Understanding Amazon.com Inc.

Lesson 1 of 3

E-commerce and AWS

Amazon is best known for e-commerce — an online retail marketplace with famously thin margins, since retail is a high-volume, price-competitive business. Less visible to most shoppers is Amazon Web Services (AWS), its cloud-computing division, which rents servers, storage, and software infrastructure to other businesses. AWS is a smaller share of revenue than retail but has historically contributed a much larger share of profit, since cloud infrastructure carries higher margins than retail.

• •E-commerce is Amazon's largest, most visible business but has thin margins.
• •AWS (cloud computing) is a smaller share of revenue but a larger share of profit.
• •Retail and cloud computing are very different businesses under one company.