amazon-revenue-breakdown

Amazon Revenue Breakdown

Amazon Revenue BreakdownOnline storesPhysical storesThird-party seller servicesSubscription servicesAWSAdvertisingOther
2022$220B$18.96B$117.71B$35.22B$80B$37.74B$4.25B
FourWeekMBA Analysis
Key Facts
FounderJeff Bezos
Year & Place FoundedJuly 5, 1994, Bellevue, WA
Year of IPO5/15/1997
IPO Price$18.00
Total Revenues at IPO$15.75 million
Total Revenues in 2021$469.8B
Amazon Employees1,608,000 full-time and part-time employees
Revenues per Employee$292,177.86
Jeff Bezos founded Amazon, on July 5, 1994, in Bellevue, WA. The company IPOed in 1997, at a price of $18 per share, and it recorded over $15 million in revenues, prior to the IPO. In 2021, Amazon generated $469.8B with 1,608,000 full-time and part-time employees, generating $292,177.86 revenues per employee.
Amazon AWS$62
Microsoft Intelligent Cloud$60
Google Cloud$19.20
Amazon AWS is so far, the largest player, based on revenues, with ha $62 billion in net sales in 2021, compared to Microsoft Intelligent Cloud at $60 billion and Google Cloud at over $19 billion.

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Amazon Business Model

Connected to Amazon Business Model

Amazon Business Model

amazon-business-model
Amazon has a diversified business model. In 2021 Amazon posted over $469 billion in revenues and over $33 billion in net profits. Online stores contributed to over 47% of Amazon revenues, Third-party Seller Services,  Amazon AWS, Subscription Services, Advertising revenues, and Physical Stores.

Amazon Mission Statement

amazon-vision-statement-mission-statement (1)
Amazon’s mission statement is to “serve consumers through online and physical stores and focus on selection, price, and convenience.” Amazon’s vision statement is โ€œto be Earthโ€™s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.โ€ 

Customer Obsession

customer-obsession
In the Amazon Shareholders’ Letter for 2018, Jeff Bezos analyzed the Amazon business model, and it also focused on a few key lessons that Amazon as a company has learned over the years. These lessons are fundamental for any entrepreneur, of small or large organization to understand the pitfalls to avoid to run a successful company!

Amazon Revenues

amazon-revenue-model
Amazon has a business model with many moving parts. With the e-commerce platform which generated over $222 billion in 2021, followed by third-party stores services which generated over $103 billion, Amazon AWS, which generated over $62 billion, Amazon advertising which generated over $31 billion and Amazon Prime which also generated over $31 billion, and physical stores which generated over $17 billion.

Amazon Cash Conversion

cash-conversion-cycle-amazon

Working Backwards

working-backwards
The Amazon Working Backwards Method is a product development methodology that advocates building a product based on customer needs. The Amazon Working Backwards Method gained traction after notable Amazon employee Ian McAllister shared the companyโ€™s product development approach on Quora. McAllister noted that the method seeks โ€œto work backwards from the customer, rather than starting with an idea for a product and trying to bolt customers onto it.โ€

Amazon Flywheel

amazon-flywheel
The Amazon Flywheel or Amazon Virtuous Cycle is a strategy that leverages on customer experience to drive traffic to the platform and third-party sellers. That improves the selections of goods, and Amazon further improves its cost structure so it can decrease prices which spins the flywheel.

Jeff Bezos Day One

jeff-bezos-day-1
In the letter to shareholders in 2016, Jeff Bezos addressed a topic he had been thinking quite profoundly in the last decades as he led Amazon: Day 1. As Jeff Bezos put it “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”

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