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Segment Information

12 Months Ended

Dec. 31, 2019

SEGMENT INFORMATION

We have organized our operations into three segments: North America, International, and AWS. We allocate to segment results the operating expenses “Fulfillment,” “Technology and content,” “Marketing,” and “General and administrative” based on usage, which is generally reflected in the segment in which the costs are incurred. The majority of technology infrastructure costs are allocated to the AWS segment based on usage. The majority of the remaining non-infrastructure technology costs are incurred in the U.S. and are allocated to our North America segment. There are no internal revenue transactions between our reportable segments. These segments reflect the way our chief operating decision maker evaluates the Company’s business performance and manages its operations.

North America

The North America segment primarily consists of amounts earned from retail sales of consumer products (including from sellers) and subscriptions through North America-focused online and physical stores. This segment includes export sales from these online stores.

International

The International segment primarily consists of amounts earned from retail sales of consumer products (including from sellers) and subscriptions through internationally-focused online stores. This segment includes export sales from these internationally-focused online stores (including export sales from these online stores to customers in the U.S., Mexico, and Canada), but excludes export sales from our North America-focused online stores.

AWS

The AWS segment consists of amounts earned from global sales of compute, storage, database, and other service offerings for start-ups, enterprises, government agencies, and academic institutions.

Information on reportable segments and reconciliation to consolidated net income (loss) is as follows (in millions):



	Year Ended December 31,
	2017			2018			2019
North America
Net sales	$	106,110		$	141,366		$	170,773
Operating expenses	103,273			134,099			163,740
Operating income	$	2,837		$	7,267		$	7,033
International
Net sales	$	54,297		$	65,866		$	74,723
Operating expenses	57,359			68,008			76,416
Operating income (loss)	$	(3,062	)	$	(2,142	)	$	(1,693	)
AWS
Net sales	$	17,459		$	25,655		$	35,026
Operating expenses	13,128			18,359			25,825
Operating income	$	4,331		$	7,296		$	9,201
Consolidated
Net sales	$	177,866		$	232,887		$	280,522
Operating expenses	173,760			220,466			265,981
Operating income	4,106			12,421			14,541
Total non-operating income (expense)	(300		)	(1,160		)	(565		)
Provision for income taxes	(769		)	(1,197		)	(2,374		)
Equity-method investment activity, net of tax	(4		)	9			(14		)
Net income	$	3,033		$	10,073		$	11,588

Net sales by groups of similar products and services, which also have similar economic characteristics, is as follows (in millions):



	Year Ended December 31,
	2017		2018		2019
Net Sales:
Online stores (1)	$	108,354	$	122,987	$	141,247
Physical stores (2)	5,798		17,224		17,192
Third-party seller services (3)	31,881		42,745		53,762
Subscription services (4)	9,721		14,168		19,210
AWS	17,459		25,655		35,026
Other (5)	4,653		10,108		14,085
Consolidated	$	177,866	$	232,887	$	280,522

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(1)

Includes product sales and digital media content where we record revenue gross. We leverage our retail infrastructure to offer a wide selection of consumable and durable goods that includes media products available in both a physical and digital format, such as books, music, videos, games, and software. These product sales include digital products sold on a transactional basis. Digital product subscriptions that provide unlimited viewing or usage rights are included in “Subscription services.”


(2)	Includes product sales where our customers physically select items in a store. Sales from customers who order goods online for delivery or pickup at our physical stores are included in “Online stores.”


(3)	Includes commissions and any related fulfillment and shipping fees, and other third-party seller services.


(4)	Includes annual and monthly fees associated with Amazon Prime memberships, as well as audiobook, digital video, digital music, e-book, and other non-AWS subscription services.


(5)	Primarily includes sales of advertising services, as well as sales related to our other service offerings.

Net sales generated from our internationally-focused online stores are denominated in local functional currencies. Revenues are translated at average rates prevailing throughout the period. Net sales attributed to countries that represent a significant portion of consolidated net sales are as follows (in millions):



	Year Ended December 31,
	2017		2018		2019
United States	$	120,486	$	160,146	$	193,636
Germany	16,951		19,881		22,232
United Kingdom	11,372		14,524		17,527
Japan	11,907		13,829		16,002
Rest of world	17,150		24,507		31,125
Consolidated	$	177,866	$	232,887	$	280,522

Total segment assets exclude corporate assets, such as cash and cash equivalents, marketable securities, other long-term investments, corporate facilities, goodwill and other acquired intangible assets, and tax assets. Technology infrastructure assets are allocated among the segments based on usage, with the majority allocated to the AWS segment. Total segment assets reconciled to consolidated amounts are as follows (in millions):



	December 31,
	2017		2018		2019
North America (1)	$	35,844	$	47,251	$	72,277
International (1)	18,014		19,923		30,709
AWS (2)	18,660		26,340		36,500
Corporate	58,792		69,134		85,762
Consolidated	$	131,310	$	162,648	$	225,248

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(1)	North America and International segment assets primarily consist of property and equipment, inventory, and accounts receivable.


(2)	AWS segment assets primarily consist of property and equipment and accounts receivable.

Property and equipment, net by segment is as follows (in millions):



	December 31,
	2017		2018		2019
North America	$	20,401	$	27,052	$	31,719
International	7,425		8,552		9,566
AWS	14,885		18,851		23,481
Corporate	6,155		7,342		7,939
Consolidated	$	48,866	$	61,797	$	72,705

Total net additions to property and equipment by segment are as follows (in millions):



	Year Ended December 31,
	2017		2018		2019
North America (1)	$	13,200	$	10,749	$	11,752
International (1)	5,196		2,476		3,298
AWS (2)	9,190		9,783		13,058
Corporate	2,197		2,060		1,910
Consolidated	$	29,783	$	25,068	$	30,018

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(1)	Includes property and equipment added under finance leases of $2.9 billion, $2.0 billion, and $3.8 billion in 2017, 2018, and 2019, and under financing obligations of $2.9 billion, $3.0 billion, and $1.3 billion in 2017, 2018, and 2019.


(2)	Includes property and equipment added under finance leases of $7.3 billion, $8.4 billion, and $10.6 billion in 2017, 2018, and 2019, and under financing obligations of $134 million, $245 million, and $0 million in 2017, 2018, and 2019.

U.S. property and equipment, net was $35.5 billion, $45.1 billion, and $53.0 billion, in 2017, 2018, and 2019, and non-U.S. property and equipment, net was $13.4 billion, $16.7 billion, and $19.7 billion in 2017, 2018, and 2019. Except for the U.S., property and equipment, net, in any single country was less than 10% of consolidated property and equipment, net.

Depreciation and amortization expense, including other corporate property and equipment depreciation and amortization expense, are allocated to all segments based on usage. Total depreciation and amortization expense, by segment, is as follows (in millions):



	Year Ended December 31,
	2017		2018		2019
North America	$	3,029	$	4,415	$	5,106
International	1,278		1,628		1,886
AWS	4,524		6,095		8,158
Consolidated	$	8,831	$	12,138	$	15,150