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Revenues & Trends for Retail, Ads, & Technology Units


Amazon is one of the most influential companies in the world. With its powerful flywheel business model, Amazon has maintained its status as the top ecommerce retailer in the US and has even begun to wear away at the digital ad dominance of the Meta and Google duopoly. In addition, its cloud-computing division, Amazon Web Services (AWS), is used by organizations worldwide. But as competition increases, Amazon is also looking to other business units—like payments, B2B, and logistics—to keep revenues up. 

In this guide, we break down Amazon’s many business units and show where the ecommerce giant is facing fresh competition. 

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Amazon was founded on July 5, 1994 by Jeff Bezos in Bellevue, Washington, as an online marketplace for books. Bezos served as CEO of Amazon until 2021, when he stepped down and was succeeded by Andy Jassy. Bezos remains the executive chairman of the company. 

Amazon has acquired several companies since its inception, including Audible (2008), livestreaming platform Twitch (2014), Whole Foods Market (2017), and home security/smart home company Ring (2018).

Amazon’s business units include retail (comprised of ecommerce and physical retail), advertising, cloud computing (AWS), logistics, payments, and B2B services. 

Here’s a deeper dive into each business unit:

Retail

Amazon’s retail business includes its ecommerce operations, its grocery offerings (including Whole Foods and Amazon Fresh), and other brick-and-mortar locations like Amazon Go and Amazon Style. Amazon uses a regional retail fulfillment model, dividing its national logistics network into eight regional networks, which include fulfillment centers, intermediate sorting centers, last-mile delivery hubs, and its transportation fleet. 

Ecommerce
Amazon is the top ecommerce retailer in the US, according to EMARKETER’s Top 15 US Ecommerce Companies Forecast report. In fact, it’s larger than the next 15 largest US ecommerce retailers combined.

A chart showing the top 16 companies ranked by US retail ecommerce sales, 2024. (Subscribers only)

In 2024, Amazon will grow its US retail ecommerce sales by 11.5% to reach $492.23 billion, according to EMARKETER’s November 2023 forecast. Though the company still dominates US ecommerce, its share of retail sales is plateauing, dipping slightly to 37.8% from a high of 38.0% in 2021. There are a few reasons for this slowing growth, per EMARKETER’s The Power of Amazon in 2023 report, including:

  • The third-party marketplace model is catching on, and Amazon is facing competition from companies like Walmart, Macy’s, Shein, and Temu. As third-party sales will account for 66.3% of Amazon’s ecommerce sales in 2024, according to EMARKETER’s November 2023 forecast, Amazon stands to lose a lot if competitors start stealing its share of marketplace and third-party seller sales.
  • Amazon Prime user growth is also slowing from 10.1% in 2021 to 2.9% in 2024. Again, Amazon faces competition from other retailers like Walmart, which has been aggressively promoting its Walmart+ subscription service. 
  • Younger consumers are increasingly using social platforms like TikTok and Instagram to start their shopping searches.
A chart showing Amazon’s US retail ecommerce sales, by dollar amount, percent of ecommerce sales, and percent change, 2019 to 2024.

Grocery

  • Amazon’s US grocery ecommerce sales will total $40.50 billion in 2024, placing it behind Walmart Inc.’s $58.92 billion (which includes Sam’s Club), according to EMARKETER’s November 2023 forecast. Amazon’s limited physical footprint prevents it from overtaking Walmart in this area. 
  • Nearly half (49.5%) of US digital grocery buyers made a grocery purchase from Amazon.com in the last 12 months, per an EMARKETER May 2023 survey. That’s a far greater percentage than Amazon Fresh (18.6%) and Whole Foods (7.3%). But in August 2023, Amazon announced plans to merge its three digital offerings, so customers will soon be able to check out from a single online cart.
  • Whole Foods is still in growth mode with plans to add 100 new stores at a pace of 30 store openings per year, according to Winsight Grocery Business. Amazon also announced plans to roll out its biometric payment technology to all Whole Foods locations by the end of 2023. 
  • The future of Amazon’s grocery business is its Amazon Fresh stores. After pausing the opening of new stores in 2023 while it tried to figure out what resonated with customers, Amazon said it would renovate and open new stores in 2024.

