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How Amazon Makes Its Money

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How Amazon Makes Its Money Chart

The Briefing

  • While a majority of Amazon’s revenue comes from online sales, the company has several other business segments that generate billions of dollars in revenue
  • The largest business segment following online sales is third-party selling services

How Amazon Makes Its Money

With a market cap of $1.7 trillion, Amazon is the most valuable retailer in the world. But the company has grown into more than just an online store.

Amazon is now the proud owner of multiple billion-dollar revenue streams—but what are these different business segments, and how much does each unit contribute to the company’s overall revenue mix?

Here’s a look at Amazon’s different business segments, and how much each contributed to the company’s total revenue in 2019 (which was a casual $281 billion):

Business SegmentPercent of Revenue (2019)
Online stores50.4%
Third-party seller services19.2%
Amazon Web Services (AWS)12.5%
Subscription services6.9%
Physical stores6.1%
Other5.0%

While online stores generated the highest amount of revenue at 50.4%, third-party seller services made up a significant portion as well, making up 19.2% of the total.

Third-party selling has seen significant growth over the years—in 2018, it accounted for 58% of Amazon’s gross merchandise sales, which is a vast increase compared to 2000, when it made up merely 3%.

Amazon Web Services (AWS) is the third most important revenue stream, contributing 12.5% to the overall mix. However, despite contributing a relatively small percentage to total revenue in 2019, AWS made up a large portion of Amazon’s operating income, making it the key to the company’s overall profitability.

» To learn more, read our full article on How Big Tech Makes Their Billions.

Where does this data come from?

Data was sourced from directly from Amazon’s 2019 SEC filing.

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Datastream

Visualizing Net Worth by Age in America

How much is the average American worth at different ages? This chart reveals the average net worth by age in the U.S.

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net worth by age

The Briefing

  • The age group with the highest average net worth in the U.S. is the 65-74 group, with $1.22 million in 2019 dollars.
  • There is a significant gap between median and mean (average) net worth in nearly every age category, suggesting that mean values are skewed upwards by outliers.

Visualizing Net Worth by Age in America

Calculating the net worth of individuals often seems like the kind of math reserved only for the richest people in the world like Elon Musk or Jack Ma. But as the proverbial pie gets bigger, the net worth of the average American household gets bigger as well.

This chart uses data from the U.S. Federal Reserve Bulletin to reveal median and average household net worth across different age categories in 2019.

Average vs. Median Net Worth

A person’s net worth is a sum of their assets and liabilities. Here’s a closer look at net worth by age in the U.S.

AgeMedian Net Worth 2019 Average Net Worth 2019 Difference
Younger than 35$13,900$76,300>5x
35-44$91,300$436,200>4.5x
45-54$168,600$833,200>4.5x
55-64$212,500$1,175,900>5.5x
65-74$266,400$1,217,700>4.5x
Older than 75$254,800$977,600>3.5x

The age group with the highest net worth is those aged 65-74, sitting at around $1.22 million. Coming in at a close second, are 55-64 year olds, at $1.18 million. However, these are the numbers using the average, while median net worth is quite different.

Median net worth at 65-74, for example, is $266,000, a difference of over $950,000 compared to the average. This reveals that there are likely high net worth individuals skewing the average towards over a million dollars in the same age category.

Both average and median net worth appear to increase throughout one’s life, trailing off slightly around the 75+ age range.

Trends in Net Worth

With the economic impacts of COVID-19, it’s possible that median net worth growth could taper off across nearly every age category, as people lose jobs, income, and assets such as houses.

Average net worth, on the other hand, may not drop as significantly, as a handful of American billionaires have actually increased their net worth during the pandemic.

Overall, wealth has been generally increasing in America with a consistent rise in average and median net worth occurring over the three years leading up to the pandemic. And while this steady increase has likely been slightly derailed, the general trends in asset ownership and income increases over time, bode well for Americans.

Where does this data come from?

Source: U.S. Federal Reserve Bulletin.
Details: Data is in 2019 U.S. dollars.

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Ranked: The World’s Least Affordable Cities to Buy a Home

For the 10th consecutive year, Hong Kong ranks as the least affordable city. Vancouver Canada is the second, followed by Sydney, Australia.

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The Briefing

  • For the 10th year in a row, Hong Kong is the world’s least affordable housing market
  • The U.S. is home to a mixture of the most and least affordable housing markets

Ranked: The World’s Least Affordable Cities to Buy a Home

In certain parts of the world, housing prices have risen much faster than household incomes, making home ownership increasingly more difficult for the average Joe.

Using data from Demographia published in 2020, this graphic looks at some of the world’s most expensive housing markets.

The Least Affordable Housing Markets

It’s worth noting that this data looks at housing affordability specifically for middle-income earners. While it’s far from globally exhaustive, it measures affordability in 309 major metropolitan areas across Australia, Canada, Hong Kong, Ireland, New Zealand, Singapore, the U.S., and the UK.

In this study, a city’s affordability is calculated by taking its median housing price and dividing it by the median household income.

  • Moderately Unaffordable: 3.1 to 4.0
  • Seriously Unaffordable: 4.1 to 5.0
  • Severely Unaffordable: 5.1+

All the cities on this graphic classify as severely unaffordable. Perhaps unsurprisingly, Hong Kong is the most unaffordable housing market—scoring 20.8 to take the top spot.

Housing MarketCountryScore
Hong Kong🇨🇳 China20.8
Vancouver, BC🇨🇦 Canada11.9
Sydney, NSW🇦🇺 Australia11.0
Melbourne, VIC🇦🇺 Australia9.5
Los Angeles, CA🇺🇸 United States9.0
Auckland🇳🇿 New Zealand8.6
Toronto, ON🇨🇦 Canada8.6
San Jose, CA🇺🇸 United States8.5
San Francisco, CA🇺🇸 United States8.4
London (Greater London Authority)🇬🇧 United Kingdom8.2
Honolulu, HI🇺🇸 United States8.0
San Diego, CA🇺🇸 United States7.3
Adelaide, SA🇦🇺 Australia6.9
Bournemouth & Dorsett🇬🇧 United Kingdom6.9

Home to 7.5 million people, Hong Kong has ranked as the world’s least affordable city for 10 consecutive years. Because of its steep housing prices, nano apartments have risen in popularity over the last decade.

The Most Affordable Housing Markets

Three of the most expensive housing markets are in America, but at the same time, the country also contains some of the most affordable markets in the eight-country study, too.

In fact, the top 10 most affordable cities are all in America:

CityCountryScore
Rochester, NY🇺🇸 United States2.5
Cleveland, OH🇺🇸 United States2.7
Oklahoma City, OK🇺🇸 United States2.7
Buffalo, NY🇺🇸 United States2.8
Cincinnati, OH-KY-IN🇺🇸 United States2.8
Pittsburgh, PA🇺🇸 United States2.8
St. Louis, MO-IL🇺🇸 United States2.8
Hartford, CT🇺🇸 United States2.9
Indianapolis. IN🇺🇸 United States2.9
Tulsa, OK🇺🇸 United States3.0

Keep in mind, these figures are from Q3’2019. Considering the pandemic-induced suburban shuffle that’s been going on in some of America’s major housing markets, this list could look a bit different in Demographia’s next report.

>>Like this? Then you might like this article on The 10 Most Expensive Cities in the World

Where does this data come from?

Source: Demographia
Details: Affordability score is calculated by taking a city’s median housing price and dividing it by the median household income. Anything over 5.1 is considered severely unaffordable
Notes: Data includes 309 metropolitan markets across eight countries, including Australia, Canada, the U.K., and the U.S., as of the third quarter of 2019

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