<p><span><strong>Amazon</strong> <span class="ticker-mention inline-flex items-center font-bold">(AMZN <span class="ml-1 text-green-900">+0.55%</span>)</span> is currently the leader in cloud computing.</span><span> The company's Amazon Web Services (AWS) is one of its biggest drivers of operating profits, as its core e-commerce business carries notoriously low margins. AWS still has attractive long-term prospects. CEO Andy Jassy noted in a letter to shareholders that 85% of IT spend still occurs on-premises.</span></p>
<p><span>As this spending moves to the cloud, Amazon should be one of the biggest winners. But has the tech leader found another potential growth avenue that could rival AWS? The company recently announced a new business segment, prompting investors to wonder whether that's the case. Let's look into it and decide what it could mean for investors. </span></p>
<div class="image"><img alt="Amazon logo." width="880" height="587" class="h-auto max-w-full rounded object-contain" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84NjkxMTAvYW1hem9uLWxvZ28ucG5nJnc9Mzg0MA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84NjkxMTAvYW1hem9uLWxvZ28ucG5nJnc9Mzg0MA"/>
<p>Image source: The Motley Fool.</p>
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<h2>ASCS has entered the chat </h2>
<p><span>Amazon spent years and a small fortune building a logistics network. It features transportation assets for long-distance shipping, massive warehouses, delivery drivers, and various tools for route optimization, analytics, and more. The company did so to offer free, fast shipping to its customers. This has paid off. Perks like free shipping, overnight delivery, and others arguably attract more shoppers to the platform and encourage them to spend more. But this network was primarily open to businesses within Amazon's ecosystem, including those selling on its website. </span><span>That is now changing. </span></p>
<p><span>Amazon recently announced the launch of Amazon Supply Chain Services (ASCS), which will grant other businesses access to the company's logistics network.</span><span> Notice the similarity with AWS. With the latter, Amazon built a large computing infrastructure and rents it to other companies via a cloud-based model. With ASCS, the company built a massive logistics network and will now rent it out to other companies, allowing them to avoid the cost of building their own. This could become a popular service. </span></p><div class="my-8 lg:hidden"><div id="foolcom_sidebar_top_container" class="pitch-container"></div></div>
<p><span>Although e-commerce has become far more popular than it once was, it still has plenty of room for growth. </span><span>Andy Jassy has said that 80% of retail commerce still happens in brick-and-mortar stores, and that will change over the long run.</span><span></span></p><div class="mb-8 flex justify-center"></div>
<section><div class="flex flex-wrap place-content-between"><div class="flex w-full place-items-center lg:w-3/4"><div class="p-[8px] text-center" style="width: 95px"><small><div class="flex flex-col items-center gap-2">Expand</div></small></div><div class="py-4 pr-4"><img alt="Amazon Stock Quote" width="64" height="64" class="w-full flex-none object-contain" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL0FNWk4ucG5nJnc9MTI4?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL0FNWk4ucG5nJnc9MTI4"/></div><div class="pr-[16px]"><h2>NASDAQ: AMZN</h2><div class="text-md leading-[1] font-medium text-gray-800">Amazon</div></div></div><div class="flex w-full place-items-center lg:w-1/4"><div class="h-full w-5/6 px-4 py-2.5 lg:text-right bg-green-200"><div class="mb-[2px] text-[10px] text-gray-800">Today's Change</div><div class="mb-6 text-[18px] leading-none font-medium text-green-900">(0.55%) $1.49</div><div class="mb-[2px] text-[10px] text-gray-800">Current Price</div><div class="text-gray-1100 text-[18px] leading-none font-medium">$272.66</div></div><div class="flex h-full w-1/6 items-center justify-center py-2.5 bg-green-900"></div></div></div><div class="flex flex-wrap overflow-hidden transition-all duration-300 h-0"><div class="w-full border-t border-gray-300 p-2 lg:w-3/4 lg:border-r lg:p-6"></div><div class="w-full p-2 lg:w-1/4 lg:p-4"><h3>Key Data Points</h3><div class="text-gray-1100 my-[14px] grid grid-cols-2 text-sm"><div class="border-b border-gray-300 py-[14px] text-gray-800">Market Cap</div><div class="border-b border-gray-300 py-[14px] text-right font-bold">$2.9T</div><div class="border-b border-gray-300 py-[14px] text-gray-800">Day's Range</div><div class="border-b border-gray-300 py-[14px] text-right font-bold">$269.95 - $274.00</div><div class="border-b border-gray-300 py-[14px] text-gray-800">52wk Range</div><div class="border-b border-gray-300 py-[14px] text-right font-bold">$196.00 - $278.56</div><div class="border-b border-gray-300 py-[14px] text-gray-800">Volume</div><div class="border-b border-gray-300 py-[14px] text-right font-bold">1.6M</div><div class="border-b border-gray-300 py-[14px] text-gray-800">Avg Vol</div><div class="border-b border-gray-300 py-[14px] text-right font-bold">50M</div><div class="border-b border-gray-300 py-[14px] text-gray-800">Gross Margin</div><div class="border-b border-gray-300 py-[14px] text-right font-bold">50.60%</div></div></div></div></section>
<p><span>Meanwhile, free and fast shipping, which is standard on Amazon, is still lacking at many other companies. These retailers might see an opportunity to improve their e-commerce operations by leveraging Amazon's logistics network. According to Amazon, major corporations such as <strong>Procter &amp; Gamble</strong>, <strong>3M</strong>, and <strong>American Eagle Outfitters</strong> have already signed up for ASCS.</span><span> Further, like AWS, ASCS could potentially boast higher margins than Amazon's core e-commerce business.</span></p><div><div id="in_line_article_pitch_container" class="pitch-container"></div></div>
<p><span> The initial investment to build data centers and the entire AWS infrastructure was massive, but now that it is up and running, incremental costs per additional customer are relatively low. Perhaps we might see something somewhat similar with ASCS. It may not be as high margin as AWS (ASCS will face significant operating expenses, including labor and fuel costs), but it may well become a stronger profit driver than Amazon's e-commerce operations. </span></p>
<h2>What does this mean for investors? </h2>
<p><span>Of course, it's still too early to tell whether ASCS will be nearly as successful as AWS. Rival companies may choose not to use Amazon's logistics network, or ASCS' margins may be crushed by the various costs it will incur. These are all possibilities investors have to keep in mind: Amazon's new business venture isn't a slam dunk yet. However, this initiative is another example of Amazon's creativity and innovation, the kind that helped it become the leader in e-commerce and cloud computing.</span></p>
<p><span> Even without ASCS, Amazon has excellent growth prospects across its cloud, artificial intelligence, and advertising businesses, as well as other potentially attractive opportunities, such as its healthcare ventures through Amazon One Medical. </span>Amazon also has a large customer base, with more than 200 million Prime members, and could find more ways to monetize this audience in the future.</p>
<p><span>Further, the tech leader has a wide moat through switching costs, the network effect, and a strong, recognizable brand name that effortlessly attracts customers to its platform. For all those reasons, Amazon's shares remain very attractive, regardless of whether ASCS succeeds or not. </span></p><div id="article_pitch_container" class="pitch-container"></div><div id="promobox_container" class="pitch-container"></div>

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<p>Amazon has launched Amazon Supply Chain Services (ASCS), allowing other businesses to access its extensive logistics network, similar to how AWS operates in cloud computing. This move could enhance e-commerce operations for retailers lacking efficient shipping solutions. Major companies like Procter & Gamble and 3M have already signed up for ASCS. While ASCS may not match AWS's margins due to operational costs, it could still become a significant profit driver for Amazon. Investors should consider the potential risks and opportunities as Amazon continues to innovate in various sectors.</p>

- Amazon leads the cloud computing sector with its Amazon Web Services (AWS), which significantly boosts operating profits amid low e-commerce margins.  
- The recent launch of Amazon Supply Chain Services (ASCS) allows other businesses to utilize its extensive logistics network, a model similar to AWS, indicating potential for higher margins compared to traditional e-commerce.  
- While the success of ASCS remains uncertain, Amazon's diversified growth prospects and strong customer base position it favorably in the market, making its shares attractive to investors.

Has Amazon Found the Next AWS?