Business Model Amazon – Amazon has evolved into more than just an online store. While e-commerce accounts for a significant portion of the company’s overall sales, its diverse revenue model generates billions through various business segments.
This visualization provides an overview of the different parts that make up Amazon, showing each business unit’s net sales from June 2019 to 2020.
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With a market capitalization of $1.7 trillion, Amazon is now the most valuable retailer in the world. The company is expected to account for 4.6% of total US retail sales by the end of 2020, but the tech giant is more than just a one-trick pony.
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A key factor in the company’s success is its diversification into other areas. Here’s a breakdown of Amazon’s revenue:
While Amazon is indeed more than an online store, it’s worth noting that online sales make up a significant portion of the company’s total revenue. Between June 2019 and 2020, sales of products on Amazon’s website generated $163 billion, more than the company’s other business units combined.
An important day for online sales is Prime Day, which has grown into a major shopping event comparable to Black Friday and Cyber Monday. Prime Day is projected to generate nearly $10 billion in global revenue in 2020.
While e-commerce makes up a significant portion of Amazon’s total sales, there are many other segments that each generate billions in revenue, creating enormous value for the tech giant. For example, support for third-party sellers on the platform is the company’s second-largest division in terms of net sales, generating $63 billion during the year.
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This segment has shown tremendous growth over the past two decades. In 2018, it accounted for 58% of gross product sales on Amazon, up from just 3% in 2000. While third-party sellers have technically overtaken Amazon itself, the company still makes money through commissions and shipping fees.
Other tech giants profit from a range of products, services and applications. For example, while a significant portion of Apple’s revenue comes from iPhone sales, the company gets 17% of its revenue from a mix of services ranging from Apple Pay to Apple Music. Microsoft is another example of this, given that it owns a wide range of hardware, cloud services and platforms.
While there are several reasons for building a diverse business portfolio, the main benefit of diversification is having a buffer against market crashes. This has proved especially important in 2020, given the economic devastation caused by the global pandemic.
For example, while Amazon Web Services (AWS) lags online sales and third-party sellers in net sales, it is one of the company’s most profitable segments. In the fourth quarter of 2019, more than half of Amazon’s operating income came from AWS.
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In short, looking at Amazon’s many segments, one thing is clear – the company really is the sum of its parts.
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Technologies That Decipher Google’s AI Ambition (and Anxiety) In a recent letter, Sundar Pichai reveals more than meets the eye. Here we read between the lines to give more context to Google’s position on artificial intelligence
Anyone who has experimented with ChatGPT can get a sense of the potential of generative artificial intelligence – even in the earliest stages of the technology’s development.
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We’ve seen hype build up around certain technologies before. Blockchain, Metaverse, NFT, the list goes on. It remains to be seen what tangible value is created after the heat dies down, but in the meantime, some of the world’s biggest companies are embracing it
Google, which refocused on artificial intelligence years ago, is at the forefront of this movement, which is why a recent letter published by Google CEO Sundar Pichai is significant.
After all, billions of people use Google Search to learn about the world, and Alphabet is one of the most valuable and powerful technology companies in the world. But before we “read between the lines” of the letter, it is worth reviewing the larger context to which this letter addresses.
AI has had a number of victories in recent months, but it was the DALL-E Mini and ChatGPT that really allowed generative AI to break into the public consciousness. In fact, ChatGPT became so popular in a short period of time that Google announced an internal “code red” to address the issue. Google executives were well aware of the disruptive power of conversational AI because they were already testing their own models internally.
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Microsoft also recognized the potential and invested $10 billion in OpenAI, which works with ChatGPT as well as a number of other publicly available AI tools. Microsoft’s intention was to bring the magic of ChatGPT to their Bing search engine and possibly steal market share from Google.
This creates the basis for what we see today. Virtually every major tech firm is touting AI, and Microsoft and Google appear to be entering the AI race.
If there were any questions about how seriously Google is taking Microsoft’s new partnership with OpenAI, the latest announcements should put any doubts to rest. Sundar Pichai’s letter above speaks volumes but never deviates from the official theses. First, here’s the high-level message in Pichai’s letter:
On that last point: A message from a CEO confirming a company’s commitment to AI usually coincides with a product launch, not one that will be released to the public “in the coming weeks.” This post highlights a key barrier facing Google. Fearing the “reputational damage” that premature product releases can cause, the company has been forced to move more slowly than the market currently expects.
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Google has already suffered a painful blunder after journalists discovered the wrong answer in a commercial advertising its Bard artificial intelligence conversational service. That simple mistake cost Alphabet $100 billion in market value, demonstrating just how high the stakes are now that Big Tech’s AI advances are under the microscope.
The time of writing this letter is also very telling. The letter was published a day before Bing unveiled new AI-enabled features to the public.
Google and Microsoft may be the biggest players in the AI battle, but there are signs everywhere that AI represents a massive technological shift that will affect a number of industries. From Fiverr’s “Open Letter to Artificial Intelligence” to Baidu’s recent AI chatbot announcement, it seems like every day brings fresh news fueling the AI hype.
One thing is certain: artificial intelligence will be more prominently integrated into digital tools. And for better or worse, we will all be participating in the experiment.
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Back in 2011, I enrolled in an international MBA. For me, who was a lawyer, an MBA was a way to quickly change direction.
I wanted a career in business (more as an entrepreneur than a manager). And I wanted to find a career quickly to move to the US (I’m originally from Italy).
Let’s move to 2013. After my MBA, I managed to get a job in California as an analyst after completing my MBA with a focus on corporate finance and business strategy.
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However, instead of becoming an entrepreneur, I settled into a fixed career where I had to – like in the military – take a few linear steps and wait a few more years to climb the career ladder.
Fast forward four years since starting my MBA and three years into my new life in California. I wasn’t happy with the career path I got into through my MBA.
That’s not why I did the MBA. So I quit, went back to Italy and started my own digital business (a lot happened in between, like I moved to New York for a few months, but for the sake of brevity, let’s skip that part for now).
I found most of the things I learned in business school to be very useful for a linear career in a corporation.
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They weren’t as helpful to me as they are to a digital entrepreneur. So I had to go back to learning on my own, experimenting a lot and learning a bunch of new things from scratch in the process.
To make it more interesting, I also joined high-tech
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