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If you need it in 2 days, Amazon is your destination of choice.
The company has been at the forefront of the e-commerce revolution, destroying brick and mortar retailing over the past two decades.
You can not hear words like "Alexa" and "Prime" without thinking about the company, which proves the ridiculous reach of the Amazon brand.
But what if I told you that retail is not really the way Amazon earns money?
In this video, we will break down the small segment that forces Amazon to go, and the one that could fuel the next phase of its growth.
In 2018, Amazon achieved approximately 50% of online sales in the United States before generating more than $ 200 billion in retail sales in the United States and abroad.
But retail operations are not a big livelihood for Amazon. In fact, in some cases, they cost money to the company.
That sales figure of $ 200 billion I've already talked about – it's actually $ 208 billion. This is the combined result of the North American retail and Amazon international business segments.
Amazon is currently losing money on its international retail operations.
Together, the company's retail operations generate approximately $ 5 billion in operating income from these $ 208 billion sales.
This is because the company is competitive in price and convenience, which means reduced sales margins and expensive, high-priority shipping and logistics operations to quickly move parcels to customers.
Fortunately for Jeff Bezos and co, Amazon has another business segment that brings in a lot of money: AWS.
AWS means Amazon Web Services. It's a catch-all for the various cloud services provided by Amazon that allow businesses to store information and deliver content.
Amazon is the world's leading cloud services provider. In 2018, it held nearly 30% of the total market, almost twice the market share of its closest competitor.
This leadership position has led to a big windfall for Amazon. In 2018, AWS achieved a business turnover of nearly $ 26 billion, but as cloud services are a high-margin business that is evolving well, it has generated more operating profit. $ 7 billion.
In other words, Amazon generated the same revenue with AWS revenues of $ 26 billion as with the $ 140 billion generated by its North American retail operations.
Over the next few years, the impact of AWS on the business will be even more pronounced: the sector grew by 47% in 2018, compared to 33% for retail in North America and 21% for the segment. international society.
AWS is Amazon's cash cow right now, but the company has another major fund manufacturer.
Amazon is aggressively investing in digital advertising. According to management's comments, it is already a "multi-billion dollar company" – most estimates estimate it to be worth about $ 10 billion in 2018.
Investors should be pleased to hear it, as digital ads are even more lucrative than the company's AWS business, and the segment grew more than 90% last year and does not show many signs of growth. slow-down.
AWS is so how Amazon is making money … for now. But it may be necessary to redo this video in a year or two.
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