Amazon’s prime subscribers are doing a lot of cross-shopping on the company’s massive platform which remains a core part of Amazon’s strategy. The company is keen to get more annual subscription fee revenues from the users of Prime, which also aid in reducing the company’s net shipping costs.
3. Amazon Web Services
AWS is a leader in the cloud computing market, with rivals like Google, International Business Machines Corp. (NYSE:IBM) and Microsoft Corporation (NASDAQ:MSFT) are trying to play catch up. Amazon leverages its back-end infrastructure in place, and allows other enterprises to use that back-end on a variable cost basis. And to stay ahead of the curve, Amazon keeps slashing prices. Whereas, rival, Google Inc (NASDAQ:GOOG) has seen slower pace of adoption among small and medium businesses but gained a lot of traction amongst Enterprise customers with more than 58% of the Fortune 500 companies now using the enterprise cloud product from Google Inc (NASDAQ:GOOG).
Amazon’s customer-centric focus gives the company an edge in terms of rapidly slashing costs, and gain market share while delivering great value. Amazon’s low cost infrastructure platform has hundreds of thousands ranging from start-ups to big enterprises as well as government entities in more than 190 countries across the world.
AWS is almost certain to maintain its leader-board status, however, the revenues from AWS is not disclosed by Amazon. However, the higher margin AWS and advertising are reported together by Amazon and is growing at an impressive rate of 64% Y/Y and was at $750 million for the last quarter. Cloud computing should be a bigger piece of Amazon’s revenue pie in the future.
Non-Core has immense potential
Amazon’s rapid expansion into these other major big markets is a good thing for investors. In addition to its core retail business, marketplaces business as well as the Kindle Line, the company’s “non-core” services are receiving heavy investments by the company. Amazon’s ability to gain incremental momentum from these non-core services of the company will be a crucial component of the firm’s future growth and also make up a larger portion of the company’s total revenues going forward. And all these businesses boast of much higher margins than the retailing business.
The article Amazon’s Three Growth Engines originally appeared on Fool.com is written by Ishfaque Faruk.
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