Amazon’s service sales set to eclipse product sales – Quartz


Amazon is known to sell a wide variety of products like books, televisions, diapers, etc., but a growing portion of its sales fall into what the company calls “services”.

It’s a mixed bag of the commissions and fees that Amazon collects from third-party sellers in its marketplace; Main subscriptions; sales related to Amazon Web Services, its cloud computing platform; certain subscriptions to digital content; and the fees it charges vendors for advertising. In the three months ended June 30, Amazon’s sales of these services reached $ 55.1 billion, just below the $ 58 billion Amazon recorded in product sales, which includes its product sales. as well as the shipping costs and sales of certain digital media.

These service sales have been growing at a faster rate for years and increased by 42.4% in the quarter compared to the same period last year, while product sales increased by 15.4% more modestly. At this rate, Amazon will soon see more revenue from services than products.

The company’s total sales for the quarter increased 27% to $ 113.1 billion.

Advertising and AWS Drive Sales of Amazon Services

One of the fastest growing parts of Amazon’s service business is advertising, which sellers buy make their products more visible in the middle of everything Amazon sells. While the company does not break down its ad sales separately, it does report a segment simply labeled “other” that is primarily ad sales. In the last quarter, this segment grew 87% compared to the same period last year to reach $ 7.9 billion. This is also the fourth consecutive quarter, the growth of this segment has accelerated.

Amazon Web Services, the division created by Andy Jassy, ​​Amazon’s new CEO, also had a strong quarter, growing at its fastest pace in two years. Segment sales jumped to $ 14.8 billion, up 37% from a year ago. Jassy said the rise came as more companies sought to “transform their businesses and move to the cloud” in Amazon’s statement announcing its results. Some of those that Amazon said have recently signed deals include Ferrari, the National Hockey League and Swisscom, a major telecommunications provider in Switzerland.

Of course, as Amazon grows these businesses, it still generates a lot of seller fees on its platform. Its sales of services to its third-party sellers, made up of commissions, but also the money it collects for the storage, packaging and shipping of orders from these sellers, increased 38% to 25.1 billions of dollars.

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