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Segment Information
 9 Months Ended
Sep. 30, 2019
Segment Reporting [Abstract]  
Segment Information SEGMENT INFORMATION
We have organized our operations into three segments: North America, International, and AWS. We allocate to segment results the operating expenses “Fulfillment,” “Marketing,” “Technology and content,” 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 is as follows (in millions):
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2018
 
2019
 
2018
 
2019
North America
 
 
 
 
 
 
 
Net sales
$
34,348

 
$
42,638

 
$
97,242

 
$
117,104

Operating expenses
32,316

 
41,356

 
92,227

 
111,971

Operating income
$
2,032

 
$
1,282

 
$
5,015

 
$
5,133

 
 
 
 
 
 
 
 
International
 
 
 
 
 
 
 
Net sales
$
15,549

 
$
18,348

 
$
45,037

 
$
50,910

Operating expenses
15,934

 
18,734

 
46,536

 
51,986

Operating income (loss)
$
(385
)
 
$
(386
)
 
$
(1,499
)
 
$
(1,076
)
 
 
 
 
 
 
 
 
AWS
 
 
 
 
 
 
 
Net sales
$
6,679

 
$
8,995

 
$
18,225

 
$
25,072

Operating expenses
4,602

 
6,734

 
13,106

 
18,467

Operating income
$
2,077

 
$
2,261

 
$
5,119

 
$
6,605

 
 
 
 
 
 
 
 
Consolidated
 
 
 
 
 
 
 
Net sales
$
56,576

 
$
69,981

 
$
160,504

 
$
193,086

Operating expenses
52,852

 
66,824

 
151,869

 
182,424

Operating income
3,724

 
3,157

 
8,635

 
10,662

Total non-operating income (expense)
(334
)
 
(525
)
 
(724
)
 
(739
)
Provision for income taxes
(508
)
 
(494
)
 
(870
)
 
(1,588
)
Equity-method investment activity, net of tax
1

 
(4
)
 
5

 
(15
)
Net income
$
2,883

 
$
2,134

 
$
7,046

 
$
8,320



Net sales by groups of similar products and services, which also have similar economic characteristics, is as follows (in millions):
  
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2018
 
2019
 
2018
 
2019
Net Sales:
 
 
 
Online stores (1)
$
29,061

 
$
35,039

 
$
83,165

 
$
95,590

Physical stores (2)
4,248

 
4,192

 
12,824

 
12,829

Third-party seller services (3)
10,395

 
13,212

 
29,361

 
36,316

Subscription services (4)
3,698

 
4,957

 
10,209

 
13,975

AWS
6,679

 
8,995

 
18,225

 
25,072

Other (5)
2,495

 
3,586

 
6,720

 
9,304

Consolidated
$
56,576

 
$
69,981

 
$
160,504

 
$
193,086

____________________________
(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, e-book, digital music, and other non-AWS subscription services.
(5)
Primarily includes sales of advertising services, as well as sales related to our other service offerings.