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Breaking Down How Amazon Makes Money

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‘Tis the season for shopping.

For many of us, that means buying things online – and if you are like most internet denizens, you’ll be picking up at least one item this holiday season through the the world’s largest e-commerce giant, Amazon.

The company’s sales numbers are growing at a staggering pace. Last year, Amazon had $136 billion in sales, and the company is projected to finish at the $177 billion mark this year.

What are the exact sources of Amazon’s revenue, and how does it all break down?

How Amazon Makes Money

Today’s infographic comes to us from Sellbrite, and it dives into the company’s success, and how Amazon makes money:

Breaking Down How Amazon Makes Money

To the chagrin of many investors, Amazon has traditionally spent a lot to make a little.

In 2016, for example, the company brought in $136 billion in net sales, but it spent $131.8 billion on operating expenses. That gave the company an operating income of $4.2 billion.

However, that high-growth strategy seems to be paying off.

During the same period, e-commerce revenue jumped 25%, AWS revenue increased 55%, and net income skyrocketed 302%. The growth has continued through 2017 and it’s why Jeff Bezos is now the richest person in the world.

A Closer Look

Here’s how Amazon makes money, according to the company’s last annual report for 2016:

Revenue StreamNet Sales (2016)% of Total Revenue
Retail products$91.4B67.2%
Retail 3rd party sellers$23.0B16.9%
Amazon Web Services (AWS)$12.2B9.0%
Subscriptions (Amazon Prime, etc.)$6.4B4.7%
Other (ads, co-branded credit cards)$3.0B2.2%
Total Revenue$136.0B100.0%

Which areas of Amazon’s business are growing the fastest – and where is the company investing in the future?

Here are just a few directions in which the Jeff Bezos Empire is expanding:

Ads
In 2017, the size of Amazon’s advertising business (forecasted at $1.65 billion) has already surpassed those belonging to Twitter ($1.21 billion) and Snapchat ($642 million). Of course, Amazon is still a longshot from impacting the Google and Facebook ad oligopoly, but the two leaders would be wise to take the emerging threat seriously.

Why would Amazon ads work well? The company has a vast database of user info to allow for effective targeting, as well as high margins.

Prime Video
In 2017, Amazon is spending $4.5 billion on creating original content. It has fewer dollars allocated to content than Netflix, but it’s still more than double what HBO spends each year. By the way, Amazon Prime Video is now live in an impressive 200 countries.

International
With 65% of U.S. households having access to Amazon Prime subscriptions, a focus on international sales is the biggest lever that Amazon can pull for future growth. The company is eyeing obvious countries, but less obvious ones as well. In India for example, Amazon’s marketplace is the fastest-growing in the country.

B2B
Amazon is also leveraging its strong logistics platform to provide goods for small businesses, rather than just consumers.

Shipping and Logistics
Fulfillment by Amazon (FBA) is already a booming business that allows small businesses to tap into the scale of Amazon. Investing in shipping also betters the customer experience – a key objective for Amazon. However, it’s still possible that the company could take shipping and logistics a step further: domination in the $200 billion parcel shipping market would be a strategic and attainable prize.

With many other ways for the e-commerce giant to grow, it’ll be interesting to breakdown how Amazon makes money in 2018.

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Nvidia is Worth More Than All of These Companies Combined

Gain a unique perspective on the market cap of Nvidia in this simple graphic.

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Putting the Market Cap of Nvidia Into Perspective

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

Nvidia’s massive rise in the AI era has been well-documented, but did you know that it’s currently the world’s third most valuable company?

To put the massive market cap of Nvidia into perspective, we’ve put it side by side with a collection of other major U.S. tech companies.

All figures were sourced from Companiesmarketcap.com, and are as of May 23, 2024.


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Data and Takeaways

All of the numbers we used to create this graphic are included in the table below.

CompanyMarket Cap
(as of May 23, 2024)
Nvidia$2.5T
Meta$1.2T
Tesla$553B
Netflix$272B
AMD$257B
Intel$128B
IBM$157B

These figures are even more impressive when you consider that at the beginning of 2020, Nvidia was valued at a relatively tiny $145 billion.

Since then, the company has greatly surpassed other American chipmakers like Intel and AMD. This growth is due to several key factors:

  • Expansion into AI and data centers: Nvidia’s chips are highly effective for AI training, making them essential for companies engaged in machine learning and generative AI
  • Advancements in AI software: Nvidia has developed AI software platforms, such as CUDA-X and TensorRT, which are widely used by researchers.
  • Strong financial performance: Nvidia has consistently delivered strong financial results in recent years, with substantial revenue growth.

Closing in on Apple

With Nvidia’s latest stock surge (up 13.5% over the past five days ending May 24, 2024), the company could possibly overtake Apple to become the world’s second most valuable company.

Microsoft, another major player in AI, holds the #1 spot with a market cap of $3.2 trillion.

See More Visuals on Nvidia

If you enjoyed this graphic, be sure to check out this graphic that breaks down Nvidia’s revenue by product line, from 2019 to 2024.


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