Amazon is a very popular online store, which sells everything from food to clothes and electronics. But which part of the Amazon business makes the most money?
Which Part of Amazon Make the Most Money: Amazon has been on the rise in recent years, with no end in sight to its forward momentum. The online retail giant continues to add new products and services, including AWS (Amazon Web Services), Marketplace, and Fulfillment by Amazon (FBA).
Which Part of Amazon Make the Most Money?
Amazon recently reported that over one million SMBs are now selling on Amazon’s platforms, which has only increased the success of their business model. Which part of Amazon makes the most money? Here’s our breakdown of Amazon’s revenue streams to see where it all adds up!
Selling Online
There are several different ways to sell on Amazon. The first is as a third-party seller, which means you list your product alongside other products and send them to your customers yourself. The second option is as a Fulfilled by Amazon (FBA) seller. In order to do business with FBA, you must be an approved third-party merchant.
And provide inventory or storage space for inventory in one of several regional fulfillment centers across the United States or in European countries. Whatever your choice maybe, when you add shipping costs and optional charges like sales tax to each sale that make up its profit margin, it’s clear that some parts of Amazon make more money than others. Here’s what we found
Selling Used Products on Amazon
Is it really worth your time and effort, or is it just a waste of energy? If you have items in your home that you don’t need anymore, consider selling them on Amazon. Just think about how much money you spend to buy something new and in a couple of months’ time, that item is already outdated. But what if you could make some extra cash by selling that item and buying something else that’s new.
Well with Amazon selling used products can be profitable but then again they charge a fee for every sale which cuts into profits and then once you factor shipping fees into it. It all adds up pretty quickly so I did some research to find out exactly which part of amazon makes more money in fees than anything else on their site.
Third-Party Selling
The largest part of Amazon’s income comes from third-party sellers. In fact, they’re responsible for 46% percent of all products sold through their site. That means that more than a third of items in an average order is coming from outside sellers! Of course, that also means you have to compete with these other vendors on price, but if you know how to play your cards right (more on that later), it could be an extremely lucrative partnership. Just keep in mind that Amazon doesn’t give out sales numbers to independent sellers.
Estimates put their revenue anywhere between 20 and 30 billion dollars; we just don’t know exactly how much! So there’s definitely room for growth as long as you can stay competitive. If you’re looking to grow your business, I’d suggest going into business with Amazon. If you do choose to go at it alone, here are some ways to boost your earnings.
Focus on Third-Party Sales: As mentioned above, third-party sales make up a huge portion of Amazon’s total revenue. This is especially true when it comes to physical goods like clothing or books—products that people want right away instead of waiting weeks for shipping. Plus, if you ship them yourself using Fulfillment by Amazon (FBA), which many merchants do, then all customer service issues will be handled by Amazon themselves! If there’s one thing people love about online shopping, it’s fast shipping and no hassle returns.
Cloud Computing
No. 2 is Cloud Computing, which actually made $11.5 billion in revenue last year (compared to e-commerce’s $102 billion). But it’s not what you think–it’s a relatively new part of Amazon that rents out its server space to companies like Netflix and Airbnb for processing their massive amounts of streaming data. Although revenues have been climbing for two years straight, profit margins are dismal and shrinking–which isn’t surprising given how much money these companies typically sink into servers and upkeep.
It could be more than five years before Amazon turns a substantial profit on cloud computing, but betting on other industries to take off has worked well so far for Amazon: DVDs were once just as unprofitable as cloud computing is now, after all. And when those businesses finally did start making money, they turned into something big.
The biggest part of Amazon’s business might turn out to be something we’ve never even heard of yet. In fact, there are many parts of Amazon that most people don’t know about–including some segments with names like Marketplace, IMDbPro, and Zappos Insights. There are over 20 discrete businesses within Amazon itself!
AWS (Amazon Web Services)
Did you know that Alexa is one of Amazon’s fastest-growing business lines and brings in over 7 billion dollars every year? People often wonder how a product like Alexa can be so profitable. So let’s take a look at some facts about Alexa. First, do you know how much an Echo costs to make and ship to your house? The answer is less than $30. In fact, almost all physical products on Amazon are very low-cost items.
They sell a ton of cheap stuff but they also sell premium products too like Kindles and Fire Tablets. The reason for selling these high-end products is because people who buy them become Prime members. This means that for $99 per year they get free 2-day shipping on millions of products and unlimited video streaming.
Access to their music library, and many other perks. As a result, Amazon has more than 100 million Prime members which make up around 50% of their total sales! If you don’t have Prime membership yet I highly recommend it as it really does change how you shop online.
Advertising Section
A new report from eMarketer reveals that Amazon’s ad revenue is expected to grow by 50% in 2018 to $2.4 billion. That will place it ahead of Facebook, but still far behind Google and its parent company Alphabet. How can you use ads on different parts of Amazon as a tool for your business? Read more about how amazon ads work, when to use them, and where you can find help setting up your first campaign. There are many advertising opportunities available at Amazon – some require an Amazon seller account while others don’t.
Let’s take a look at what each one has to offer: Sponsored Products – The largest portion of Amazon’s revenue comes from sponsored products which show up alongside search results. These ads cost anywhere between 10-50 cents per click depending on who you’re targeting (CPC). To be eligible for Sponsored Products, you must have an active Professional Seller Account with a minimum feedback score of 20 or above.
Sponsored Brands – Showing up alongside product listings instead of search results means your ad has greater visibility among shoppers who already know what they want to buy. With sponsored brands, Amazon shows only your brand logo along with product details and customer reviews. You can opt into displaying specific prices if they’re competitive with other sellers’ prices in order to stand out even more!
Alexa
The name Alexa comes from a library at Amazon called Alexa and was given to a fictional artificial intelligence character in an episode of Star Trek: The Next Generation. You can now control your Sonos speakers with just your voice through Alexa, who’s also built into some thermostats, fridges, and televisions. Through third-party app integration, you can even play music on Spotify and other services using just your voice through Alexa.
If you’re interested in smart home devices, it’s definitely worth checking out what’s available – but do keep an eye on privacy concerns as many people are uneasy about having always-listening tech devices in their homes! By purchasing an Alexa device, you’re placing a deposit down on becoming an affiliate marketer for one of the largest companies in America.
The device uses its voice recognition software to find a specific product and then make it available for purchase through its links. If you’re looking to jump into marketing with your new business, starting with online retail is a great place to begin. That way, if you have success (which we all hope), Amazon will take care of packaging, shipping, and customer service!
Also Read: What Can I Sell to Make Money?
Conclusion
The answer is many different parts of Amazon make money, but it depends on what you are selling. However, one part that always makes money is advertising. The main reason why is because you have to pay a fee for people to click on your ad regardless if they purchase anything or not.
Some other ways you can make money include creating your own products and selling them, shipping items that customers buy on Amazon to other places and so much more. Many people will argue that being an amazon affiliate will also make you a lot of money.
Which it can as long as you put enough work into it. If someone doesn’t put enough time into their website then they most likely won’t get any money from it.
