If you had to rank online marketplaces in terms of popularity, which would come first? Without a doubt, it would be Amazon. As the world’s largest online marketplace, it has a global audience. However, starting a business on a popular platform does not guarantee great revenue, especially for sellers who would like to start a business on the platform. Still, do you know how much does Amazon make in a year?
When it comes to the annual Amazon gross revenue, it’s in upwards of $400 billion. This number is so high that even if the site is competitive, many third-party sellers still prefer selling on this platform. AMZ keeps on making sales at every turn, and its profit margins are second to none. An Amazon profit breakdown from the 4th quarter of 2021 alone mentioned somewhere in the $130 billion range (Source: Fortune)
It holds a 50% stake in the eCommerce market. Although this shows that sellers can earn substantially from selling on the platform, the first step to starting a successful business is to get the numbers right.
Keep reading for a thorough breakdown of how much does Amazon make in a year.
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How Much Does Amazon Make in a Year?
So are you interested to know how much does Amazon make in a year? What are the numbers saying? In 2020, Amazon reports recorded its annual net revenues of $386.06 billion, is an increase of 38% compared to the year before. The retail sales even got higher at the end of 2021, which means Amazon earns a lot of money even in the midst of the pandemic.
From that $386.06 billion, it reported a net income of $21.33 billion, up 84% from the previous year.
The annual revenue summed up to $386.06 billion. For beginners, this may be difficult and daunting to understand. Here’s a further breakdown of revenue leading up to a year.
- Monthly revenue of $32.2 billion
- Weekly revenue of $7.4 billion
- An estimated $1.1 billion per day
- $141,1 million per hour
- $734,512.9 per minute
- A staggering $12.241.88 per second.
How Does Amazon Make its Money?
Trying to answer the question “how much does Amazon make in a year?” is pointless if you don’t look at how it makes its money. Remember, it’s the world’s leading online marketplace and the world’s largest online retailer. And looking at some Amazon profit breakdown reports, it is clear that it Amazon earns most of its money from retail sales and commissions.
There are many products available on the platform, which explains its popularity among consumers. While some of its products are sold by third-party sellers, others are purchased from vendors and resold to customers.
Though it is the most commonly associated with its eCommerce operations, this conglomerate also offers subscription services, cloud computing services, and advertising sales.
Its revenue streams are as follows:
Physical Stores
AMZ is predominantly an online store. But when it comes to making money, there’s no stopping this retail giant. Asking “how much does Amazon make in a year” does not online end in its online platform. In addition to online retail, it has opened physical retail stores to cater to various aspects of customers’ needs. These include AMZ Go (physical bookstore and convenience store) and AMZ Fresh (Grocery stores). In addition, it offers other physical stores such as AMZ Pop-Up and AMZ 4-Star.
Online Stores
Through its online platforms, AMZ offers a wide range of retail products. It sells a variety of products including toys, games, apparel, baby products, clothing and accessories, jewelry, kitchen products, beauty products, sporting equipment, books, home & garden items, etc.
The website also offers digital products such as music, eBooks, movies, videos, games, and software. So to ask ” how much does Amazon make in a year”, you also need to look at its best money maker – which is its online platform.
Subscription Services
The revenue is generated from its several subscription services, Prime being the most popular. There are more than 200 million Prime subscribers in the United States alone. (Source: Statista).
it also offers Prime Video, Music, Subscribes and Save, Kindle Unlimited, Audible, and many others.
Retail third-party seller services
The e-commerce giant generated nearly 80 billion dollars in third-party seller services in 2020, a whopping 50% increase from last year. Third-party sellers can sell goods on its marketplace, for a certain amount of fee.
Asking “how much does Amazon make in a year” isn’t a representation of accurate data if we don’t add up the other fees that the platform generates from its sellers. These FBA fees surely make up a big part of AMZ’s business model.
Amazon Web Services (AWS)
The AMZ Web Services (AWS) is a pay-as-you-go computing service that offers to start-ups, companies, government agencies, and academic institutions. This service cuts across several areas: Media, Advertising, Financial Services, and Game tech.
Why Does It Earn So Much?
First, you asked, “how much does Amazon make in a year?”. Now that you know how much money it makes, you probably wonder why it generates so much income. The yearly Amazon gross revenue is just so huge, you wouldn’t think a company that started as a bookstore could have done it.
The answer is simple. The website offers a wide range of services, but beyond this, it has won the heart of the majority of online shoppers. The website has very high trust and customer rating and this has contributed greatly to its revenue generation.
