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10 Businesses Amazon Is In Besides Selling Books Online

Sky high AMZN stock valuation is about a lot more than just book sales

By Brad Moon, InvestorPlace Contributor

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Amazon stock

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Amazon.com’s (NASDAQ:AMZN) most recent big move was to buy online pharmacy company PillPack. The acquisition effectively marks the beginning of Amazon’s goal of becoming a competitor in the lucrative drugstore space — a development with big upside for AMZN stock.

Considering that Amazon started out 24 years ago as an online book retailer, that’s quite a development.

But you don’t become a tech industry giant by only selling books. Amazon has grown to one of the biggest companies in the world, with 2017 revenue of nearly $178 billion. The current AMZN stock price of $1,739 gives the company a market valuation of over $838 billion.

To get here, AMZN has expanded into many businesses –including some that you may not realize. Here are 10 of Amazon’s ventures outside of flogging books.

10 Amazon Businesses: Whole Foods

10 Amazon Businesses: Whole Foods
Source: Amazon

While PillPack is the Amazon acquisition dominating the headlines these days, in 2017 it was the company’s $13.7 billion purchase of Whole Foods that was making news.

With that acquisition, AMZN instantly gained a presence in the $800 billion retail grocery market, while adding yet another benefit for Amazon Prime members — discounts at Whole Foods.

Amazon also gained hundreds of brick-and-mortar stores where it can (and has) used shelf space to sell electronics like tablets, e-readers, smart speakers and video streamers.

10 Amazon Businesses: Amazon Web Services (AWS)

10 Amazon Businesses: Amazon Web Services (AWS)
Source: Amazon

AMZN may be best known as a giant online retailer, but Amazon Web Services (AWS) is the division that generates the profits and drives AMZN stock. In the last quarter, AWS accounted for 73% of Amazon’s total operating income, with 49% year-over-year growth.

AWS is the top provider of cloud infrastructure other companies use to host their websites and deliver internet-based services. Big names like Netflix (NASDAQ:NFLX) rely on AWS.

Based on the division’s profitability and growth rate, expect AWS to be AMZN’s biggest business in terms of profitability for years to come.

10 Amazon Businesses: Kindle E-Readers and Tablets

10 Amazon Businesses: Kindle E-Readers and Tablets
Source: Amazon

Amazon started as an online book seller, but it also became a pioneer in the e-book market, when its line of Kindle e-readers launched in 2007.

AZMN now dominates the market for e-readers. There are a few competitors left, but many, including Sony (NYSE:SNE), have dropped out. 

Amazon also got into the tablet game, and with its latest generation of inexpensive Fire Tablets, has been posting big gains in that market, with impressive growth compared to rivals like Apple’s (NASDAQ:AAPL) iPad.

10 Amazon Businesses: Streaming Video and Streaming Music

10 Amazon Businesses: Streaming Video and Streaming Music
Source: Amazon

Amazon is a big player in two of the hottest consumer entertainment markets: streaming video and streaming music.

Amazon invests heavily in original programming for its video streaming service (spending $4.5 billion in 2017), which is free for its 90 million Prime subscribers. That perk has helped boost Prime membership, which is an important factor for overall revenue and AMZN stock. The audience for Amazon’s Prime Video puts it in second place, behind only Netflix.

Amazon is also a player in the streaming music market. Prime Music is a free benefit for Prime members, while Amazon Music Unlimited — launched last April — is a subscription-based competitor to leaders Spotify Technology (NYSE:SPOT) and Apple Music.

10 Amazon Businesses: Amazon Go

10 Amazon Businesses: Amazon Go
Source: Amazon

With the launch of Amazon Go at the start of the year, AMZN opened its first brick-and-mortar convenience store.

While that may not sound glamorous, or like a move that has any real upside for AMZN stock, it was actually a big deal. Amazon Go is automated, with no checkout line — customers enter the store, an array of cameras and sensors track everything, they leave and their account is billed for anything they bought.

And that convenience store market is worth some $233 billion … With more Amazon Go stores opening in Chicago and San Francisco, it’s safe to say that AMZN is now officially in the convenience store business.

10 Amazon Businesses: Amazon Echo Smart Speakers

10 Amazon Businesses: Amazon Echo Smart Speakers
Source: Amazon

Amazon was the company that kicked off one of the hottest product categories in consumer electronics: the smart speaker.

The Amazon Echo, with Alexa onboard, was the first smart speaker, a product category that started slowly, then exploded. The company has expanded the Echo lineup to include a range of smart speakers, including versions with integrated displays. Despite competition from Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google and Apple, Amazon sold a record number of Echo smart speakers over the holidays — helping to boost AMZN stock.

Current estimates are for the smart speaker market to be worth $11.79 billion by 2023, and AMZN is well positioned to capture the majority of that revenue.

10 Amazon Businesses: Home Security

10 Amazon Businesses: Home Security
Source: Amazon

Last year, AMZN entered the home security market with the release of the Cloud Cam, an internet-connected smart security camera.

This puts Amazon in competition with Google’s Nest.

But the move served a dual purpose. The company also launched Amazon Key, an in-home delivery service that incorporates the Cloud Cam and a smart door lock to allow Amazon drivers to drop off packages inside customers’ homes.

10 Amazon Businesses: Twitch Video Game Broadcasting

10 Amazon Businesses: Twitch Video Game Broadcasting
Source: Amazon

Unless you’re a video gamer, you may not have heard of Twitch.

The service is incredibly popular with gamers, and is the leading platform for live broadcasting of video games. Amazon acquired Twitch in 2014 — when the service was the fourth largest source of peak internet traffic, and the largest source of live video streaming traffic.

Twitch stands to grow even more with the rising popularity of eSports, the addition of more streaming content (creative, music and occasional TV shows), video game distribution and inclusion in Amazon’s Prime membership.

10 Amazon Businesses: Smartphones

10 Amazon Businesses: Smartphones
Source: Amazon

When you think flagship smartphones, chances are the first to come to mind are Apple’s iPhone, or Samsung’s Galaxy series. But Amazon once had a horse in the race, too: The Fire Phone. And this one was a rare AMZN misstep.

Arriving late to the market and going up against the iPhone 6, Amazon’s all-new flagship smartphone with a unique 3D interface and “Mayday” tech support button tanked and was discounted to 99 cents on contract just two months after release.

The Fire Phone resulted in a $170 million write down for Amazon in Q3 2014, helping to trigger an 8% drop for AMZN stock.

Amazon is still in the smartphone business today, but rather than selling its own device, it acts as a retailer for unlocked phones, including brands that are difficult to find in U.S. carrier stores such as Huawei and Xiaomi.

10 Amazon Businesses: Online Drugstore

10 Amazon Businesses: Online Drugstore
Source: PillPack

Finally, we circle back to the acquisition that led off this piece: PillPack.

Amazon had been expected to make a move toward being an online drugstore. In the U.S. alone, drugstores did $263 billion in business in 2015, making the market a natural target, and earlier this year Amazon made moves to begin to selling medical supplies.

PillPack lets the company sell prescription medications, putting it in direct competition with brick-and-mortar drugstores like CVS (NYSE:CVS). The PillPack announcement caused stock for the big three drugstores –including CVS– to drop.

If Amazon has the kind of success here that it has with some of its other businesses, the move could be just what it needs to drive AMZN stock to the point where it becomes a trillion dollar company.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.


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Article printed from InvestorPlace Media, https://investorplace.com/2018/07/10-businesses-amazon-is-in-besides-selling-books-online/.

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