amazon-revenue-model

How Amazon Revenue Model Changed In Four Years

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.

The Amazon’s Empire

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 is the largest online store in the world. Started out as an online bookstore, now Amazon embraces any product you can ever imagine. Jeff Bezos, one of the wealthiest and most influential people in business on earth, has managed to survive the dot-com bubble while building a company that would stay for years to come.

In this blog, we covered the Amazon business model from several perspectives. From how its prime membership segment was growing and how Amazon has been shifting from a core commerce company to a company that offers a complete experience to its members.

Related: How Amazon Makes Money: Amazon Business Model in a Nutshell

While the revenues from products, in 2014 represented about 77% of its revenues it then became about 61% in 2017. Indeed, other segments like AWS, subscription services, and third-party seller services has become a massive business, given Amazon scale.

Indeed, I pointed out how Amazon has been in part “swallowing the fish” as it was moving more and more to a subscription-based business model. However, even there Amazon strategy is relentless toward growth. When more people become prime members, they also spend more on the platform. Amazon makes more money. The company also runs on tight profit margins on its product sales, as it leverages the cash conversion cycle to generate a massive short-liquidity for the business, used to expand quickly and take over several industries.

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