#9: AWS - the goose that is laying the golden eggs

In the early 2000s Amazon probably did not believe how big of a home run they hit as they started working with APIs. Inspired by Tim O’Reilly, the work was tasked for a group that eventually gave itself a name: Amazon Web Services.

First gradually and then at an increasing pace AWS became the crucial profit driver for the company. However, one should note that the growth of AWS has declined quite rapidly. It will be interesting to see whether that trend continues as the competitors start to catch on to AWS.

Since the start of 2017, AWS has produced more than $70 billion in Operating income for Amazon. The profitability of AWS is illustrated as one compares that to the retail segment.

AWS’s Operating income margins of around 30% are unrealistic for a retailer. The North American segment of Amazon has at best been able to generate 6% Operating margins.

For many years, AWS was the biggest income generator for the company. Over the last 12 months AWS has been the only source of operating income for the company.

----------------

Would you like to learn more about the retail trends and numbers?

We conduct trend reviews, from individual presentations to ongoing quarterly reviews. Read more about them in the Services section or email us at arhi@adainsights.fi, and we can discuss how we could help you understand the changing retail environment.