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Amazon.com, Inc.
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== Risks related to operations == === International Expansion === There are several factors like government restrictions/ regulations, physical and technological infrastructure, income levels, geopolitical events etc. which pose a threat to significant revenues and profits from the international market. Amazon has no first-to-market advantage in some geographies and little operating experience in others. For example, regulations in the two biggest Asian markets- India and China are quite restrictive to Amazon’s business activities. Violation of these regulations may result in heavy penalties or revocation of licences. They also face threats from more established local companies and brands. === Fluctuation in Demand === Variability in Amazon’s retail business because of seasonality, promotions, unforeseen economic, climate and geopolitical events place increased strain on operations. The risks related to fulfilment network optimisation and inventory are magnified during periods of high demand. This results in high fluctuations in operating results and growth rate. === Technological Risks (data loss, security breaches, system interruption, lack of redundancy) === Because a lot of sensitive and confidential information is collected, processed, stored and transmitted by Amazon, failure to prevent data loss, theft, and misuse could lead to litigation liability, and regulatory action, discouraging its customers and vendors to use the platform, and could harm the business reputation. Furthermore, any event that could prevent Amazon from accepting and fulfilling customer orders and providing services, due to system interruption, delays etc. Can make its product and service offerings less attractive and subject to liability. === Strategic Alliances, Commercial Agreements, Supplier and other Business Relationships === Violations by suppliers or other vendors of applicable laws, regulations, contractual terms, intellectual property rights of others, or Supply Chain Standards, as well as products or practices regarded as unethical, unsafe, or hazardous, could expose Amazon to claims, damage their reputation, limit our growth, and negatively affect our operating results. A point to be noted is that there are limited or single sources of supply in some cases. Additionally, these arrangements are complex and require substantial infrastructure capacity, personnel, and other resource commitments, which may limit the amount of business Amazon can service. They may not be able to implement, maintain, and develop the components of these commercial relationships, which creates additional risk. === Risks related to inventory and payments === There are several inventory risk factors that may adversely affect the operating results . Some of these are rapid changes in product cycles and pricing, defective merchandise, changes in customer demand and consumer spending patterns, changes in consumer tastes with respect to products offered, spoilage, new product launches. Additionally, certain goods or components require significant lead time and prepayment which may not be returnable. They also carry significant inventory levels of certain products, like consumer electronics, and are sometimes unable to sell products in sufficient quantity or to meet demand during relevant selling seasons. For existing and future payment options they offer to their customers, Amazon currently is subject to, and may become subject to additional, regulations and compliance requirements (including obligations to implement enhanced authentication processes that could result in significant costs and reduce the ease of use of their payments products), as well as fraud. For certain payment methods, including credit and debit cards, they pay interchange and other fees, which may increase over time and raise their operating costs and lower profitability.
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