who-owns-zappos

Who Owns Zappos?

Business / By / March 24, 2023

Zappos is an Amazon subsidiary acquired by Amazon in 2009 for over a billion dollars. Jeff Bezos explained at the time of the acquisition, “Zappos is a customer-focused company; we see great opportunities for both companies to learn from each other and create even better experiences for our customers.” Iconic entrepreneur Tony Hsieh founded Zappos.

Connected to Amazon Business Model

Amazon Business Model

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Amazon has a diversified business model. In 2022 Amazon posted over $514 billion in revenues, while it posted a net loss of over $2.7 billion. Online stores contributed almost 43% of Amazon revenues. The remaining was generated by Third-party Seller Services, and Physical Stores. While  Amazon AWS, Subscription Services, and Advertising revenues play a significant role within Amazon as fast-growing segments.

Amazon Revenue By Country

Amazon Revenue By Country
In 2022, most of Amazon’s revenue came from the US, with over $356 billion in revenue, followed by Germany with $33.6 billion, the UK with $30 billion, Japan with $24.4 billion, and the rest of the world generated almost $70 billion in net sales.

Amazon Cost Structure

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Both the North American and International segment of Amazon are running at negative margins. Indeed, in 2022, for the North American segments, of almost $316 billion in revenue, Amazon spent almost $319 billion in operating costs to run it, thus it generated $2 billion in operating losses in 2022. For its International segment, of $118 billion in revenue, Amazon spent almost $126 billion to operate it. Thus, it reported a $7.7 billion operating loss. While for AWS, with $80 billion in revenue, Amazon spent $57 billion to operate it, thus generating almost $23 billion in operating income. The high operating costs are primarily due to the high cost of running Amazon’s inventory and fulfillment infrastructure behind its e-commerce operations. Indeed, Amazon is as much as a physical player as a digital one.

Is Amazon Profitable Without AWS?

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Amazon was not profitable once AWS was removed in 2022. In fact, Amazon, without AWS generated $10.6 billion in operating losses. While Amazon, without AWS, generated $12.2. billion operating income.

Amazon Profit Breakdown

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Amazon is subdivided into three operating profit segments: North America, International, and AWS. Amazon AWS is the most profitable segment, with almost $23 billion in operating profit in 2022. While Both the North American and International segments run at negative operating losses, with $2 billion and $7.74 billion in operating losses, respectively, in 2022.

Amazon Revenue Breakdown

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Amazon Revenue Per Employee

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Amazon vs. Walmart

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eBay vs. Amazon

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In 2021, Amazon generated almost $470 billion in revenue, vs. eBay’s over $10.4 billion. In comparison, looking at revenues, Amazon was 45x times larger than eBay.

Amazon Mission Statement

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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

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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

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Amazon has a business model with many moving parts. The e-commerce platform generated $220 billion in 2022, followed by third-party stores services which generated over $117 billion; Amazon AWS, which generated over $80 billion; Amazon advertising which generated almost $38 billion and Amazon Prime, which generated over $35 billion, and physical stores which generated almost $19 billion.

Amazon Cash Conversion

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Working Backwards

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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

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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

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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 The Author

Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
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