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Comment by pdeuchler | Hacker News Reader

AWS makes almost no money compared to their core business, it's around 10%, maybe a little bit more. The profit from AWS, however, is something like 50% of Amazon's total profit. That said, it's not hard to occupy a huge percentage of profits from Amazon since they purposefully run almost every other facet of the business at razor thin margins.

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3.2 billion of revenue in one quarter [1] is is nothing to scoff at. However the more important point is without the profit from AWS, Amazon would still be posting huge deficits [2] and would probably face much higher shareholder pressure to produce.

[1] http://venturebeat.com/2016/10/27/aws-reports-3-2-billion-in...

[2] http://www.geekwire.com/2016/amazon-without-aws-online-retai...

Isn't that an invalid assumption that Amazon would do nothing else differently if they didn't have AWS?

I always understood "make money" as referring to profit, not revenue. A business with $1 trillion in revenue and $1 trillion in expenses makes no money.

"I have a trillion-dollar business: I take dollar bills from one person and give them directly to another and repeat that a trillion times a year."

Maybe there can be profit to be made from this business too with a bit of _delay_ in between receiving and giving. I'm trying here just to imagine this company. I think it will work because of the scale. I'm thinking: I take dolar bills from one person, I keep them 10 days and then I give them to another one. And I repeat this for 1 trillion dollar value. Even if the profit in 10 days is 0.1% then you will have 1 million dollar remaining to you. What I am trying to say is that it seems to be a value in being so big, because of how big numbers math works but also because people are impressed by it (think going to a bank asking for money)

This is how Amazon benefits from free cash flow in their retail business. With payment days of >90 days to their suppliers but almost immediate payment from their customers they get 90 days to reinvest that money at a profit before paying it back. Essentially an interest free loan from their suppliers.

> almost immediate payment from their customers Isn't there a gap between customer making the credit card payment and the bank transferring the actual money into Amazon's account?

Probably. And they also won't always sell an item as soon as they receive it, which eats into free cash flow. But generally speaking, they get paid for goods by customers before they need to pay the supplier, which creates free cash flow.

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