Amazon

To understand Amazon as a business/stock, it is important to understand it is at least two almost completely different businesses.  

-Media, which accounts for ~45% of revenue and is growing ~10% y/y, and is going through a massive transition to digital goods where the main competition is going to be Apple, Google, Netflix, cable companies, etc.
Screen_shot_2011-09-30_at_5
– Everything else (known as “EGM” – “Electronics and General Merchandise”) which accounts for ~52% of revenue, is growing ~24% y/y, and where Amazon is mainly competing with specialty e-commerce sites and (primarily) offline retailers like Walmart.
Screen_shot_2011-09-30_at_5
The stat I find surprising is how much room there is to grow.  Amazon’s share of (global) e-commerce is ~8.3%.  E-commerce is only ~6% of global retail.  Hence Amazon’s share of total global retail is ~0.5%.

 

Advertisements

6 thoughts on “Amazon

  1. Evan Jacobs says:

    Your point is valid even though I think your exact numbers are incorrect. According to AMZN’s latest quarterly announcement (http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-newsArticle&ID=1589157), media growth is around 20% while EGM growth is around 60%.More importantly is AMZN’s “Other” segment which includes AWS. While it only accounts for about 3% of net sales, it is growing at about 70%.

  2. zzbar says:

    That’s all very good, but the stock is trading at 100x earnings with a 4% net profit margin! It’s a Good company and lousy stock at the current level.

  3. chris dixon says:

    @evan i was basing it on a morgan stanley analyst report. the growth rates were their projections. I should have clarified that.

  4. HHorsley says:

    I have to wonder why is the m/s so low – especially given their price point.Do you think Amazon’s brand has limitations with the mainstream?Perhaps it has to do their lack of traditional media advertising or the barrier of older demographics not being comfortable making purchases online?Do you have thoughts?

  5. Mike Dierken says:

    Their EGM also has two areas – ‘retail’ where Amazon buys/stocks/sells/ships products, and ‘platform’ where they help other merchants list/sell/ship products. And don’t forget their growing Web Services business (EC2, S3, etc).They are also building out an ad serving platform – different from any of these areas also.

  6. Jason Crawford says:

    And that only covers their retail business. Don’t forget Amazon Web Services and Kindle. Amazon is actually multiple businesses in one. It’s seemingly eclectic and yet everything they do is mutually reinforcing.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: