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Sales are irrelevant because the margins are so thin. The vast majority of actual profit comes from AWS.
by jdsully 7y ago
Sales are irrelevant because the margins are so thin. The vast majority of actual profit comes from AWS.
- dragontamer 7y agoIn 2018, Amazon made 141 Billion in product net sales. Net means "after" all costs are included. This includes operating costs like warehouses, workers, cost-of-sales, etc. etc. But only made 90 Billion in "service sales" (AWS and subscription services). Note that Amazon Prime counts as service sales, so plenty of "product revenue" falls under the service boat in practice. https://ir.aboutamazon.com/node/32656/html#sB4CED683083F59A8917E158CFF7A442F https://ir.aboutamazon.com/node/32656/html#sB4CED683083F59A8... Amazon's storefront makes more than 50% of all of their services combined in profit, and is ~1000%+ more revenue. Yeah, it costs a lot to run the Amazon warehouses, but Amazon is still primarily a warehouse / storefront company by all measurements on their income sheets.
- jdsully 7y agoNet sales is not equivalent to profit. I direct you to page 37 of the 2018 annual report [1] where you see cost of sales being deducted from "net sales". When the cost of sales is 93% of net sales it is not much different from topline revenue as a metric. For 2018 actual operating income was $3.1bln for AWS and $1.078bln for global retail. (page 66). Top line metrics are popular in tech circles because so many "unicorns" don't actually make any profit. But it will lead you astray if your goal is to actually make money. [1] https://ir.aboutamazon.com/static-files/0f9e36b1-7e1e-4b52-be17-145dc9d8b5ec https://ir.aboutamazon.com/static-files/0f9e36b1-7e1e-4b52-b...