Amazon (NASDAQ:AMZN) makes money through its consumer ventures (online and offline retail sales, search advertising, content streaming etc) and cloud services (rental of compute, storage etc) and competes with industry leaders in the retail as well as technology industry including Walmart, Facebook, Google, Microsoft, IBM, eBay and Oracle.
Trefis highlights trends in Amazon’s Revenues over recent years along with our forecast for 2019 and 2020 in an interactive dashboard. While the technology giant did well to surpass Q3 earnings expectations, we believe that its growth rate over coming years will be dragged down by sub-par growth internationally. While growth from India and Japan are guided to be weaker for the current quarter due to country-specific events, we expect headwinds to Amazon’s international growth to extend over several quarters – making its international segment the slowest growing division in the near future.
A Quick Look at Amazon’s Revenues
Amazon has 3 Operating Segments
- Amazon North America: Segment revenues are derived from the sale of consumer products and subscriptions across North America.
- Amazon International: Segment revenues are derived from the sale of consumer products and subscriptions globally, excluding North America.
- Amazon Web Services (AWS): Segment revenues are derived from the sale of compute, storage, database, and other enterprise service offerings.
Amazon’s revenue grew 71.3% over 2016 to 2018 to $233 billion and is expected to increase 50% to nearly $350 billion by 2020.
(1) Amazon North America Division revenues have grown $61.6 billion over 2016-18, and we expect it to growth $69 billion over the next two years thanks to same-day shipping and frictionless payments. This represents an increase in Amazon’s North America revenues by nearly 50% between 2018 and 2020.
(2) Amazon International Division revenues have grown $21.9 billion over 2016-18 and we expect these revenues to grow by $29 billion over the next two years due to the growing trend of digitization in International markets. However, this represents an effective growth of 44% in the division’s revenues through 2020 – a figure which pales in comparison to the expected 50%-growth for the much bigger North America division over the same period.
(3) Amazon Web Services Division revenue growth of $19 billion over the next two years is likely to be driven by AWS’s leadership position in public cloud and AWS’s initiatives to expand into the private cloud. This represents a strong 75% growth in the segment’s revenues over 2018-20.
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