Over the past two decades, Amazon (NASDAQ: AMZN) has become a powerhouse in the e-commerce industry while also venturing into various other innovative business ideas. One of its successful ventures is Amazon Web Services (AWS), which has become the world’s largest cloud computing company in terms of sales. Despite the success of AWS and other concepts, e-commerce remains a crucial component of Amazon’s overall business strategy.
Amazon’s e-commerce segment, which includes online stores and sales to third parties, generated $89.3 billion in the first quarter of 2024, accounting for 62% of the total sales of $143.3 billion. Ancillary e-commerce services such as subscriptions, including Prime memberships, e-books, and digital music, further contribute to the e-commerce share, bringing it to 70% of total sales.
While AWS and other businesses are growing in importance, e-commerce remains Amazon’s primary revenue driver. However, AWS played a significant role in Amazon’s operating income, contributing more than 60% in the first quarter of 2024 despite representing only 17% of total revenue. Additionally, advertising has emerged as Amazon’s fastest-growing segment, with a 24% year-over-year growth rate.
Amazon’s growth model revolves around leveraging profits from e-commerce to enhance efficiency and profitability, as seen in its transition from a national to a regional fulfillment network to expedite deliveries and reduce costs. The company reinvests profits into new growth segments, with AWS initially serving as the profit generator, followed by advertising as the latest growth driver. Amazon’s “other” category encompasses its newest ventures, such as healthcare, which could potentially lead to its next major breakthrough.
In terms of investment opportunities, while Amazon remains a prominent player in the market, other stocks may offer greater returns according to some analysts. The Motley Fool’s Stock Advisor team has identified 10 stocks with significant growth potential, where Amazon is not included. This advisory service has a history of outperforming the S&P 500 and providing valuable insights for investors seeking to build a successful portfolio.
In conclusion, Amazon continues to excel in the e-commerce sector while diversifying its business portfolio with ventures like AWS and advertising. The company’s growth model emphasizes reinvesting profits into new segments to drive innovation and maximize profitability. While Amazon remains a solid investment choice, exploring alternative stock options recommended by experts could potentially yield higher returns for investors.
Article Source
https://finance.yahoo.com/news/much-amazons-sales-come-e-215000582.html