Why Amazon can not run without profit

[Abstract] Amazon revenue growth, profit is close to zero. Tencent science and technology news Amazon evaluation often lead to polarization. On the one hand, it is a high efficiency, large company job requirements be beneath the human character, on the other hand, in the past 20 years since its founding, it has not announced a substantial profit. Figure 1 is a good reflection of this contradiction: revenue growth, profit is close to zero. However, this curve does not truly reflect the operation of the amazon.

figure 1

Amazon is to disclose its revenue from three aspects: media, electronic products and commodities (referred to as EGM) and other categories (mainly AWS cloud services). As shown in Figure 2, these aspects of revenue is very different. The TTM is a 12 – month track that can reconcile seasonal fluctuations, making it easier to see the underlying trends. Media business is still growing, but in the past few years to promote the explosive growth of the Amazon is a commodity. At the same time, other categories are growing, but relatively slow.

figure 2

subdivision, we can see Amazon’s three operations in North America and the international market revenue (Figure 3).

figure 3

Figure 4

is all business Amazon in North American and international market revenue, which revenue in North America.

figure 4

as shown in Figure 5, on the whole, in the last quarter, the media business accounted for only 25% of Amazon’s total revenue, while in North America, the ratio is $20%.

figure 5

if we go back to other categories, we will find that it’s revenue growth is also very fast, as shown in figure 6.

figure 6

these kinds of business, sales of different products, the price of the sale is different, in the face of different consumers, transportation costs are also different, so their profit margins are likely to be different.

however, this still does not accurately reflect the actual situation of the amazon. In fact, in addition to its business is broadly divided into three categories, there are dozens of independent teams to operate their own businesses, they each have a high degree of autonomy. For example, German shoes, French electronics, or American cosmetics are operated by different teams. Each team will own the product pricing. At the same time, the maturity of all these services is also different. Some of the business is relatively early, more mature, relatively slow pace of development, is profitable; some business is a new start-up companies in the operation, as many as

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