- Online stores still represent the backbone of the Amazon business model with almost $124 in revenues for 2018
- Amazon has a diversified business model. In 2018, online stores contributed to nearly 52% of Amazon revenues, followed by Physical Stores, 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
- Amazon third-party sales contributed to 58% of the total gross merchandise sales on Amazon in 2018
- Amazon AWS is the fastest growing business unit, with over $25 billion in sales in 2018 and over $7 billion in operating margins
- Amazon is grabbing a growing piece of the digital advertising cake, with about $10 billion in revenues from advertising in 2018
- Amazon core business is in the US with over $160 billion in revenues in 2018, but it is diversified globally
Amazon revenue breakdown for 2016-2018
|data in million dollars||2016||2017||2018|
|Third-party seller services||22,993||31,881||42,745|
|Other (Primarily Advertising)||2,950||4,653||10,108|
|data in million dollars||Revenue Breakdown (2018)|
|Third-party seller services||42,745|
|Other (Primarily Advertising)||10,108|
Amazon third-party sales vs. Amazon first-party sales
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.
|Year||Third party sales||
First party sales
Amazon all segments margins vs. Amazon AWS
Amazon AWS is among the fastest growing Amazon business unit. With its scalable infrastructure, AWS grew to over $25 billion in revenues in 2018.
Also, AWS carries high operating margins compared to the rest of the Amazon business model. Indeed you can see from the graphic below, how AWS contributed to 58.7% of Amazon overall operating income, in 2018.
|data in billion dollars||Revenues||Operating Income|
|All segments (except AWS)||$123B||$5.1B|
|data in million dollars||Operating income|
Amazon advertising business compared to Facebook, Google, and Bing
|data in billion dollars||Revenues|
Amazon revenues, broken down by geography
|data in billion dollars||Revenues per area|
|Rest of world||24,507|
More resources about Amazon
- How Amazon Makes Money: Amazon Business Model in a Nutshell
- What Is the Receivables Turnover Ratio? How Amazon Receivables Management Helps Its Explosive Growth
- Amazon Case Study: Why from Product to Subscription You Need to “Swallow the Fish”
- What Is Cash Conversion Cycle? Amazon Cash Machine Business Model Explained
- Why Is AWS so Important for Amazon Future Business Growth?
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- Why Amazon Is Doubling Down On AWS
- The Economics Of The Amazon Seller Business In A Nutshell
- How Much Is Amazon Advertising Business Worth?
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- Amazon Mission Statement and Vision Statement In A Nutshell
- Amazon Financial Statements for 2018
- Amazon Shareholders’ Letter for 2018