Amazon started as an online bookshop. Today it is one of the world’s biggest companies, and most of its profit comes from a business many shoppers never see. Here’s how it makes its money.
Jeff Bezos founded Amazon in 1994, selling books online from a garage in Seattle. It has since grown into the world’s biggest online retailer, a cloud computing giant, a streaming service and an advertising powerhouse.
In 2025, Amazon reported net sales of US$716.9 billion and operating income of US$80 billion.
The store
Amazon’s online store, including sales of its own products and goods from other retailers, brings in the bulk of its revenue. But retail margins are thin, because of the high cost of warehouses, delivery and staff.
More than half of the items sold on Amazon come from independent third-party sellers. Amazon charges them fees for listing products, storing them in its warehouses and delivering them.
Amazon Prime, its subscription service, gives members free fast delivery and access to Prime Video and other perks. It keeps members shopping on Amazon, and brings in billions in fees.
Advertising is one of Amazon’s fastest-growing businesses. Sellers pay to have their products appear at the top of search results, and Amazon also sells ads on Prime Video. Its advertising revenue reached US$68.6 billion in 2025.
AWS, the profit engine
Amazon Web Services, or AWS, rents out computing power, storage and AI tools to businesses, governments and start-ups. It is the world’s largest cloud computing provider, ahead of Microsoft’s Azure and Google Cloud.
AWS brought in revenue of US$128.7 billion in 2025, less than a fifth of Amazon’s sales, but it earned US$45.6 billion in operating income, more than half of the company’s total.
Demand for AI has turned AWS into a major focus. Amazon spent US$131.8 billion on property and equipment in 2025, much of it on data centres and its own AI chips.
In Australia, Amazon launched its local store in 2017 and has been expanding its warehouses and delivery network, putting pressure on local retailers.
The risks include competition in cloud computing, pressure from cheap online rivals such as Temu and Shein, scrutiny from regulators over its market power, and the cost of its huge investment in AI. Andy Jassy, who built AWS, has been chief executive since 2021.
