Amazon just began disclosing the earnings from its nine-year-old Cloud computing arm, Amazon Web Services (AWS), in April 2015. As it turns out, renting secure and innovative web space is an incredibly profitable business. In fact, Deutsche Bank estimates that the AWS Cloud could be worth as much as $160 billion as a stand alone company.
But that’s not all Amazon has up its sleeves — oh no. As Amazon continues to revolutionize how people shop, it also becomes increasingly profitable. Although it has taken some time to reach this point, stock analysts have now declared that Amazon has reached an inflection point. The enormous investments made in Amazon infrastructure have finally began to pay off as its market shares increasingly help it to dominate the competition.
The Success of Amazon Prime
A big part of the success on the retail side, it would seem, is due to Amazon Prime. The $99 per year subscription service that gives shoppers access to free two day shipping along with free video, music and other media offerings seems to be the key to unlocking greater potential in each and every Amazon shopper. At the beginning of 2015, this legion numbered around 30 million, but by the end of 2015, some estimate that membership will have doubled again to about 60 million.
Prime means more than just brand loyalty, though. According to the New York Times, Prime members spend three to four times as much with Amazon than they did before joining. If membership psychology can triple or quadruple the value of a single $99 membership, Amazon has nowhere to go but up, as Prime subscriptions are expected to reach at least half of American households by 2020.
It would seem a slow and careful growth plan is what it takes to make a giant like Amazon. Other companies like Wal-Mart are trying to get into the arena with this eCommerce giant, but it’ll be many years before they can even begin to touch Amazon’s size and complexity — after all, Amazon has a nearly 20-year head start.Google+