Is Amazon Profitable? Amazon Profitability 1994-2018

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Is Amazon Profitable? Amazon Profitability 1994-2018

Amazon is a profitable company. Its operating income and net income passed $12.4 billion and $10 billion respectively in 2018. The operating income was driven primarily by Amazon AWS, contributing $7.29 billion. Amazon has been consistently profitable since 2015 when it posted 596 million in profits.

Amazon aggressive growth

Since its inception, Amazon has been aggressively focusing on growth. While it managed to survive the dot-com bubble Amazon also hat to tweak its business playbook throughout those years:

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Source: Amazon S-1

Amazon business model today has several moving parts:

Amazon e-commerce
Amazon platform business (Amazon hosts third-party sellers on the platform since the early 2000s)
Amazon AWS
Amazon Prime
Advertising
And more

Below you can appreciate the Amazon business model in full:

[image error]Amazon has a diversified business model. In 2018, online stores contributed to nearly 52% of Amazon revenues, followed by Physical Stores, Third-party Seller Services, AWS, Subscription Services, and Advertising revenues.

As of 2018-2019, Amazon AWS is a major contributor to Amazon operating and net income. That is because AWS has different unit economics logic:

[image error]Amazon AWS follows a platform business model, that gains traction by tapping into network effects. Born as an infrastructure built on top of Amazon‘s infrastructure, AWS has become a company offering cloud services to thousands of clients from the enterprise level, to startups. And its marketplace enables companies to connect to other service providers to build integrated solutions for their organizations.

To understand more about the Amazon business model consult the resources below: