Amazon: Not Just an Online Store

After a return to form in 2023, Amazon reported better-than-expected results for the first quarter of 2024 as well. The e-commerce giant, that had struggled to live up to expectations in 2022, reported net profit of $10.4 billion on net sales of $143.3 billion for the three months ended March 31.

"It was a good start to the year across the business, and you can see that in both our customer experience improvements and financial results," Andy Jassy, the company's CEO said, pointing out that the company's core e-commerce business achieved record delivery speeds for Prime customers while lowering the cost to serve. "It’s very early days in all of our businesses and we remain excited by how much more we can make customers’ lives better and easier moving forward," he added, addressing doubts over how much room for growth the company has left.

Possibly the most important message was the fact that the slowdown in AWS growth, which had spooked investors last year, has subsided with growth re-accelerating for the second consecutive quarter. "The combination of companies renewing their infrastructure modernization efforts and the appeal of AWS’s AI capabilities is re-accelerating AWS’s growth rate," Jassy said, also revealing that the company's biggest profit driver is now at a $100-billion annual revenue run rate.

As the following chart shows, AWS is Amazon’s third biggest operating segment in terms of sales, but because it’s by far the most profitable part of the company’s vast operations, investors tend to look at its performance particularly closely. The chart also illustrates that the world’s most popular online retailer has expanded its business considerably over the past few years. While its core “online stores” business, i.e. first-party e-commerce sales recognized on a gross revenue basis, accounted for 64 percent of sales in Q1 2017, it amounted to just 38 percent of Amazon's total sales in the first three months of 2024.