How Amazon Makes Money

Amazon runs a hybrid model: it buys inventory and sells it directly, and it rents its store, warehouses, and ad inventory to independent sellers. In FY2025 online stores produced $269.3B of net sales, third-party seller services $172.2B, advertising services $68.6B, subscription services $49.6B, physical stores $22.6B, and AWS $128.7B. Marketplace referral commissions typically run in the mid-teens as a share of the sale price, and sellers pay separately for Fulfillment by Amazon and for advertising placement. Retail earns thin margins but collects cash from customers before it pays suppliers, which funds expansion without borrowing. Profit sits in AWS, which turned $128.7B of net sales into $45.6B of operating income, and in advertising, where Amazon charges for placement against shopping queries.

Amazon's growth now comes mostly from the higher-margin layers on top of its infrastructure. Advertising services grew from $56.2B in FY2024 to $68.6B in FY2025 as Amazon added inventory in Prime Video, grocery, and its demand-side platform. In AWS the company is spending on its own silicon and capacity: the Project Rainier cluster of roughly 500,000 Trainium2 chips, built with Anthropic, became fully operational in October 2025, and Amazon had put $8.0B into Anthropic convertible notes by the end of 2025. Retail growth is being pushed through grocery, pharmacy, and same-day delivery rather than new categories, and Amazon Leo, the satellite network previously called Project Kuiper, is being aimed at commercial connectivity contracts.