Other brick-and-mortar locations

  • In 2022, Amazon shuttered all of its Amazon Books, 4-star, and Pop Up shops, a total of 68 physical stores across the UK and the US.
  • It also closed nine Amazon Go locations, though 23 still remain across the US. 
  • In 2022, Amazon opened two Amazon Style physical stores (one in Los Angeles and one in Columbus, Ohio), which offered clothing, shoes, and accessories for men, women, and kids. In November 2023, the retailer announced it would close both stores.

Amazon Prime Day
In July 2015, Amazon introduced Prime Day, a sales event that offers exclusive discounts to Prime members. Amazon Prime Day has grown from a one-day, once-a-year event to a two-day event that happens twice a year. Hoping to steal share from Amazon, other retailers like Walmart, Target, and Best Buy have begun holding their own sales events during the same time period.

A chart showing US Amazon Prime users, by amount, percent change, and percentage of the US population, 2019 to 2024.

Advertising

Amazon will remain the king of retail media in 2024, generating $44.26 billion in ad revenues, according to an October 2023 EMARKETER forecast. The majority of that spending ($29.30 billion) will come from search ad revenues, but a growing portion ($7.82 billion) will come from display advertising.

Amazon’s advertising business has several facets:

  • Advertisers that sell products on Amazon can buy impressions based on cost per click on Amazon’s retail properties. EMARKETER estimates that the majority of Amazon’s net US ad revenues come from these types of placements.
  • Amazon DSP is a demand-side platform (DSP) that allows advertisers, including brands nonendemic to Amazon, to buy display impressions across Amazon’s retail properties; its nonretail properties like Twitch and IMDb TV; and the programmatic web.
  • Amazon Publisher Services provides header bidding integrations for publishers to access both Amazon demand and demand coming through other supply-side platforms.

Amazon is even gaining on Google and Meta, capturing 14.4% of the US digital ad market in 2024 (behind Google’s 25.2% and Meta’s 20.4%). 

However, Amazon is facing competition from other retail media networks, including Walmart, Target, and The Kroger Co., according to EMARKETER’s The Power of Amazon in 2023 report. To stay relevant, Amazon is moving beyond search ads to display, video, and streaming TV ads. Sellers are being encouraged to shift ad budgets into upper-funnel ads, and the retailer is now turning its attention to ad-supported streaming TV opportunities with Prime Video, Freevee, and NFL Thursday Night Football.

A chart showing US retail media ad revenues, by company, 2024. (Subscribers only)

Amazon Web Services 

Amazon Web Services (AWS) plays a key role in Amazon’s tech ambitions. Launched in 2006, AWS is the largest player in the enterprise cloud infrastructure services market, earning 32% of market share worldwide in Q4 2022, according to Canalys. It’s also Amazon’s most profitable business by far, according to EMARKETER’s The Power of Amazon in 2023 report.

AWS represents a small share of Amazon’s net sales, but it has grown from 12% in 2020 to 16% in 2022, per Amazon’s 2022 earnings. However, it faces several challenges, including slowing growth in the cloud computing market, increased competition among generative AI technology services, and regulatory risks from antitrust authorities. 

Other business units

Amazon’s other business units include Amazon Prime Video, Amazon Music, Amazon Publishing (including the Kindle), logistics, payments, B2B services, and devices. 

Amazon Prime Video 

Some 163.6 million US consumers will be Amazon Prime Video viewers in 2024, per a September 2023 EMARKETER forecast. However, they will only spend an average of 11 minutes a day with Prime Video in 2024, compared with 32 minutes a day with Netflix. 

In January 2024, Amazon introduced an ad-supported tier to Prime Video. There will still be an ad-free subscription available for an additional $2.99 monthly, but live broadcasts and sporting events will still have ads.

In an attempt to grab both ad dollars and more viewers, Amazon scored the exclusive rights to the NFL’s Thursday Night Football beginning in 2022. 2023’s opening game set records for both the Prime Video platform and NFL streaming overall, according to Nielsen and Amazon’s internal data. Amazon also hosted a Black Friday NFL game, during which it ran interactive shopping ads that enabled viewers to shop in real time. 

Amazon Music

Some 53.1 million US consumers will listen to Amazon Music in 2024, about half of Spotify’s 2024 listeners, per an August 2023 EMARKETER forecast. 

Amazon Music Prime, which is included in a Prime membership, gives users access to a catalog of 100 million songs and most of the top podcasts, according to the retailer. For non-Prime members, Amazon Music Unlimited offers the same perks—along with unlimited skips and HD versions of songs—for $10.99 per month (or $9.99 for Prime members). A free version also exists with ads. 

