Speaking of Amazon, people will immediately imagine a powerful e-commerce empire, but in fact, Amazon does anything they can do business, and Amazon’s biggest source of life does not come from e-commerce as people often think.
So where does Amazon actually make money?
AWS (Amazon Web Services)
AWS or web services, or cloud computing services Amazon provides to other parties, is the largest source of revenue for the Amazon corporation. Over time, the ratio of AWS revenue to total revenue has grown: From 5% in 2014 to 11% in 2018.
However, the most shocking thing is that even though it contributed not so much in total revenue, AWS appeared to be tới of the profits Amazon earned 60% in 2018. Also, Amazon can use money from AWS to protect ensure the delivery of goods to users, making many other retailers unable to compete.
AWS provides technology and industry-specific tools. In 2003, AWS built an e-commerce site for other retailers such as Targets or Borders. Three years later, AWS launched Amazon S3, a cloud storage service and hosting provider. In 2011, AWS continued to launch AWS GovCloud for government agencies, AWS IoT for Internet of Things and spent $ 600 million building cloud storage services for the CIA. Not only hosting, AWS also has Amazon Recognition facial recognition technology, much to the delight of legislators.
Advertising service
In addition to AWS, digital advertising is also a potential monetization area for Amazon. Although the company’s financial statements do not provide exact figures, in the $ 10.1 billion to “Other revenue” in the 2018 financial statements, much of it was the contribution of digital advertising services. Although just emerging, but Amazon is also considered as a player threatening the advertising pie that the two giants Google and Facebook are taking turns monopolizing the market before.
The reason Amazon can compete with Facebook and Google in advertising is that Amazon has a special advantage in user data. Facebook shows people’s views and preferences, and Google shows what users search for, but Amazon is the only place that collects data on what users actually bought. Moreover, if I want to book an ad, the percentage I choose to place the ad on Amazon will probably be higher, because it is clear that customers who search on shopping apps have a higher propensity to buy compared to Facebook players or people who are not interested in shopping. watch Google’s YouTube videos right?
Some positive numbers are that Amazon’s share of digital advertising has grown from 6.8% in 2018 to 8.8% in 2019. Meanwhile, his market share tops the digital advertising industry. is that Google fell from 38.2% to 37.2%.
Bottom line
So Amazon not only makes bank from e-commerce as many people think, but AWS and digital advertising services have helped Amazon make a lot of money and increasingly expand.
Well, if you can’t imagine how fat Amazon is, you can understand Amazon’s own market capitalization is larger than the GDP of 9 South American countries combined.
