Feb 8, 2025

Amazon has transformed itself from a fledgling online bookstore into a formidable retail giant, now boasting record quarterly and annual profits. According to a detailed analysis by Yahoo Finance, the company’s operating income increased by a staggering 86% year-over-year, underscoring its growth trajectory.

The major driver of Amazon’s profitability has been its cloud computing division, AWS, which accounted for 58% of the company’s operating profits in 2024, amounting to $39.8 billion out of a total $68.6 billion in core business income. This still leaves a significant 42% of profit, or $28.8 billion, coming from non-AWS business ventures.

Amazon’s e-commerce segment, which includes fees on its independent sellers, has become increasingly important. IndexBox data reveals that in 2024, Amazon generated over $150 billion in revenue through seller fees alone, a figure significant enough to place it among the Fortune 25 if considered a separate entity. The proportion of revenue from seller fees skyrocketed from 19% of Amazon’s non-AWS revenue in 2019 to over 29% last year, reflecting a 53% increase.

Despite Amazon’s growing dependence on third-party sellers, who accounted for around 61% of the total merchandise sold, there remains ambiguity around how much of the collected fees are necessary for covering associated costs versus serving as an additional profit source. This aspect remains unexplored by Amazon, possibly due to increased scrutiny it might invite.

Further bolstering Amazon’s profit engine are its advertising activities, which are claimed to have even higher margins than AWS, alongside cost reductions in warehousing and transportation by streamlining logistics operations. Amazon’s warehouse network restructuring into regional hubs and the adoption of cutting-edge automation solutions have added to these efficiencies.

Analyst Mark Mahoney from Evercore ISI concurs that while advertising and operational cost improvements have been pivotal, the revenue from seller fees ‘may well be material’ to Amazon’s financial performance, contributing to the company’s record-breaking profits.

Amazon remains tight-lipped on this subject, with spokesperson Angie Quennell declining to provide comments, leaving stakeholders to speculate on the true impact of these seller fees on Amazon’s bottom line.

Source: IndexBox Market Intelligence Platform