Amazon Publishing

Amazon Publishing publishes fiction, nonfiction, and children’s books in digital, print, and audio formats. Kindle Direct Publishing provides authors with the tools to self-publish their books in more than 10 countries and over 45 languages, for ebook, print, or Amazon’s serialized reading platform Kindle Vella. 

In November 2023, Kindle Direct Publishing announced it was beta testing technology that would allow authors to produce audiobook versions of their ebooks using virtual voice narration. 

Logistics

In September 2023, Amazon launched Supply Chain by Amazon, which expands its fulfillment and logistics operations for sales outside of Amazon.com. The product suite includes discounts for cross-border transportation; automated inventory replenishment; improved visibility and tracking; and low-cost, long-term bulk storage through Amazon Warehousing and Distribution. 

This is in addition to Fulfillment by Amazon, a service that enables businesses to use Amazon to store, pick, pack, and ship customer orders. 

Payments

Amazon Pay, Amazon’s online payment service, integrates directly with retailer websites so customers can use information stored in their Amazon accounts to pay. It also allows customers to use buy now, pay later services (like the one from Affirm, which was previously only available via Amazon’s US checkout page) and Citi Flex Pay, an installment plan for Citi credit card holders, according to EMARKETER’s The Power of Amazon in 2023 report. 

Amazon also offers a “Buy with Prime” button, which enables retailers to use Amazon’s payment and delivery services. In January 2023, BigCommerce became the first partner to enable the Buy with Prime button, opening the solution to its 51,000 merchants. Then in August, Shopify announced it would give its merchants the option to offer Buy with Prime directly into checkout. 

B2B

Amazon Business will bring in $43.44 billion in US product sales in 2024, a 12.3% growth YoY, according to EMARKETER’s August 2023 forecast. Even though that only represents 2.1% of total US B2B ecommerce site sales, Amazon is still outperforming competitors like BigCommerce ($2.58 billion) and Shopify ($11.29 billion).

Echo and Alexa 

The number of Echo users will grow to 68.9 million in 2024, a meager 1.7% annual growth, per EMARKETER’s August 2023 forecast.

After struggling to find a way to monetize the Echo, Amazon made major cuts to its device team in late 2022. But in September 2023, Amazon announced it was revamping its voice assistant, Alexa, with new generative AI-powered capabilities. The technology will be based on a new large language model, which the company says will help Alexa feel more human, more personalized, and more connected to other smart devices. 

Amazon’s ecommerce competitors

Though Amazon is undoubtedly the king of ecommerce in the US, it’s facing its share of competition.

  • Walmart Inc. will bring in only a fraction of Amazon’s ecommerce revenues in 2024 ($82.81 billion versus Amazon’s $492.23 billion, according to EMARKETER’s October 2023 forecast), but it is growing faster. Walmart’s ad business is also growing faster, rising 39.5% in 2024 compared with Amazon’s 26.6% growth. Plus, Walmart has a physical advantage over Amazon with its 4,616 US locations. 
  • Shopify also presents competition for Amazon with its third-party marketplace. However, the Buy with Prime integration could pave the way for future collaboration. Though Shopify was hesitant at first to incorporate the button, the two companies came to an agreement where merchants can use Amazon’s fulfillment system while payments will still go through Shopify’s checkout service. 
  • Globally, Amazon’s reach is also unparalleled, but Alibaba and Mercado Libre are giving the company a run for its money in their respective regions of China and Latin America. 
A chart showing which retail membership services US adults pay for, February 2021 to October 2023. (Subscribers only)

Amazon antitrust allegations 

Over the past few years, Amazon has faced increasing antitrust scrutiny from the US government over alleged anti competitive practices. On September 26, 2023, the Federal Trade Commission and 17 state attorneys general announced they were suing Amazon for “illegally maintain[ing] its monopoly power” with an “ongoing pattern of illegal conduct.”
 

Amazon’s AI ambitions

To stay relevant in the AI race, Amazon has incorporated generative AI into a wide variety of its businesses and services, including: 

  • Within its cloud computing platform, AWS
  • With a generative AI-powered assistant, Amazon Q, which can answer queries, generate content, and streamline tasks 
  • With an AI chatbot feature within its search functionality, which can give recommendations, offer product comparisons, and ask follow-up questions 
  • With an image generation tool for Amazon Ads that enables advertisers to generate lifestyle backgrounds for their products  



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