How much of Amazon’s sales come from e-commerce?

Over the last two decades Amazon (AMZN -0.17%) has built an unrivaled e-commerce business. At the same time, he constantly experiments with new business ideas. One of these ideas made Amazon Web Services (AWS) the largest cloud computing company in the world by sales. Together with AWS, Amazon is developing several other concepts that have already been successful or are in the pipeline.

Given this diverse business model, is e-commerce still important to Amazon’s overall business?

The key to Amazon’s growth

Amazon’s online stores and third-party sales together constitute the e-commerce segment. This segment accounted for $89.3 billion, representing 62% of the staggering total first-quarter 2024 sales of $143.3 billion. Additional e-commerce services such as subscriptions (including Prime memberships, e-books and digital music) can be considered part of e-commerce, increasing the share of overall sales to 70%.

Amazon sales by segment in the first quarter of 2024. Image source: Statista.

Even though AWS and other businesses are gaining in importance, e-commerce remains the core business by a wide margin. However, it is not the main source of profits or the fastest growing one.

AWS accounted for more than 60% of Amazon’s operating revenue in Q1 2024, although it represented only 17% of total revenue. Advertising is Amazon’s fastest growing segment. It accounted for only 8% of sales in the first quarter, but this segment grew by 24% year over year.

This is Amazon’s growth model. It raises money through e-commerce and invests in making it more efficient and profitable. Last year, the company moved from a national to a regional fulfillment network and is delivering more products to more customers faster and at lower costs. Shoppers who receive orders faster become more loyal and make more purchases, creating a virtuous upward cycle.

Amazon uses the proceeds to fund its next growth segment. In the past it was AWS. Now AWS is its profit machine, and advertising is at the center of growth. Amazon’s “other” category includes newer and smaller companies. Today it’s mostly health care and it’s the breeding ground for the next big thing.