Amazon is undoubtedly the biggest e-commerce store in the world. You can find all sorts of items from electronics to books. From a tumble beginning as an online bookstore, the company has defied all odds to be what it is today.

Founded on July 25th, 1994, by Jeff Bezos, the company has grown in leaps and bounds over its 27-year history and has become a global icon and a pacesetter in the e-commerce industry. The biggest edge of Amazon comes from a product that was launched in 2005, the service is amazon prime. At that time, Amazon Prime cost 79 dollars per year and it allowed customers to get unlimited two-day deliveries on their orders. Without prime, it would cost a customer 9,48 dollars to get an item delivered within two days. This means that if a customer placed nine orders a year, prime would have paid for itself. Prime proved to be a game changer for the company as prime members spend more money and are more frequent customers on the site than non-prime members.

Amazon reported record profits in 2018, earning $10.1 billion in net income compared to just three billion dollars in 2017. Considering the company hardly had any annual profit 2016, it represents major growth.

Amazon long dominated the U.S e-commerce market, online sales are not actually the biggest moneymaker for the company. Its e-commerce division is not even profitable internationally. Instead, Amazon Web Services or AWS has generated the majority of the company’s operating income since 2016.

AWS is Amazon’s cloud computing division, comprised of a huge network of servers providing processing and storage solutions for companies, government agencies and individuals. Its clients, which include Netflix, Airbnb and Yelp, are changed for their volume of usage, the features they subscribe to, and the services they use.

In 2018, AWS brought in 7,3 billion dollars in operating income and 25,7 billion dollars in revenue which, for reference, is more than both McDonald’s and Macy’s. Although it is a huge reason behind Amazon’s recent probability, other areas of the company are seeing major growth as well. The fastest growing division of Amazon is its advertising business. It grew 95 percent in the fourth quarter of 2018 and brought in $10.1 billion in revenue for the year overall.

The last segment experiencing major growth is the third-party marketplace. While Amazon traditionally buys products in bulk from wholesales and sells them at a sight markup, in the third-party marketplace outside companies pay Amazon to sell their goods using its platform. Amazon takes about a 15 to 20 percent cut of the sales, while also collecting storage and shipping fees. While Amazon generates significantly less revenue from third-party merchants than from products it sells, margins are much higher, making it more profitable than the traditional model.

Today, more than half of all goods sold come from third-party sellers, and more and more businesses are signing up. Sales of third-party seller services rose by 34 percent in 2018 to 42.7 billion dollars.

Sources: New York Times, Forbes, Amazon, Consumer News and Business Channel