<div id="readability-page-1"><p>If you are old enough you will remember a time when <strong>Amazon.com</strong> <span>(AMZN<span> 1.44%</span>)</span> was a fledgling online book store. But that was a long time ago at this point, with the company's online presence now so ubiquitous that, for many consumers, it is the first place they look when shopping for anything.</p> <p>The interesting thing here, however, is that Amazon has now grown to the point where its retail operations aren't the most important feature of the business.</p> <p>Here's what you need to know.</p> <div><p><img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MzIzMjIvMjJfMDRfMjEtdHdvLXBlb3BsZS1pbi1hLWJlZC1sb29raW5nLWF0LWEtY29tcHV0ZXItX2dldHR5aW1hZ2VzLTEzMjU4NTM2OTkuanBnJnc9NzAw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="467" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MzIzMjIvMjJfMDRfMjEtdHdvLXBlb3BsZS1pbi1hLWJlZC1sb29raW5nLWF0LWEtY29tcHV0ZXItX2dldHR5aW1hZ2VzLTEzMjU4NTM2OTkuanBnJnc9NzAw"/></p><p>Image source: Getty Images.</p> </div> <h2>What does Amazon do?</h2> <p>Amazon is an online retailer, which shouldn't come as a surprise to anyone. In the second quarter it sold nearly $61.6 billion worth of goods. The company sells just about anything you can think of. There's a reason why consumers often go to Amazon.com before looking anywhere else.</p> <p>Only there's something more going on with the company's store. Its value as a retail destination has turned it into something of an online mall. Amazon doesn't just sell goods on its own behalf, it sells products for others.</p> <p>In the company's second-quarter earnings news release it noted that it had &#34;announced a <strong>Nike</strong> storefront on Amazon.com where U.S. customers will be able to shop a range of footwear, apparel, and accessories.&#34; In addition, the company highlighted that it had expanded its selection with brands like Away, Aveda, Marc Jacobs Fragrances, Milk Makeup, and Origins.</p> <p>Those brands all have their own identities, and often their own retail locations and websites, but being on Amazon is so important that they have willingly partnered with the online retailer.</p> <p>And those are just big names; there are smaller companies that sell through Amazon.com, too. In this way, Amazon's retail operation is also a service. This service generates revenue for Amazon, but still only touches the surface of this one little-known fact about the company.</p> <h2>Amazon's AWS division is where the big money lives</h2> <p>The fact that Amazon allows others to use its retail presence to sell their products highlights the service business that's hidden behind the Amazon.com website. But the bigger story is completely technology-related in the form of the Amazon Web Services (AWS) division. This is the company's cloud computing division, in which all it is selling is technology services.</p> <p>There are two interesting ways to view the situation. If you look at the company's income statement, you will see that product sales were, as noted, around $61.6 billion in the second quarter. Service-based revenue came in at $86.4 billion. From that standpoint alone, Amazon looks more like a service provider than a retailer.</p> <p>But there's another key figure to consider. Cost of sales, which is basically the price of the items Amazon sold, totaled up to $73.9 billion. That's more than the revenue generated from product sales.</p>  <p>It looks very much like selling things is a loss leader for Amazon. That said, there are a lot of moving parts here. For example, Amazon Prime subscription revenue doesn't go into the product sales line even though it is an important source of revenue. Ultimately, GAAP accounting clouds the view here. It will help to understand how Amazon breaks down its own business.</p> <p>The company reports three segments: North America, international, and AWS. North America's operating income was roughly $7.5 billion in the second quarter. International chipped in about $1.5 billion. And AWS topped them all with operating income of nearly $10.2 billion.</p> <h2>What is Amazon?</h2> <p>If you buy Amazon stock thinking you are buying the world's most important online retailer you aren't wrong, but you are missing the whole picture. The company's business is increasingly about services, with its AWS division clearly the most important operation it has. In other words, Amazon is more technology stock than retail stock, which is a fact that can get lost thanks to the company's powerful online retail presence.</p>                                                                            </div>

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<p>Amazon.com has evolved from an online bookstore to a major online retailer, generating $61.6 billion in product sales in Q2. However, its AWS division, which provides cloud computing services, is the primary revenue driver, with $86.4 billion in service-based revenue. This shift indicates that Amazon is more of a technology company than a traditional retailer, as its retail operations serve as a platform for other brands and a means to support its more profitable service offerings.</p>

- Amazon.com has evolved from an online bookstore to a dominant online marketplace, generating nearly $61.6 billion in product sales in the second quarter.  
- The company also operates as a service provider, allowing brands to sell through its platform, while its Amazon Web Services (AWS) division generated $86.4 billion in service-based revenue.  
- This shift indicates that Amazon is increasingly a technology company, with AWS being its most significant revenue source, overshadowing its retail operations.  

Think You Know Amazon.com? Here's 1 Little-Known Fact You Can't Overlook.