Today, Amazon ranks high among the giants of the e-commerce industry. It is one of the largest corporate empires in the world, which is a long way from its humble beginnings. It went from being an online bookstore to being the Goliath of the retail world, innovating and disrupting everything we thought we knew about shopping, delivery service, and consumer behavior. Amazon has a very expansive and diversified business portfolio, so they have their hands in lots of pies across various industries. Through risk-taking and cutthroat business models, Amazon’s net worth has become the stuff of legends. Take a look at the company’s net worth in 2020 and how the popular online retailer makes money in this piece.
The Launch of Amazon and Its Evolution
The company was founded in 1994, by Jeff Bezos, who still presides over it as Amazon’s CEO and largest stockholder. This mega online retail store first began as an online bookstore, but as its customer base grew, it ventured into other lines of commodities like video games, electronics, software, clothing, foodstuff, and many other items.
By 2017, it was announced that Amazon had bought the Whole Food Market, and in the bid to further expand its reach, the company launched its delivery services in 2018. Not long after that, it was recorded that Amazon had garnered tons of subscribers not just locally, but also internationally.
It has been able to establish itself as a one-stop-shop where millions of people buy not just daily household items, but it has made it possible for people to stream both videos and music. Its Audible subsidiaries, Amazon Music and, Аmаzоn Рrіmе Vіdео handle this segment of the business.
The popular online store also ventured into publishing, as well as establishing the Amazon studios to cater to the teeming needs of their consumers. It currently has numerous other subsidiaries namely, Diapers.com, Twitch, Techstreet, Zappos, and a string of other businesses that are greatly contributing to making it the giant it is in the industry.
How Much Is Amazon Worth In 2020?
If you haven’t already guessed by now, Amazon’s net worth is ridiculously huge, and as of January 2020, its market capitalization was pegged at, $931 billion. In early February, it went on to record a market capitalization that was worth more than $1 trillion, but unfortunately, the company was not able to maintain its figures by the close of the stock market, thereby bringing it below the one trillion dollar mark. Other times Amazon has missed the $1 trillion valuation was back in July and September 2018 when it hit the $1 trillion, but the fluctuating stock market attitudes brought the value down by the close of the market.
However, despite the instability of the stock market, the truth of the matter is that Amazon is growing at an amazing rate, and this growth is aided by its investment and acquisition of other companies such as Whole Foods, Zappos, and a long list of other ventures. Since it was founded, Amazon has purchased at least 100 companies spanning across different industries such as transportation and logistics, media production and entertainment, artificial intelligence, clothing, food and other consumer products, publishing, financial services, and much more. The company also has stakes in several companies, and from the look of things, Amazon has no intention of slowing down in its pursuits, in terms of acquiring a business or partnering with them, and this means Amazon’s net worth is going to continue rising significantly in the coming years.
How Do They Make Their Money?
Amazon is primarily a retail business, and this is where it derives a good chunk of its money from. However, contrary to what many people believe to be the main source of revenue for the company, it makes larger sums from its other ventures other than retailing. More so, reports have it that because of the high competition it faces as a retailer to provide low prices, as well as optimum satisfaction to customers, especially in terms of timely deliveries, Amazon has been running at a loss to maintain its international retail markets. Thankfully, Jeff Bezos was smart enough to launch into other areas like Amazon Web Services, which has made the company a cash cow. Other segments Amazon makes its money from, as well as more deets on Amazon Web Services, are given below.
Cloud Computing
In 2006, the company rolled out Amazon Web Services, a cloud computing business that allows individuals and corporate bodies to store information and deliver content anytime and anywhere. Today, AWS is one of Amazon’s highest revenue-generating businesses, and it controls a third of the market share in the cloud business.
E-commerce
In the United States, Amazon is the biggest e-commerce company, controlling about half of the entire market. In the world, it is the second-largest, with the first being Alibaba. Other than just selling directly to consumers, Amazon also makes money from selling access to their platform and other services to merchants and other users. The company makes its brand of products and services such as Fire TV, Fire Tablets, Kindle, and Alexa, Amazon’s virtual personal assistant. It also has its video content product, streaming platform, and subscription service, Amazon Prime.
Digital Advertising
Another major way that Amazon makes money is through online advertising. It is believed that it currently controls about 7% of the market share and made billions of dollars in ad sales. It has also been predicted by Juniper Research that in 2023, Amazon’s earnings from advertising would be around $40 billion, which indicates a growth rate of 400%. Juniper went on to state that Amazon will capitalize on its main line of business, which is retailing to craft out effective ways to reach the target consumers, and this might just give it an edge over Google and Facebook.
When these sections are combined with other businesses and services that the company offers, we now know how Amazon makes a lot of money to keep its investors and stakeholders happy. If it keeps growing at this rate and appreciating, Amazon might succeed in grabbing and holding on to the title of the richest company in the world for a long time.
