Amazon is the world's largest online retailer, and it has developed swiftly in a wide range of businesses, including its cloud services, core eCommerce operations, and digital advertising.
Along with these, Amazon also sells devices like its Kindle e-reader, Alexa personal assistant and ecosystem, Fire TV, and various movies and TV series via its Prime Video platform.
Business Segments of Amazon
International, North America, and Amazon Web Services (AWS) comprise Amazon's commercial divisions (Amazon Web Services). First, the North American and International segments refer to Amazon's retail operations. Retail sales in North America and elsewhere, subscriptions, and export sales contribute to its bottom line.
Online stores account for most sales, and physical stores make up the retail sector. Online retailers' sales contributed approximately 48% of total net sales in Q4 FY 2021, while physical stores generated sales of $4.7 billion, or roughly 3% of total net sales.
North America
In Q4 FY 2021, Amazon's North American business generated $82.4 billion in net sales. There has been an increase of 9.3% over the last year, accounting for nearly 60% of the company's net sales in this quarter's results.
Compared to the year-ago quarter's operating profitability of $2.9 billion, the division reported a $206 million operating loss for the third quarter.
In addition to retail, subscriptions, such as Amazon Prime, which provides unlimited free delivery and unlimited streaming of movies, TV series, and more, are the principal source of revenue in North America.
International
Consumer subscriptions to international online retailers make up the International section of Amazon's business. These stores' export sales are included as well. However, online stores with a primary concentration in North America are excluded.
The segment's operating loss in Q4 FY 2021 was $1.6 billion, a considerable decline from the $363 million operating income recorded the year before. Sales in the International division, which accounted for 27% of overall sales, decreased by about 1% yearly to $37.3 billion.
AWS (Amazon Web Services)
Founded in 2006, Amazon Web Services (AWS) is a cloud computing platform that serves corporations, government organizations, and academic institutions.
4 In Amazon's words, AWS is an "infrastructure platform in the cloud" that you can use for a range of "solutions," including hosting apps and websites, providing enterprise IT, and delivering content.
Q4 FY 2021 saw sales of $17.8 billion by Amazon's AWS division and operating profits of $5.3 billion. Compared to the prior year's third quarter, sales were up 39.5%, and operating income was up 48.5%.
With net sales in North America and internationally below AWS's, the operating profit for AWS is significantly larger. More than a third of the company's revenue comes from the AWS division. AWS generated the company's operating income in the fourth quarter because the other two sectors had losses.
One-third of the worldwide cloud market belongs to Amazon, far ahead of its nearest competitor. Azure from Microsoft (MSFT) and Google Cloud (GOOGL) from Alphabet Inc.
Ways through which Amazon Makes Money
Retail Sales at Amazon's Store
Amazon's retail sales were USD 469 billion in 2021, making it the world's largest online retailer. This generates a large portion of Amazon's revenue. Retail sales commissions are not always the same.
Amazon Prime Subscriptions
Subscribe to Amazon Prime, the company's subscription program. Payment options include monthly and annual. It costs $119 or $12.99 per month in the United States.
Customers who sign up for Amazon Prime save money on shipping charges, access Amazon Music and Prime Reading, and are eligible for special discounts. Over $30 billion was made in 2021 by customers who signed up for Amazon's Prime service.
Alexa
The Alexa smart home assistant is available for purchase and installation through Amazon. The price of an Alexa-enabled smart speaker might range anywhere between $40 to $200. Amazon Alexa-enabled devices do not charge a monthly subscription fee. According to Amazon's estimates, Alexa generates a gross profit margin of 90%.
KDP Publishing
Using Amazon's KDP technology, writers may self-publish and print their books on demand. Authors receive royalties ranging from 35 percent to 70 percent of Amazon's 30 percent or more profit on every book printed or sold. Paperback, hardback, and e-books are all available.
Kindle
With its Kindle offerings, Amazon is a leader in digital book systems. Despite the widespread belief that Amazon sells the Kindle at a loss or lower price than it costs to produce, the company makes money via advertising and media sales.
Media sales make up the price of each book offered for sale on the marketplace. For $9.99 a month, readers can subscribe to Kindle Unlimited or pay $0.15 per megabyte (file size) for each book they purchase. There may be additional delivery charges in countries where books cost more than $2.99.
Amazon Video
It is an additional $9-per-month subscription option. Subscribers can watch movies and television series with this service. More than 24,000 films and 2,100 television shows are currently housed in the collection, some of which are original productions.
