How Amazon Makes Money

Product sales, advertising, subscription services, and cloud services

Amazon.com Inc. (AMZN), the world’s largest online retailer, has grown rapidly in a broad range of businesses, including its core ecommerce operations, cloud services, and digital advertising. It also sells products such as the Alexa personal assistant and ecosystem, Kindle e-reader, Fire TV, and movies and television shows through its Amazon Prime Video platform. Amazon’s rivals include Walmart Inc. (WMT) and Alibaba Group Holding Ltd. (BABA).

Key Takeaways

  • Amazon makes money through its retail, subscriptions, and web services, among other channels.
  • Retail remains Amazon’s primary source of revenue, with online and physical stores together accounting for the biggest share.
  • Amazon Web Services (AWS) currently generates the majority of Amazon’s operating profits and is growing at a robust pace.

Amazon’s Financials

Amazon ranks as one of the world’s top companies by market value. As of January 27, 2023, Amazon has a market capitalization of $1 trillion.

The company posted net income of $2.9 billion in the third quarter (Q3) of its 2022 fiscal year (FY). The three-month period ended September 30, 2022. Net income decreased from $3.2 billion in Q3 2021.

Revenue, which Amazon calls net sales, rose 15% year over year (YOY) to $127.1 billion for the quarter, compared with $110.8 billion in third quarter 2021. Operating income, which the company uses as a profitability metric for its business segments, decreased to $2.5 billion in the third quarter, compared with $4.9 billion in third quarter 2021.

Amazon’s Business Segments

Amazon divides its business into three segments: North America, International, and AWS (Amazon Web Services). The first two of these segments, North America and International, refer to geographical breakdowns of Amazon’s retail business. They generate revenue from retail sales in North America and the rest of the world, as well as from subscriptions and export sales for those areas.

Retail can be broken down further into online stores, comprising the bulk of sales, and physical stores. Company-wide, online stores accounted for $53.4 billion in sales in Q3 FY 2022, while physical stores generated $4.6 billion in sales. Net sales increased 19% compared with the third quarter of the previous year.

North America

Amazon’s North America segment dominates its net sales, accounting for $78.8 billion. That is a 20% increase from the year-ago quarter and comprises about 62% of the company’s net sales for the quarter. The segment posted an operating loss of $400 million, or $0.4 billion, compared with operating income of $900 million, or $0.9 billion, in third quarter 2021.

International

Amazon’s International segment consists of Amazon’s retail business for consumer products and subscriptions for internationally focused online stores. It also includes export sales from those stores, but not those from North America-focused online stores. The segment reported an operating loss of $27.7 billion in Q3 FY 2022, a decrease of 5% from the year-ago quarter.

Amazon Web Services (AWS)

Amazon Web Services (AWS), launched in 2006, provides cloud services to businesses, government agencies, and academic institutions to store information and deliver content. Amazon says AWS provides an “infrastructure platform in the cloud” for a variety of “solutions” such as hosting applications and websites, providing enterprise information technology (IT), and content delivery.

Amazon’s AWS segment generated net sales of $20.5 billion and operating income of $5.4 billion in Q3 FY 2022. Net sales increased 28%, excluding changes in foreign exchange rates, and operating income rose by $.5 billion, or $500 million, compared with the year-ago quarter.

Although net sales from AWS are below net sales for the North America segment and International segments, AWS’s operating income is substantially higher. The AWS segment accounts for about 16% of total net sales. Because the other two segments posted operating losses in the third quarter, AWS accounts for all of the company’s operating income.

Amazon controls about a third of the global cloud market, substantially more than its next closest competitor. AWS’s biggest rivals are Microsoft Corp.’s (MSFT) Azure and Alphabet Inc.’s (GOOGL) Google Cloud.

Amazon Furthers its Push into Healthcare

From telehealth to cancer research, Amazon has made a push into healthcare since 2018 by amassing healthcare businesses. The company is offering a new $5 monthly subscription service for U.S. Prime members.

The subscription service, called RxPass, launched on January 24, 2023 and provides access to commonly prescribed generic medications that treat more than 80 health conditions. The company reports that Amazon pharmacists or support staff will be available at all times to discuss medications and coordinate with a patient’s doctor.

How Amazon Reports Diversity and Inclusiveness

As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of Amazon and its commitment to diversity, inclusiveness, and social responsibility. We examined the data that Amazon releases to show you how it reports the diversity of its board and workforce, to help readers make educated purchasing and investing decisions.

Below is a table of potential diversity measurements. It shows whether Amazon discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall, as is marked with a ✔. It also shows whether Amazon breaks down those reports to reveal the diversity of itself by race, gender, ability, veteran status, and LGBTQ+ identity.

Amazon Diversity & Inclusiveness Reporting
  Race Gender Ability Veteran Status Sexual Orientation
Board of Directors          
C-Suite          
General Management ✔ (U.S. Only)      
Employees ✔ (U.S. Only)      

What is Amazon's main business?

Amazon divides its business into three segments: North America, International, and AWS (Amazon Web Services). "North America" and "International," refer to geographical breakdowns of Amazon’s retail business. These two business segments generate revenue from retail sales, subscriptions, and export sales. AWS provides cloud services to businesses, government agencies, and academic institutions to store information and deliver content.

Is Amazon the biggest company in the world?

Amazon ranks as one of the world’s top companies by market value and revenue. As of January 27, 2023, Amazon has a market capitalization of $1 trillion and reported $127.1 billion in revenue for its third quarter of FY 2022. For context, the biggest companies by revenue in the world today are worth several trillion dollars. This makes these companies larger and more valuable than some countries' entire economies.

How does Amazon make most of its money?

Retail is Amazon’s primary source of revenue, with online and physical stores together accounting for the biggest share. In the third quarter of FY 2022, Amazon reported $106.5 billion in retail sales. Of those, $78.8 billion belong to its North America business segment and $27.7 billion to its international business segment.

The Bottom Line

Amazon ranks as one of the world’s top companies by market value. As of January 27, 2023, Amazon had a market capitalization of $1 trillion. The company posted net income of $2.9 billion in the third quarter (Q3) of its 2022 fiscal year (FY). The three-month period ended September 30, 2022. Net income decreased from $3.2 billion in Q3 2021. Amazon divides its business into three segments: North America, International, and AWS (Amazon Web Services).

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. U.S. Securities and Exchange Commission. “Amazon.com Inc.: Form 10-K for the Fiscal Year Ended December 31, 2020,” Page 3.

  2. Investopedia. “Amazon.com Inc. (AMZN).”

  3. Amazon. "Amazon.com Announces Third Quarter Results." Accessed Jan. 29, 2023.

  4. U.S. Securities and Exchange Commission. “Amazon.com Inc.: Form 10-K for the Fiscal Year Ended December 31, 2021,” Page 64.

  5. Amazon Web Services. “About AWS.”

  6. U.S. Securities and Exchange Commission. “Amazon.com Inc.: Form 8-K Dated Feb. 3, 2022,” Page 17.

  7. Statista. “Amazon Leads $180-Billion Cloud Market.”

  8. Reuters. "Factbox: Amazon's healthcare journey, from telehealth to cancer research." Accessed Jan. 29, 2023.

  9. Amazon. "Introducing RxPass: Amazon Pharmacy launches a new $5 prescription subscription for Prime members." Accessed Jan. 29, 2023.

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