amazon-statistics

Seven Amazon Statistics That Break Down Its Business Model

  • Online stores still represent the backbone of the Amazon business model with over $222 billion in revenues for 2021.
  • Amazon has a diversified business model. In 2021, online stores contributed to over 47% of Amazon’s revenues, followed by Third-party Seller Services, AWS, Subscription Services, and Advertising revenues. 
  • In 1999 Amazon third-party sales contributed to only 3% of Amazon gross merchandise sales.
  • By 2018, Amazon third-party sales contributed to 58% of the total gross merchandise sales on Amazon.
  • Amazon AWS is among the fastest growing business units, with over $62 billion in sales in 2021 and over $18 billion in operating income.
  • Amazon is grabbing a growing piece of the digital advertising cake, with over $30 billion in revenues from advertising in 2021.
  • Amazon’s core business is in North America with almost $280 billion in revenues in 2021, but it is diversified globally.

Amazon revenue breakdown for 2015-2021

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 has a diversified business model that relies on several revenues streams. At its core, the online stores are still the primary revenue streams.
 
Followed by third-party Seller Services, AWS, Subscription Services, and Advertising revenues.

Amazon third-party sales vs. Amazon first-party sales

amazon-seller-business
Amazon Marketplace is the world’s biggest online retailer, with sales greater than the eCommerce sales of entire countries. Marketplace Pulse estimates that there are over five million sellers on the Amazon marketplace, with over two million on Amazon.com alone.  Amazon had enviable sales of over $232.8 bn in 2018 just from its product sales, with over 50% of sales coming from third-party vendors.

Over the years, Third-party sales have grown from 3% of the total to 58%.

Amazon helped independent sellers compete against its first-party business by investing in and offering them selling tools (inventory management, payments processing, shipments tracking, reporting).

Programs like Fulfillment by Amazon and the Prime membership program improved the customer experience of buying from independent sellers, which made this business grow substantially over the years.

In 2018, gross merchandise accounted for 58% of the total Amazon online sales.

YearThird party salesFirst party sales
19993%97%
20003%97%
20016%94%
200217%83%
200322%78%
200425%75%
200528%72%
200628%72%
200729%71%
200830%70%
200931%69%
201034%66%
201138%62%
201242%58%
201346%54%
201449%51%
201551%49%
201654%46%
201756%44%
201858%42%

Amazon all segments margins vs. Amazon AWS

amazon-aws-business
Amazon AWS follows a platform business model, that gains traction by tapping into network effects. Born as an infrastructure built on top of Amazon’s infrastructure, AWS has become a company offering cloud services to thousands of clients from the enterprise level, to startups. And its marketplace enables companies to connect to other service providers to build integrated solutions for their organizations.

Amazon AWS is among the fastest-growing Amazon business unit. With its scalable infrastructure, AWS grew to over $62 billion in revenues in 2021.

Also, AWS carries high operating margins compared to the rest of the Amazon business model.

Indeed you can see from the graphic below, how, already by 2018, it was clear that AWS contributed to 58.7% of Amazon’s overall operating income.

data in billion dollars Revenues (2018)Operating Income (2018)
All segments (except AWS)$123B$5.1B
AWS$25.7B$7.3B
data in million of dollarsOperating income (2018)
All Segments$5.12B
AWS$7.29B

Amazon’s advertising business compared to Facebook, Google, and Bing

amazon-advertising-business
In 2021 Amazon generated around $31 billion in advertising revenues. Becoming one of the key competitors of the Google and Facebook duopoly. 

To put things in context, Amazon’s advertising business has been growing substantially, and not it competes with other media tech players, like Google, Facebook, and Microsoft.

data in billion dollars Ads Revenue (2021)
Amazon Ads$31,16B
Facebook (+Instagram)$114.9B
Google Ads (+YouTube + Network Members)$209.5B
Bing (Microsoft)$8.52B
Data analysis by FourWeekMBA

Amazon revenues, broken down by geography

data in billion dollars Revenues per area
United States$314B
Germany$37.32B
United Kingdom$31.91B
Japan$23B
Rest of world$63.5B
Data analysis by FourWeekMBA

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 “to be Earth’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.” 

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 company’s product development approach on Quora. McAllister noted that the method seeks “to work backwards from the customer, rather than starting with an idea for a product and trying to bolt customers onto it.”

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.”

More resources about Amazon 

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