Amazon’s recent 10k filing allows an update to the analysis published in Behemoth, Amazon Rising. Unsurprisingly, as we know, revenues boomed during the pandemic, and that was true for all segments except physical stores. However, trends that existed pre-pandemic have accelerated: Amazon’s first party retail operations lost a staggering $42 billion in 2020, red ink that was covered by the explosive growth of profits in other segments:
We must therefore understand Amazon’s profitable segments in an entirely new light. it turns out that AWS is the smallest contributor to Amazon’s operating income among the big four profitable segments:
This helps to explain why Amazon has been squeezing sellers, pushing Prime internationally in particular, and above all turning Amazon.com into a giant ad.
This post uses the most recent Amazon 10k filing to update the detailed analysis (including a full description of my methodology) in Behemoth, Chapter 9.