Amazon’s Third-Party Marketplace Is Its Cash Cow, Not AWS

Amazon’s Third-Party Marketplace Is Its Cash Cow, Not AWS

Ever since Amazon's earnings call this past Tuesday, the business world has been abuzz with one Amazon story and one story alone: Jeff Bezos is stepping aside as CEO and transitioning to the new role of Executive Chair. That bombshell news completely overshadowed the company's impressive performance in fourth quarter and for the year ending December 31, 2020.

Fourth-quarter revenues were up 44%, largely due to moving Prime Day to October, with year-end rising 38% to $386.1 billion in total revenues. Net product retail sales made up over half of that total, or $215.9 billion, with service sales making up the rest, $170.2 billion.

What other talk there's been was around the company's highly-profitable AWS business, generating nearly 60% of the company's operating income. That's because Andy Jassy, who leads that division, will take over as CEO in the third quarter.

Profitable it may be, but AWS is small in comparison to Amazon's other businesses. It accounted for only about 12% of the company's reported revenue in 2020 - $45.4 billion. However, CFO Brian T. Olsavsky described it as currently a $51 billion annualized run-rate business in the earnings call.

And it's even smaller if you peel back the layers and look at the