Amazon‘s (NASDAQ:AMZN) North America business, consisting primarily of retail sales in the region, is expected to contribute $177.6 billion to Amazon’s 2019 revenues, making up 61.2% of Amazon’s $290.4 billion in expected revenues for 2019. The North America segment contribution is more than twice that from International business. Amazon is expected to add $154 billion in revenue between 2016 to 2019, out of which the North America segment is expected to provide $97 billion, that is 63% of the total expected increase. This North America revenue growth has been key to Amazon’s 160% price appreciation since 2016, further helped by increasing margins. We discuss Amazon’s valuation analysis in full, separately.
Below we discuss Amazon’s business model, followed by sections that review past performance and 2019 expectations for Amazon’s revenue drivers and competitive comparisons of its Retail revenue with Walmart and Target.
You can look at our interactive dashboard analysis ~ Amazon’s Revenues: How Does Amazon Make Money? ~ for more details.
Amazon Business Model:
What does Amazon offer:
- Amazon.com, Inc. was incorporated in 1994 in the state of Washington. The company is one of the largest online retailers, and also dabbles in a broad range of businesses including its core e-commerce operations, cloud services, digital advertising, groceries, and prescription drugs. They also sell products such as the Alexa personal assistant and ecosystem, and also gives access to content through subscription on its Amazon Prime platform.
Has 3 major Operating Segments:
- North America: The North America segment primarily consists of amounts earned from retail sales of consumer products (including from sellers) and subscriptions through North America-focused online and physical stores. This segment includes export sales from these online stores.
- International: The International segment primarily consists of amounts earned from retail sales of consumer products (including from sellers) and subscriptions through internationally-focused online stores. This segment includes export sales from these internationally-focused online stores (including export sales from these online stores to customers in the U.S., Mexico, and Canada), but excludes export sales from the North America-focused online stores.
- AWS: The AWS segment consists of amounts earned from global sales of computing, storage, database, and other service offerings for start-ups, enterprises, government agencies, and academic institutions.
What Are The Alternatives?
- Major competitors are Walmart, eBay, Alibaba, Google, Facebook, and Apple.
What Is The Basis of Competition?
- The principal competitive factors in the retail businesses include selection, price, and convenience, including fast and reliable fulfillment. Additional competitive factors for the seller and enterprise services include the quality, speed, and reliability of their services and tools, as well as customers’ ability and willingness to change business practices. For how its revenue compares to its peers please visit our interactive dashboard – Amazon’s Revenue.
Revenue growth expected in 2019 is primarily from growth in the North America segment.
- Total Revenue has grown at a very high pace from $136 billion in 2016 to $232.9 billion in 2018 primarily pushed by the North America segment. Trefis estimates further growth of about 24.7% and Revenue to reach $290.4 billion in 2019.
- Amazon International business has seen a positive revenue growth over the years. Revenue grew from $44 billion in 2016 to $65.9 billion in 2018. Trefis estimates further growth of about 19.7% and Revenue to reach $78.8 billion in 2019.
- Amazon North America segment has seen the highest increase in absolute terms in Revenue and also contributes the maximum to Total revenue. The segment revenue increased from $79.8 billion in 2016 to $141.4 billion in 2018. Trefis estimates further growth of about 25.7% and Revenue to reach $177.6 billion in 2019.
- Amazon Web services is the fastest growing segment as revenue more than doubled over the last 2 years. It increased from $12.2 billion in 2016 to $25.7 billion in 2018. Trefis estimates further growth of about 32.3% and Revenue to reach $33.9 billion in 2019.
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