Ways in which Amazon makes money

For the last 20 years, Amazon’s name has grown and the people it links to have more than tripled. Despite spirited competition from brick and motor stores, the e-commerce giant keeps making sustained efforts to emerge at the top of the sales chain. But how does Amazon make money? Well, this has always been a rather interesting subject of discussion over the years but with the company determined to keep its trade secrets, answers have been few. Let us look at the revenue streams that add to the tally of amazon’s stash.

1. General retail products

In the year 2012, amazon made $51.7 billion from sales of general products. This figure was more than that of the next six e-commerce sites combined. I out of this total, over 30 billion dollars was attributed to the sale of electronic goods and general merchandise.

2. Kindle items

Amazon CEO Jeff Bezos has in the past underlined the importance of this family of items as a great asset in the market war against apple and Google. In many cases, these products barely break even but that is not why they exist; they are around to drive content, which accounts for over a third of the revenues the company generates every year. So then how does Amazon make money if it focuses too much on the competition?

3. Third party sales

40 percent of all the items that are sold by amazon come from third party operatives. In terms of revenues, third party sellers bring to the table over 10% of the financial totals of the company every year. In addition to these monetary gains, the company gets to track the performance of its products as sold by third party associates in a bid to analyse and implement CRM strategies.

4. Web services

Experts argue that this service offers very little profit to Amazon. If that is so, then how does amazon make money? On average, Amazon earns $900 million from its web services, which despite not being significant, is nothing to sneer at.

5. Media

How does Amazon make money? The four above will not make much sense to you until you come to the media aspect of the company’s workings. In 2012 alone, it made in excess of $20 billion from its media links.

Jeff Bezos has in the past talked about free prime subscription, so how does Amazon make money on this end? It turns out that after the free trial, a user makes an annual subscription of $79. Spread among 182 million users, that is some serious money.