- It has over 300 million customers.
- Currently, Prime has over 150 million subscribers.
- 89% of buyers are more likely to buy than other marketplaces.
- 23 percent of online shoppers consult the website for inspiration when they don’t know what they want to purchase.
Here’s why it’s able to make this much money.
- Customers have varying needs and tastes. AMZ offers thousands of popular products to choose from, which means they have a unique selection of things people like to purchase.
- The shopping process is straightforward. You can easily browse through their vast selections if you do not know what product you want. It has also built credibility through the years and as a result, it has gained customers’ trust. The platform’s annual revenue is a reflection of its huge customer base.
- AMZ offers flexible seller plans, fees, and fulfillment options for sellers, making it easy for sellers to run their businesses.
Because a large share of the website’s revenue comes from its third-party sellers, the platform has witnessed tremendous growth and a consistent influx of new sellers due to its flexibility. This, therefore, leads to an inevitable increase in its annual revenue.
Now you know how much does Amazon make in a year? It’s within billions of dollars, including seller fees and other physical store revenues.
It makes its money from multiple channels. Thus, sellers can also generate passive income from selling on Amazon.
How To Make Money As A Seller On AMZThe platform makes billions every year from its multiple businesses, and the amount increases significantly every year. In the wake of the pandemic, more people have taken to online shopping. Because of this, there is no better time to start a business on Amazon than now.
We have shared these numbers now only to know how much does Amazon make in a year. It is also to highlight the potential of how lucrative this marketplace is. You too can make a great deal of money through the website if you know what you are doing.
But don’t simply ask, “How much does Amazon make in a year?”. Instead, explore how it can make you money by checking out the different models you can use to sell products on the platform.
Making money as a third-party seller is not as complicated as it seems. AMZ offers several selling models, and there’s one for every prospective seller.
Here are some selling models you might want to consider:
- Private Labeling:
A private label is a product that is manufactured by one company but distributed by another company with its name and brand. After the products are privately labeled, the manufacturer no longer has any rights over them.
Using this selling model means that you will have to source existing goods from manufacturers and sell them under your brand. This business model is best suited for sellers whose intention is to build a brand. To set themselves apart from their competitors, private label sellers invest time and money into their logos and packaging.
- Wholesale:
Selling wholesale on Amazon is a business model that will not require you to go the long route of getting products manufactured specifically for your brand. What you will have to do is to purchase already branded products from manufacturers in bulk, and resell them at a profitable retail price.
- Retail or Online Arbitrage:
The retail and online arbitrage selling models are very similar, the method of purchasing your merchandise is what distinguishes them.
To use this selling model, you’ll have to source your products from reputable retail stores like Walmart and the likes. You’ll purchase these products at retail prices, unlike the wholesale model where you buy in bulk.
However, for retail arbitrage, you walk into these stores to source your products. With online arbitrage, on the other hand, you source your products from online stores and put them up for sale on AMZ at a markup price.
- Dropshipping:
The dropshipping model is the most flexible of all selling models, this model does not require sellers to own any inventory.
Dropshipping on Amazon simply means that you act as an intermediary between AMZ and its customers. How? You purchase the products from your suppliers after the customers place their orders. Then you get your supplier to deliver the products directly to your customers. All of this is done under your name, so the customers still think that the product is coming from you, not your supplier.
Sellers are easily discouraged when they consider the hassles involved in running an online business. These hassles usually revolve around business processes like product research, keyword research, listing optimization, and order fulfillment.
Although these tasks can be carried out manually, they may be back-breaking for newbies or existing sellers who have no prior experience in selling online. Good thing is, these processes can be outsourced.
Amazon FBA software can handle business processes like product research, keyword research, and listing optimization on your behalf. If you use the best FBA software available, you can generate six figures in revenue from sales.
The question “how much does Amazon make in a year?” has been answered already, however, one of the other ways through which it makes its money is through AMZ fees (referral fees, fulfillment fees, storage fees, and more). Sellers who use any of the aforementioned Amazon selling models can outsource fulfillment to Amazon or handle it themselves, two fulfillment options for this purpose.
Fulfillment Options
FBA
FBA stands for Fulfillment by Amazon, a service that allows AMZ to handle storage, packaging, and shipping on behalf of its sellers. A major reason for FBA’s popularity is the ease and flexibility it offers sellers.
Sellers who sell on multiple marketplaces can use FBA as a standalone fulfillment option. Sellers can store their inventory at the warehouse and be assured that their orders will be filled quickly and efficiently.
