Inside Amazon’s Money Machine

DEAR READERS

Let’s talk about Amazon—the company that started with books and ended up taking over… well, pretty much everything.

You’ve probably ordered something from Amazon this month. Maybe even this week. Heck, maybe this morning. But have you ever stopped and thought: How does this beast of a company actually make money? And more importantly, what can I learn from it as an entrepreneur?

Today, I’m breaking it all down: how Amazon works, where the money comes from, how they grew like crazy, and what every entrepreneur should know from their journey.

Let’s get into it.

It All Started With a Garage and Some Books

Yep, the cliché startup origin story is real.

Back in 1994, Jeff Bezos started Amazon in his garage. The original idea? An online bookstore. That’s it. Just books. No lightning deals. No Alexa. No streaming. Just a scrappy little site trying to sell paperbacks over dial-up internet.

But Bezos didn’t just want to build a bookstore—he wanted to build “the everything store.” A place where you could buy anything. That vision is what made Amazon… well, Amazon.

Fast forward to today and Amazon is a $1.5+ trillion dollar company. Wild.

How Amazon Makes Money (Spoiler: It’s Not Just from Selling Stuff)

A lot of people think Amazon just makes money from selling products. That’s only part of the story.

Here’s a breakdown of Amazon’s money-making machine:

1. E-Commerce (The Marketplace)

This is the most visible part of Amazon: the website where you buy batteries, blenders, and banana hammocks.

But even here, there are layers of money-making:

• Retail Sales: Amazon buys products wholesale and sells them at a markup.
  

• Third-Party Sellers: Other businesses sell on Amazon’s platform, and Amazon takes a cut of the revenue (around 15% on average, plus other fees)

• Fulfilment by Amazon (FBA): Sellers can store products in Amazon’s warehouses, and Amazon handles shipping, returns, and customer service—for a price, of course.
  
  

• Fun fact: more than 60% of products sold on Amazon come from third-party sellers, not Amazon itself. And Amazon gets paid either way.

2. Amazon Web Services (AWS)

Here’s where it gets juicy. AWS is Amazon’s cloud computing division, and it’s a monster.

• Big brands like Netflix, Airbnb, NASA, and even governments run their websites and apps on AWS.

• Amazon basically rents out computing power and storage space online.
  
  And get this: AWS alone brings in more profit than the entire retail side of Amazon. Yup. While we’re all busy buying socks, AWS is printing money in the background.

3. Prime Memberships

Amazon Prime is one of the most genius things they’ve ever done. For $139/year, customers get:

• Free shipping
  
  

• Access to Prime Video
  
  

• Exclusive deals
  
  

• Music, photo storage, and more
  
  

  It’s recurring revenue. It’s sticky. And people rarely cancel.

  As of 2024, Amazon has over 200 million Prime members globally. That’s billions in recurring revenue every single year.

4. Advertising

Did you know Amazon has an ad business? A big one.

When you search for something on Amazon, the top results are often sponsored ads. Sellers pay to be seen. And Amazon rakes in the cash.

In fact, Amazon’s ad business is now a multi-billion dollar revenue stream—and it’s growing fast.

5. Physical Stores

Yep, Amazon has real-world stores too.

• Amazon Go: Cashier-less convenience stores.
  
  

• Whole Foods: Acquired in 2017 for $13.7 billion.
  
  

• Amazon Fresh: Grocery stores with tech built in.
  
  

  Retail is still small compared to online and AWS, but it shows Amazon’s not afraid to play in every sandbox.

6. Devices & Media

Echo. Kindle. Fire Stick. Ring cameras.

Amazon sells a ton of smart devices—and makes money from the hardware and the services that come with them.

Plus, they’re now a serious player in entertainment with Prime Video, original shows, and even NFL streaming rights.

How Amazon Expanded (and Why It Worked)

Amazon’s growth strategy wasn’t just “let’s get bigger.” It was intentional and brutal (in a good way).

Here’s how they pulled it off:

1. Start Narrow, Think Big

They started with books. Just books. But Bezos always had a massive vision: to become the everything store.

Lesson: Focus early. Dream big. Grow deliberately.

2. Obsess Over Customers

Jeff Bezos said this over and over: “We’re not competitor-obsessed. We’re customer-obsessed.”

They focused on:

• Fast delivery
  
  

• Easy returns
  
  

• Great service
  
  

  And it worked. People trust Amazon with everything—because Amazon made them feel safe.

3. Invest in Infrastructure (Even When It Hurt)

Amazon lost money for YEARS. Investors weren’t thrilled, but Bezos didn’t care. He kept reinvesting into:

• Warehouses
  
  

• Robots
  
  

• Delivery systems
  
  

• AWS
  
  

  Lesson: Sometimes you’ve got to sacrifice short-term profits for long-term domination.

4. Bet on Tech

Amazon didn’t just sell online—they built the tools. AWS is a perfect example. No one expected an online bookstore to become a cloud giant, but Amazon bet on its own internal tech—and turned it into a business.

5. Use Data Like a Superpower

Amazon tracks what you buy, browse, click, and even abandon in your cart. That data helps them:

• Recommend products
  
  

• Target ads
  
  

• Plan inventory
  
  

• Optimize logistics
  
  

Lesson: The more you know about your customer, the more money you can make.

The Numbers (as of 2023/2024)

• Revenue: Over $500 billion per year
  
  

• Profit: Tens of billions (driven by AWS)
  
  

• Employees: 1.5+ million worldwide
  
  

• Prime Members: 200M+
  
  

• Market Cap: Trillion-dollar territory
  
  

  From a garage in Seattle to global domination. Not too shabby.

Key Lessons for Entrepreneurs

Let’s talk about what you can take away from all this:

1. Start Small, Think Long-Term

   You don’t have to build an empire overnight. Start with one great product or service. But always have a bigger vision.

2. Be Obsessed With Your Customers

   Solve their problems. Make their lives easier. When in doubt, make decisions that benefit your customers, not your ego.

3. Invest in Infrastructure

   Whether that’s your website, systems, or team—build strong foundations. They’ll carry you when it’s time to scale.

4. Diversify Your Revenue

   Don’t rely on one income stream. Amazon has many. You should aim for multiple ways to make money too.

5. Use Technology and Data

   You don’t have to be a tech company—but you should use tech to your advantage. Automate, track, and optimize wherever you can.

6. Be Willing to Lose (Smartly)

   Amazon didn’t make profits for years. But they were building. Don’t be afraid of early losses—if they’re part of a smart growth strategy.