How Does Amazon Make Money?
Most people think of Amazon as a shop. By revenue, it mostly is. But by profit, Amazon is something else: a cloud company and an advertising company that happens to run the world's biggest store.
In 2025, Amazon reported $716.9 billion in net sales. This post breaks down where that money comes from and, more importantly, which parts actually make the profit, using Amazon's own 2025 annual report.
🎯 Quick Answer (30-Second Read)
- Revenue: $716.9B in 2025, up 12%.
- AWS brought in $128.7B of revenue (about 18%) but $45.6B of operating income, around 57% of Amazon's total profit.
- Advertising: $68.6B, up about 22%, one of its fastest-growing and highest-margin lines.
- Third-party seller services (fees from sellers): $172.2B.
- Subscriptions (Prime and others): $49.6B.
- The shop is the traffic engine; cloud and ads generate most of the profit.
Amazon in Numbers (2025)
Where the Revenue Comes From
Amazon reports revenue by type of product or service:
Source: Amazon's 2025 annual report. "Own retail" combines online stores, physical stores (like Whole Foods) and other revenue.
The Five Money Machines
1. Online Stores: Huge Revenue, Thin Margins
When Amazon sells a product it bought from a supplier, the full price counts as revenue. That's why this is the biggest slice. But retail margins are thin, and Amazon spends heavily on warehouses, delivery and low prices.
2. Third-Party Seller Services: The Marketplace Toll
Most items on Amazon are sold by independent sellers. Amazon charges them:
- Referral fees: a percentage of each sale
- Fulfilment fees (FBA): for storing, packing and shipping their products
- Other fees such as storage
Amazon doesn't need to own the inventory, but it earns on every sale.
3. AWS: The Profit Engine
Amazon Web Services rents computing power, storage, databases and AI services to companies, from startups to Netflix. In 2025:
| Revenue | Operating income | |
|---|---|---|
| AWS | $128.7B (+20%) | $45.6B |
| Whole Amazon | $716.9B | $80.0B |
AWS is under a fifth of revenue but more than half of operating profit.
4. Advertising: The Quiet Giant
Sellers and brands pay to appear at the top of Amazon search results ("Sponsored" products), plus ads on Prime Video, Twitch and other properties. Advertising grew from $56.2B in 2024 to $68.6B in 2025.
5. Subscriptions: Prime Locks You In
Prime membership fees, plus subscriptions like Music and Kindle Unlimited, brought in $49.6B. Prime's real value is behaviour: members get free fast delivery, so they check Amazon first and buy more often.
The Flywheel: How the Pieces Feed Each Other
fast delivery"] --> CX["More customers
(and Prime members)"] CX --> SE["More sellers
join the marketplace"] SE --> SEL["More selection"] SEL --> CX CX --> ADS["More shoppers =
more valuable ads"] SE --> FEES["More seller fees"] ADS --> CASH["Profit + cash
(also from AWS)"] FEES --> CASH CASH --> LP
Amazon uses profit from AWS and ads to keep prices low and delivery fast. That attracts shoppers, which attracts sellers and advertisers, which funds more investment.
What This Means
- Retail is the moat, not the profit centre. Few competitors can match Amazon's delivery network.
- AWS funds the experiments. Profit from the cloud lets Amazon invest in AI, devices and new markets.
- Ads turn traffic into margin. Every product search is advertising inventory.
Frequently Asked Questions
What is Amazon's most profitable business?
AWS. In 2025, it produced $45.6 billion of operating income, about 57% of Amazon's total $80.0 billion, despite being roughly 18% of revenue. Advertising is also highly profitable, though Amazon doesn't report its profit separately.
How much does Amazon make from advertising?
Amazon reported $68.6 billion of advertising services revenue in 2025, up from $56.2 billion in 2024. Most of it comes from sponsored product listings in Amazon search results, with additional ads on Prime Video and other Amazon properties.
Does Amazon make money from Prime?
Yes. Subscription services, mainly Prime fees, brought in $49.6 billion in 2025. Prime's bigger value is that members shop more often on Amazon, which increases retail sales, seller fees and advertising revenue.
Conclusion
Amazon makes money from five engines: its own retail sales, fees from third-party sellers, AWS cloud services, advertising and subscriptions. Retail brings in the most revenue, but AWS and advertising generate most of the profit, which Amazon reinvests to keep its shopping flywheel turning.
Sources
Last verified: 14 October 2026.
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