Amazon.com Inc., the world's largest online retailer, operates through its core e-commerce business, cloud services, The company also sells digital advertising, and other products, including the Alexa personal assistant and ecosystem, Kindle e-readers, Fire TV, and movies and TV shows through its Amazon Prime Video platform. Amazon's competitors include Walmart (WMT) and Alibaba Group Holdings (BABA).
Key Takeaways
- Amazon generates revenue through channels such as retail, subscriptions, and web services.
- Retail remains Amazon's main source of revenue, accounting for the largest share of the company's sales when combined with online and brick-and-mortar stores.
- Amazon Web Services (AWS) currently generates the majority of Amazon's operating profits and is growing at a robust pace.
- Amazon announced that its AWS division will offer a new AI certification for people looking to improve their AI and machine learning skills to stay competitive in the job market.
Amazon's Finances
In the first quarter of 2024, Amazon (AMZN) had total sales of $143.3 billion, up 12.5% from the same period in 2023. The company posted net income of $10.4 billion, up 228.8%. The increase in net income was due to an increase in net sales without a significant increase in operating expenses. This means that the company was able to grow net sales while keeping operating expenses in check.
Amazon's business segments
Amazon divides its business into three segments: North America, International, and AWS (Amazon Web Services). The first two segments, North America and International, provide a geographic breakdown of Amazon's retail business. These segments generate revenue from retail sales in North America and other regions, as well as subscriptions, advertising, and export sales in those regions. The AWS segment consists of Amazon's cloud services business.
Retail can be further categorized into online stores, which account for the majority of sales, and brick-and-mortar stores. For the company as a whole, online stores accounted for $54.7 billion in sales in the first quarter of 2024, while brick-and-mortar stores generated $5.2 billion in sales.
North America
The North America segment consists of online and brick-and-mortar retail sales of consumer products, advertising and subscription services focused in North America.
Amazon's North American division accounted for the majority of the company's net sales, achieving $86.3 billion in first quarter 2024, up 12% from the same period in 2023. North American net sales accounted for approximately 60% of the company's overall net sales in first quarter 2024. The division's operating income was $5 billion, up 455% year over year. The division accounted for 32.6% of the company's total operating income for the quarter.
International
Amazon's international division consists of its consumer goods retail business, advertising, and subscriptions for its internationally focused online stores.
The International segment generated revenue of $31.9 billion in the first quarter of 2024, up 9.7% year over year and representing 22% of the Company's net revenue. The segment's operating income was $903 million, a significant increase from a loss of $1.2 billion in the same period in 2023. The segment represented 5.9% of the Company's operating income in the first quarter of 2024.
Amazon Web Services (AWS)
Launched in 2006, Amazon Web Services (AWS) provides cloud services for information storage and content delivery to businesses, government agencies, and academic institutions. AWS provides a cloud infrastructure platform for a variety of solutions, including application and website hosting, enterprise information technology (IT) delivery, and content delivery.
Amazon controls about a third of the global cloud market, well ahead of its next closest competitors, which are Microsoft's (MSFT) Azure and Alphabet's (GOOGL) Google Cloud.
Amazon AWS The segment posted net sales of $25.0 billion in the first quarter of 2024, an increase of 17.2%, and represented 18% of total sales. The segment's operating income was $9.4 billion, an increase of 83.9%. The segment represented 61.5% of first quarter 2024 operating income.
Recent developments on Amazon
Amazon has been making a big push into the healthcare sector since 2018, consolidating its healthcare business across areas from telemedicine to cancer research and launching Amazon Pharmacy.
The subscription service, called RxPass, will launch on January 24, 2023, and provide access to commonly prescribed generic drugs to treat more than 80 health conditions. The company says an Amazon pharmacist or support staff member will be available at any time to discuss medications and coordinate with the patient's doctor.
In June 2024, Amazon announced that AWS would offer two AI certifications focused on AI and machine learning to help individuals develop their skills and become more competitive in the job market.
In June 2024, Amazon announced that its Counterfeit Crimes Unit (CCU) had taken steps to dismantle illegal online schemes aimed at circumventing Amazon's product approval process. The unit has filed six cases against these perpetrators.
How Amazon reports on diversity and inclusion
As part of our efforts to raise awareness of the importance of diversity in companies, we aim to provide investors with a glimpse into Amazon's transparency and commitment to diversity, inclusion, and social responsibility. We examine Amazon's publicly available data to show how the company reports on the diversity of its board and workforce, helping readers make educated buying and investment decisions.
Below is a table of potential diversity measures. We indicate whether Amazon publishes data on diversity across its board of directors, executive leadership, general management, and overall workforce, marked with a ✔. We also indicate whether Amazon breaks down those reports to reveal diversity by race, gender, ability, veteran status, and LGBTQ+ identity.
| Amazon Diversity and Inclusion Report | |||||
|---|---|---|---|---|---|
| Race | sex | ability | Veteran Status | Sexual orientation | |
| board of directors | |||||
| Executive | ✔ (US only) | ✔ | |||
| General Management | ✔ (US only) | ✔ | |||
| employee | ✔ (US only) | ✔ | |||
What is Amazon's main business?
Amazon divides its business into three segments: North America, International, and AWS (Amazon Web Services). “North America” and “International” refer to the geographical breakdown of Amazon's retail business. These two business segments generate revenue from retail sales, subscriptions, and export sales. AWS provides cloud services for information storage and content delivery to businesses, government agencies, and academic institutions.
Is Amazon the biggest company in the world?
Amazon is one of the largest companies in the world by market capitalization and revenue. As of June 10, 2024, Amazon has a market capitalization of $1.95 trillion and revenue of $590.74 billion (TTM as of December 31, 2023), making it the second largest company in the world by revenue and the fifth largest company by market capitalization. Incidentally, some of the largest companies in the world have market capitalizations in the trillions of dollars, meaning that these companies are larger and more valuable than the entire economies of some countries.
How does Amazon make the majority of its revenue?
Retail is Amazon's primary source of revenue, accounting for the largest percentage of its revenue when combined with online and brick-and-mortar stores. In the first quarter of 2024, Amazon reported retail sales of $118.3 billion, of which $86.3 billion was from its North American division and $31.9 billion was from its international division.
Conclusion
Amazon is one of the largest companies in the world by market capitalization. It dominates the retail industry and has grown significantly since its founding as the internet boomed and people began shopping online. Amazon started out selling books but has expanded to sell almost every type of consumer product, as well as offering media services, cloud services, and more.
