise private clouds and hybrid IT solutions. Amazon Web Services (AWS) remains the largest public cloud provider, holding a 32% market share in 2025. Microsoft Azure holds a 23% market share, and Google Cloud trails with 11%.

• 94% of enterprises worldwide are using some form of cloud service in 2025.
• 72% of all global workloads are now cloud-hosted.
• 54% of enterprises use a hybrid cloud approach for mission-critical workloads.
• 32% of enterprises use private cloud adoption.
• 56% of companies with more than $500 million in revenue use a hybrid cloud approach.

Amazon.com, Inc. (AMZN) - Porter's Five Forces: Threat of new entrants

You're assessing the barriers for any new player trying to challenge Amazon.com, Inc. in its core markets, and honestly, the financial hurdles are immense.

Barrier to entry is high due to the massive capital expenditure required for global logistics and data centers. For 2025, Amazon plans capital expenditures to exceed $100 billion, a significant jump from the $83 billion spent in 2024. The Q4 2024 outlay alone was $26.3 billion. A new entrant would need comparable, immediate spending just to reach parity in infrastructure.

Here's a quick look at how Amazon's planned 2025 spend compares to other tech titans, showing the sheer financial moat:

Amazon's brand value, at approximately $356.4 billion in 2025, is a significant deterrent. This valuation, which grew 15% year-over-year, represents a massive intangible asset that new players cannot replicate overnight.

Still, new e-commerce entrants like TikTok Shop and Temu are gaining traction with low-fee models, showing that disruption in the retail segment is possible, even if the infrastructure barrier remains high. You need to watch their growth closely:

• TikTok Shop U.S. sales jumped 153% year-over-year in January 2025.
• TikTok Shop is targeting nearly 100% growth for 2025 globally.
• Temu claimed an 11% market share in the US discount store category in 2025.
• Temu saw 28% sales growth in the U.S. in January 2025.

Economies of scale in fulfillment and technology are nearly impossible for a new player to match quickly. Amazon runs more than 100,000 robots across its global facilities today, up from 45,000 in January 2025. Furthermore, the Amazon Logistics division is currently valued at $310 billion. Amazon Freight launched Less-Than-Truckload (LTL) services in April 2025, leveraging its 60,000+ trailers to offer rates 20-30% below industry norms.

Regulatory scrutiny on Big Tech now acts as a deterrent for large-scale acquisitions by Amazon, which could otherwise be a tactic to neutralize emerging threats. This external constraint forces Amazon to rely more heavily on organic investment, like the $100 billion+ capex plan, to maintain its lead.

Finance: draft 13-week cash view by Friday.