- 2018-11-27
How does Amazon prop up the trillion-dollar market value?
At midday on September 4, local time in the United States, Amazon’s stock price briefly exceeded US$20,50.27, with a market value of more than US$1 trillion, making it the second Internet giant to enter the “trillion club” after Apple. It cost less than Apple’s market value of trillions. About 17 years.
Statistics show that Amazon’s stock price has soared since the beginning of this year. So far, the stock price has risen by about 75%, and its market value has increased by more than 435 billion US dollars, which is equivalent to an increase in the volume of Alibaba. It is also equivalent to the current three traditional retail companies of Wal-Mart, Costco and Target. The total market value. So, what's the recent situation of Amazon's e-commerce business, and what is it that supports Amazon's trillion-dollar market value?
Revenue from third-party services has soared, and physical retail business is starting to be positive
Amazon has always been a "heterogeneous" among the many listed companies on Wall Street. It likes to "tell stories" to the capital market, increase long-term investment by sacrificing short-term profits, and focus on future growth prospects. In return, it has many years of performance. Loss, but the market also gives a price-earnings ratio of hundreds of times.
E-commerce is Amazon's genes, and it is also the core killer of the Quartet. According to a report by eMarketer, a market research organization, the total sales of the Amazon platform in the U.S. market in 2018 are expected to be 258.22 billion U.S. dollars, which will account for 49.1% of the total U.S. e-commerce total that year. For comparison, eBay, the second largest player, has a share. Only 6.6%, it can be said that Amazon can not find a rival in the field of e-commerce with a telescope.
As Amazon's third-party sellers grow larger, its profit model is also changing. According to a survey conducted by The Statistics Portal, in the first quarter of this year, third-party sellers contributed 52% of the transaction volume on Amazon. The latest data shows that this proportion has reached 68%, a record high. At the same time, Amazon is continuously entering emerging markets such as Australia and India, and this proportion may further increase. The second-quarter financial report showed that revenue from providing services to third-party sellers increased by 39% year-on-year to US$9.702 billion. The above-mentioned data means that Amazon has begun to shift its high-profit business from direct operations to third-party market platforms.
It is understood that third-party services include sales commissions and related distribution services. It is worth mentioning that the delivery service provided by Amazon is becoming an important source of income in this service. Over the years, Amazon has spared no effort in logistics and distribution. As of the first half of 2018, Amazon has built more than 140 intelligent operation centers around the world, with a total storage area of more than 240 million square feet, and can be delivered to 185 countries and regions. . At the same time, relying on the intelligent supply chain system developed by Amazon, Amazon can provide third-party sellers with diversified and characteristic services, and the improvement of logistics experience has further strengthened the stickiness of the platform.
In addition, in Amazon's big e-commerce strategy, the physical retail business is becoming a new profit growth point. It is understood that since Amazon opened its first physical retail store Amazon Books in November 2015, it has begun to get involved in physical retail business in different fields. Last year, Amazon spent 13 billion US dollars to acquire Whole Foods, the sixth largest grocery chain in the United States, marking the official Amazon. Fully enter the daily necessities market with a total value of 700 billion US dollars. Up to now, Amazon has deployed physical retail business in fresh food, food, clothing and other fields, and it may further break industry boundaries in the future.
In addition, as part of the overall retail strategy, relying on advanced technologies such as artificial intelligence and cloud computing, Amazon has launched a new retail species-the unmanned convenience store Amazon Go, which completely skips the traditional checkout process and revolutionizes the offline shopping experience. The entire retail industry has had a significant impact, reflecting Amazon's determination to increase the size of the physical retail industry.
Cloud computing and digital advertising become a trillion-dollar market value promoter
Although the e-commerce business is so strong that it has no rivals, it is not the core element that supports Amazon's high market value. High-profit businesses such as cloud computing and digital advertising with great potential are the pillars.
According to Amazon’s second-quarter financial report, cloud computing business accounted for 55% of Amazon’s operating revenue and 20% of total revenue, second only to e-commerce business and service fees collected from third-party sellers. It has become Amazon’s most profitable item. business. It is understood that in the emerging cloud service market, Amazon AWS firmly occupies the top market share, reaching 49% in the second quarter of this year. In contrast, Microsoft Azure has a 30% market share, and Google’s cloud service market share is. Below 5%.
In addition to cloud computing business, digital advertising business has also become an important battlefield coveted by Amazon. It is understood that Amazon is well aware of consumers' actual shopping behaviors and has a strong ability to accurately deliver. Once launched, it has grown rapidly. Data shows that after Q1’s 139% growth rate, Q2 Amazon’s advertising growth rate broke through three digits again, increasing by 129% to US$2.194 billion from US$945 million in the same period last year. In comparison, Amazon's advertising revenue in 2017 was US$4.653 billion, and in 2016 this figure was only US$2.95 billion. In the first half of this year, Amazon's digital advertising revenue reached 4.2 billion US dollars, which means that Amazon's digital advertising revenue this year is likely to exceed the tens of billions of dollars mark.
Amazon’s fast-growing digital advertising business has attracted the attention of giants. According to data from market research firm eMarketer, the digital advertising duo Google and Facebook accounted for 38.6% and 19.9% of the market respectively in 2017. However, due to the strong rise of Amazon’s advertising business, this share is increasing. Shrinking year by year, it is predicted that by 2020 the market share of the two will fall to 36.3% and 19.3%, respectively. Amazon is expected to become the third pole of the digital advertising industry in 2020.
With smart home becoming a new outlet, Amazon has also taken the lead in entering this trillion blue ocean market, creating a brand new smart home ecosystem through the Alexa+Echo speaker + peripheral hardware operation model. At the same time, Amazon and Bezos also invested in a large number of start-ups. The number of investment/acquisition companies with a known specific amount is 76, involving multiple industries such as healthcare, education, social networking, entertainment, short-term rental, Q&A, biotechnology, etc. .
Amazon, which continues to break business boundaries and makes Wall Street analysts unable to understand the context, believes that breaking through the trillion-dollar market value is only the beginning.