E-commerce remains a significant part of Amazon’s overall business despite the company’s expansion into other ventures such as Amazon Web Services (AWS) and advertising. In the first quarter of 2024, Amazon’s e-commerce segment accounted for 62% of its total sales, with ancillary services like subscriptions pushing that figure up to 70%. While AWS is becoming a key source of operating income for Amazon, e-commerce is still the primary revenue driver.
AWS contributed over 60% of Amazon’s operating income in the first quarter of 2024, despite only representing 17% of total revenue. On the other hand, advertising is the fastest-growing segment for Amazon, with a 24% year-over-year growth rate. Amazon strategically reinvests its profits from e-commerce into initiatives that enhance efficiency and profitability, such as optimizing its fulfillment network to deliver products faster at lower costs.
The company’s growth model revolves around using e-commerce as a revenue generator and then allocating those profits into emerging segments. In the past, AWS served as the growth driver, but it has now transitioned into a profit-generating division. Advertising has taken over as the new growth avenue for Amazon, with investments in healthcare and other smaller businesses positioning the company for future expansion.
Overall, while Amazon continues to diversify its business portfolio, e-commerce remains at the core of its operations and revenue stream. The company’s ability to leverage its e-commerce success to fuel growth in other areas underscores its adaptive and strategic approach to business development and expansion.
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https://www.fool.com/investing/2024/05/24/how-much-of-amazons-sales-come-from-e-commerce/