How Amazon makes its money

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The Why Axis Bug

Amazon is unique among the US technology groups. It is not only an e-commerce and shopping giant, a cloud provider, a device manufacturer or a software and service platform, but also a money-maker with tentacles that penetrate new industries and markets, which makes it difficult to define.

The Why Axis BugThe most accurate way to find out about Amazon is to follow the money. Statista compared Amazon's Q2 2018 and 2019 results to determine how the different segments of its Amazon business grew. In all sectors, with the exception of stores like Whole Foods (which remained unchanged), Amazon's revenue increased year by year.

Online shop sales are still the basis of Amazon's business. Net sales of $ 31.1 billion were generated in the second quarter of 2019. It is also the slowest growing segment of the company, although it grew a remarkable 14 percent.

Aside from online and physical sales, Amazon generated $ 12 billion in revenue from third-party seller services in the second quarter of 2019, an increase of 23 percent over the previous year. These include commissions, shipping fees, fulfillment fees and other seller services that are directly related to the company's online shopping empire. While revenue itself may not grow as rapidly, Amazon's revenue related to the ecosystem is still booming.

The Why Axis Cloud Infrastructure market

The fastest growing sectors are the Amazon Web Services (AWS) cloud and subscription services, including Amazon Prime, Amazon Music and Prime Video. Prime Memberships saw a further price hike last year from $ 99 to $ 119 a year. This shows that subscription income rose 37 percent year over year to $ 4.7 billion.

It's still comparatively small compared to Amazon's huge e-commerce revenue, but like Apple, Amazon's continued investment in the service business is paying off.

The company spends billions each year to fund new original films and series (as well as licensed content) through Prime Video and its Amazon Studios arm. The escalating war for original streaming content is increasing as Amazon competes not only with Netflix and Hulu, but also with Apple TV +, Disney +, HBO Max and others. But if a company can afford the competition, it's Amazon.

Then there is AWS. According to the latest estimates by the Synergy Research Group, Amazon's market share in the cloud infrastructure sector was 33 percent from the second quarter of 2019. This is more than twice its closest competitor, Microsoft Azure.

AWS revenue grew a remarkable 37 percent year over year to $ 8.4 billion as Amazon acts as a cloud hosting and storage platform for an increasing share of the Internet.

Finally, the "Other" category saw growth of 37 percent, which also includes Amazon's rapidly growing advertising business, which, together with Facebook and Google, more or less monopolizes the online advertising market. Amazon does not report device sales in its earnings releases, but total sales include sales of Alexa-enabled Echo devices, Kindle tablets and e-readers, and other Amazon branded technical products.

The tentacles extend further. Amazon also owns the live game streaming platform Twitch, the audiobook company Audible, the film website IMDb, and numerous other companies – e-commerce and retail, software and services, pharmaceuticals, and more.

Another company that Amazon owns is the smart home security provider Ring. As reported by Motherboard, the video surveillance company is marketing its technology not only to consumers, but also to local governments and police agencies across the countryDistribute, distribute and use Ring products. The company also equips the police with facial recognition technologies, expanding its reach to government and law enforcement agencies. If Amazon's performance and sales have limits, the company hasn't found them yet.