Amazon (AMZN) competes head-to-head for market share with some of the largest corporations in the world. While Amazon started out as an online retailer of books, it has grown over the decades to become the largest e-commerce company by revenue in the United States.
In its quarterly and annual financial statements, Amazon breaks down where it receives its revenue into five major categories:
- Online stores
- Physical stores
- Third-party seller services
- Subscription services
- Amazon Web Services (AWS)
Below, we'll describe each of these revenue streams and list which companies are Amazon's biggest rivals per category.
- Amazon is the world's largest online retailer and is rapidly growing its footprint in other areas such as physical retail stores, subscription services, and web services.
- Amazon's retail store rivals include Target, Walmart, Best Buy, and Costco.
- For subscription services, Amazon competes with Netflix, Apple, and Google.
- In the web services category, Amazon has several rivals such as Oracle, Microsoft, and IBM.
This category includes product and digital media sales from Amazon's e-commerce website. The company offers its customers a wide selection of durable and consumer goods along with digital-format products, such as e-books, videos, software, music, and games.
Amazon's competition in this segment includes LightInTheBox Holding Co. (LITB), Overstock.com (OSTK), Vipshop Holdings Ltd. (VIPS), JD.com (JD), Wayfair Inc. (W), and Etsy (ETSY).
Although sales from online purchases represent the bulk of the company's revenue, Amazon greatly expanded its presence in the physical retail space with its 2017 acquisition of grocery retailer Whole Foods Market. Amazon also operates four other types of physical stores: Amazon Books, Amazon 4-star, Amazon Go, and Amazon Pop Up.
In the physical stores category, Amazon competes with Best Buy (BBY), Costco (COST), Target (TGT), Walmart Inc. (WMT), and Big Lots (BIG).
The number of U.S. cities and towns where Amazon Prime members have access to two-hour grocery delivery via Amazon Fresh and Whole Foods Market (as of July 2021).
Third-Party Seller Services
Third-party vendors sell their products using Amazon's online marketplace platform. Amazon's popularity as an e-commerce site enables many third-party sellers to reach a wider customer base and grow their businesses. For this service, Amazon charges commission fees, shipping fees, and related fulfillment costs.
In the third-party marketplace business, founder Jeff Bezos has stated Amazon's main competitor is auction site eBay.
Amazon sells a variety of subscription services. Its most popular paid subscription service is Amazon Prime, which has 200 million members around the world as of 2020. The company also sells subscriptions for e-books, audiobooks, digital video, and digital music.
Amazon's main competitors in the subscription services sector are media game-changer Netflix (NFLX), Apple (AAPL) with iTunes, and Google (GOOG) with its Play Store.
Amazon Web Services (AWS)
Amazon Web Services (AWS) is the company's cloud platform, offering over 200 services such as machine learning, artificial intelligence, storage, and analytics. AWS customers include startups, enterprises, and government agencies.
Amazon's main competitors in the web services sector are Alibaba Group (BABA), Oracle (ORCL), Microsoft (MSFT), International Business Machines Corporation (IBM), and Google (GOOG).
The Bottom Line
Amazon is a well-diversified company that benefits from several profitable revenue streams. The company specializes in disruptive innovation and can afford to fund forays into new industries in order to take market share away from its competitors. Amazon ended the third quarter of 2022 with sales up 15% to $127.1 billion from $110.8 billion in the third quarter of 2021.
The company reached a market capitalization of $1 trillion for the first time ever in September 2018. Amazon ended the year 2022 with a market cap of approximately $857 billion, down nearly 50% from the $1.70 trillion it hit at the end of 2021.