How Amazon Will Be the First Company to Earn $1 Trillion in Revenue
I think Amazon will be the first company to do it. Read until the end for an exciting announcement on something I’ve been wanting to do for a long time.
Amazon brought in $574.8 billion in revenue in 2023.
That’s up 12% over the prior year. It’s extraordinary to grow double digit percentages at this scale, but Amazon is an extraordinary company.
Amazon will inevitably cross the $1 trillion revenue line with their current business verticals, but there are so many new opportunities that will make this happen even faster. Let’s look at some as mentioned in their Q4 earnings.
In 2023 the company’s delivery speeds improved while the cost of delivery declined. 7 billion items arrived the same or next day. The faster customers receive their items, the more frequently they shop and the more they spend.
More revenue AND more cost savings, they are constantly getting more efficient. From switching to a regional distribution network, to robotics and continuous innovations:
Prime Air drone deliveries will expand to Italy, the UK, and an additional location in the U.S. in late 2024. Amazon will also integrate drone deliveries into the company’s Same-Day sites, which will provide customers with faster delivery on a greater selection of items. Prime Air uses drones to safely deliver packages weighing up to five pounds in one hour or less.
They also launched Sequoia, a new robotics system that can store inventory up to 75% faster and will reduce order process time by up to 25%.
Some industries should be safe from Amazon, like the auto market! Surely Amazon will never be able to sell cars… right?
AMZN 0.00%↑ will begin selling vehicles online in 2024, starting with Hyundai.
No industry seems safe. TSLA 0.00%↑ revolutionized the car buying experience to the great ire of car dealerships, yet Amazon may prove an even bigger threat to the legacy model.
On to Sportsball! A huge opportunity that Amazon has utilized brilliantly to attract more subscribers:
Increased total viewership for the second season of Thursday Night Football (TNF) on Prime Video by 24% year over year, and had double-digit growth (14%) for the second consecutive season in the hard-to-reach 18–34-year-old demographic, according to Nielsen. The November 30 Seahawks-Cowboys game attracted 15.3 million viewers, becoming Prime Video’s most watched TNF game ever, according to Nielsen.
They started a new NFL tradition: a Black Friday football game, another nail in the coffin for shopping malls. Advertising services posted 26% growth in the 4th quarter, just wait for the personalized ads on your TV to really take off, with QR codes and “add to Amazon shopping cart” options! (It’s happening)
The current healthcare options in the U.S. are absolutely terrible, but don’t take it from me, just look at the survey below!
If only a company out there could make healthcare suck less.
Prime members in the U.S. can now add health care from One Medical to their Prime membership for $9 per month (or $99 annually) and include up to five additional family members for $6 per month each.
I maintain that there is great potential for synergy between the acquisitions of One Medical and Whole Foods, as well as Amazon Pharmacy. Healthcare is a fast growing sector that’s seen little innovation, there is a major opportunity here.
More on that in my previous article:
Let’s look at the segment breakdown.
High growth rates in the double digit percentages for every “services” segment… again. These are huge potential profit margin contributors and growing at a much faster clip than 1st party/Amazon retail sales.
Amazon’s share of global retail sales is ~3%. CEO Andy Jassy has repeatedly said in the past that 90% of global IT spending is still on premise. Retail has a huge runway for growth. AWS still has a huge runway for growth.
Put all this together and what’s not to love? It is for all these reasons and more that I could go on about for pages that I believe Amazon will become the first $1 trillion revenue company.
Here’s how I’m feeling about my Amazon position these days:
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