FBM
Sellers that use Fulfillment By Merchant (FBM) are solely responsible for all their business processes. As a result, AMZ does not fulfill these orders in any way. The seller using FBM is responsible for the packaging and shipping fees, even though these fees can be passed on to the buyer.
Seller Fulfilled Prime (SFP)
With Seller Fulfilled Prime, sellers have the opportunity to sell to Prime subscribers. A seller fulfilled prime program allows them to take advantage of a larger audience, as well as maintain control over their inventory.
The seller must meet a bunch of requirements to earn the prime badge on the Seller Fulfilled Prime plan, including free same-day shipping on all orders.
Best FBA Software to Help You Make Money on Amazon
If you have recently considered starting an online AMZ business, you may have also had a rethink because of the strenuous processes involved. Selling on AMZ requires sellers to carry out product research, keyword research, listing optimization, and several other processes.
These services are the pillars upon which every business is built, so without them, it is almost impossible to make headway. Sellers earn as much as six figures monthly from sales, and if you want to get your slice of the pie you have to be on top of your game.
Beginners and even existing sellers often struggle with product research, keyword research, and listing optimization. However, these tasks can be handled seamlessly with seller software.
ZonBase is the best FBA software for product research, keyword research, and listing optimization. It is an all-inclusive FBA software for sellers who would like to have all their seller tools in one place.
ZonBase offers a comprehensive suite of 13 seller tools to execute these tasks excellently.
ZonBase Product Research Tools
Zon Research:
Zon Research is ZonBase’s product research tool that is designed to help you research profitable product niches.
In-depth market research is a crucial process that must not be skipped if your goal is to build a successful business. Selecting a profitable niche for your business is the first step in becoming successful. You need to identify top-selling products in a particular niche to make sales in that niche.
Moreover, this tool includes a preset feature that gives you the option of running your search based on our default search specification or by creating and customizing your own presets to use repeatedly without having to start all over again.
Zon Chrome Extension
If you decide to sell a product, have you ever wondered if there is a way to uncover the hidden details? With this tool, you’ll be able to do the job better.
Only a few seller tools offer this level of detail on products. This tool, however, allows you to estimate the potential of a product and validate your ideas in a matter of seconds.
Reverse ASIN
Reverse ASIN is certainly the best tool if you’re trying to spy on your competitors and scale up your business.
By using the ZonBase Reverse ASIN tool, you can uncover what keywords your competitors are using and currently ranking for. With this knowledge, you can then outrank them and double your sales.
ZonBase Hot Products
Finding products that will sell is only half the battle, the other half involves finding authentic suppliers who can supply these products. You can quickly access a list of trusted suppliers for all the products you find using the Hot Products tool.
Keyword Research Tools
Keywords
You can perform keyword research manually or with other seller tools, but the ZonBase toolkit offers a plethora of tools that will automate the process. Although most seller apps have one feature dedicated to this task, ZonBase is the best AMZ software for a reason.
Zon Tracker
This keyword tracking tool keeps you informed of any changes to your keywords. Furthermore, it displays information about your competitors’ keywords and shows keyword information for different product variations.
Listing Optimization Tools
Listify and Listing Optimizer
The process of adding items to your store involves creating product listings. Keywords, clear images, and detailed information about your products should be included in your product listings.
Listify is a tool that enables you to accomplish all of this with a few clicks. This tool also lets you research keywords and compare competitors’ listings to create your product listing.
Listing Optimizer by ZonBase is a powerful seller tool for bypassing the algorithm, optimizing your listings, and showing up on page one.
ZonBase also offers PPC campaign tools and a photo enhancer tool to help you refresh your product images, make them more attractive and professional.
If you use ZonBase, you will also be able to access mentorship from AMZ experts who have scaled multiple businesses. They will guide you through your seller journey and hold you accountable until you achieve your goals.
Are you ready to begin your seller journey with Zonbase? Sign up for a free trial here.
Conclusion
Statistics show that Amazon’s gross revenue margins increase significantly every year. Even in the middle of the pandemic, the Amazon profit breakdown showed positive growth. It is obvious that the platform has a huge potential for even more success, and will not be leaving the scene anytime soon. Many people wonder “how much does Amazon make in a year?”. But that is not the right question. The right question should be, “how much can I make in a year selling on AMZ”, right?
Beyond asking “how much money does Amazon make in a year?”, entrepreneurs should consider leveraging the marketplace for financial freedom.
We have provided sufficient information on how you can make money on Amazon. You too can become a seller today. Start by signing up for a free trial to learn how to build your store today.
