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How Amazon Makes Money

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Amazon reported a record net income of $10.1 billion in 2018, which was a considerable jump from $3 billion in 2017. CNBC breaks down where exactly the money came from and how Amazon Web Services, advertising and the third-party marketplace are driving Amazon's increased profitability. For more on Amazon check out the following videos: As Amazon Air Expands, FedEx And UPS May Suffer https://www.youtube.com/watch?v=Efs3PyR8iBw Jeff Bezos In 1999 On Amazon's Plans Before The Dotcom Crash https://www.youtube.com/watch?v=GltlJO56S1g Is Amazon HQ2 A Bad Gamble For Cities? https://www.youtube.com/watch?v=s5ouSWNQrkA Inside Amazon's New 4-Star Store https://www.youtube.com/watch?v=_lqjxVO4u5M » Subscribe to CNBC: http://cnb.cx/SubscribeCNBC About CNBC: From 'Wall Street' to 'Main Street' to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more. Connect with CNBC News Online Get the latest news: http://www.cnbc.com/ Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC Follow CNBC News on Facebook: http://cnb.cx/LikeCNBC Follow CNBC News on Twitter: http://cnb.cx/FollowCNBC Follow CNBC News on Google+: http://cnb.cx/PlusCNBC Follow CNBC News on Instagram: http://cnb.cx/InstagramCNBC #CNBC #Amazon How Amazon Makes Money
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Text Comments (702)
Amet Alvarez (1 day ago)
amazon has 230 bn in revenue . 10 bn in net income. employed 600 k. And 900 bn plus in market cap. All this took '25 years' of human calender . #jeff bezos . we can learn from hiM. #selfmade#jeffbezos
Eric Kosak (6 days ago)
Value it with ROIC.
Editor's Choice Products (10 days ago)
Title should be : How Amazon make money by hook or by crook?
ahmedalik88 (14 days ago)
While watching the video the guy mentioned Alexa to order coffee now guess what I found in my Amazon cart?
pinBin25 (19 days ago)
Great episode. Thanks guys!
LogicTech (19 days ago)
CNBC is doing some great work with these videos
Stuey Griffith (24 days ago)
:40 Invent-tory? Amazon DOES create a lot new things, don't they?! this is what happens when you let INTERNS make youtube videos.
Chaika Gaz (24 days ago)
I hate the third party sellers because they try to scam you. With ebay you have money back guarantee unlike amazon. Also why did amazon buy whole foods?
T-Head (24 days ago)
Haha, they make a lot of money by not paying proper taxes in europe😂
klobasa007007 (28 days ago)
What is changed? They divorced
BIG BRAIN MUSIC (29 days ago)
justin vertefeuille (1 month ago)
596 million "hardly any profit" this video is fukkkedddd up and that was only 13 seconds into it. This youtube channel must be doing well.
Nicolas Lopez (1 month ago)
Did she just say inventery instead of inventory?
Ron Villejo (1 month ago)
So while Amazon's profit is paltry compared to that of Apple, Google or Microsoft, it may have recently hit a major inflection point in its profit growth - driven in no small measure by its Amazon Web Services (AWS). So if you think it's just a big online retailer, think again!
Klay Thompson (1 month ago)
I'm loyal to amazon because of their decent prices, sales, fast shipping, and no hassle refunds whenever I get screwed.
No-Conspiracy No-Jobs (1 month ago)
Chad Waite (1 month ago)
Amazon is the junk store of the internet
Berta Villa (1 month ago)
Amazon over work there workers
Reshiram52 (1 month ago)
The answer in one word: AWS. No need to watch the video
GamingTimePro (1 month ago)
4:34 how many of y’all’s Alexa just went off...
YugoRr (1 month ago)
The role of shareholders is overwhelming the stakeholders.
Light Yagami (2 months ago)
And paid no taxes lmao
Johnny S (2 months ago)
and this is why amazon will be broken down into 3-4 companies,
A Tem (2 months ago)
man, so rich.
Andrew Sturgeon (2 months ago)
No, over time , I use my Alea less and less, and forget it's there, because it has few good use cases. I'm sure if you were to measure meaningful engagement, you'd find there is little, amongst 1000's of options. Tell me when the last time ANY company discussed ANY voice enabled device as even being a channel, for any aspect of their business, beit sales, customer service, customer acquisition, etc. It's a novelty/toy. Not saying voice won't be a big deal - but until there's a killer app - forget it.
Happy Life WISH (2 months ago)
And 0 tax
이은굥 (2 months ago)
I love Amazon♥ they got everything!!!!due to Jeff Bezos' crazy customer obsession!!!
San Jones (2 months ago)
Doctron Four (2 months ago)
Maybe they’ll start paying its fulfillment employees fair wages now.
Breaking Bad (2 months ago)
Why do they send small items in big ass boxes?
David M (2 months ago)
Alexa STOP!!!
David Thierry (2 months ago)
Amazon makes money by avoiding paying taxes in countries where it makes profits. Omitting this fact is unprofessional.
Paul Hosken (2 months ago)
All this obsession about money .no concern for the kids starving around the world being abused. When god comes back the USA will vanish in a puff of smoke
Bailey Henderson (2 months ago)
Sears and kmart JCP did not take about 700 dollars loss last year they just kept going sears and kmart will become together Canada will have sears back soon slim in Mexico sears has no choice either give up the division or quit Mexico will be bashed and thrashed and beaten bloody to conform to amercian counter culture
Lucas Kwiatkowski (2 months ago)
Amazons advertising is starting to become more and more profitable. Clicks for Amazon PPC are rising at an alarming rate and poorly managed ad campaigns are continuing to make Amazon a lot of money. Now that Amazon controls more than 50% of all ecommerce sales, brands are taking ad spend from Facebook and Google to put it into Amazon.
moonstar (2 months ago)
by making everything overpriced
rampage (2 months ago)
amazon not the cheapest but you can find stuff there and not locally , free shipping is nice , but i always shop around , sometimes amazon has cheapest price
glen aldo (2 months ago)
Cheaper prices means cheaper product
Alex Voxel (2 months ago)
Amazon is providing great customer experience, that's the key!
Mario Luevanos (2 months ago)
Easy, by not paying taxes.
DON KAZ (2 months ago)
Next major step should be reducing shipping costs so we'll get it cheaper
Haks Hustle (2 months ago)
They're already working on that, Prime air, more operation centres and they've increased their investment in the transportation area as a whole which will save them billions annually and ultimately benefit both the consumer (quicker deliveries at a cheaper rate) and the business. I mean, Amazon's business model and logistics is just incredible.
quadsnipershotp1lvl4 (2 months ago)
Amazon will their get too big and fall hard or it will become a monopoly and get broken up. I like amazon for expendables like laundry detergent, and their stuff and my manga if a buy only one. But most stuff that is sold on the website is just cheap Chinese crap.
KWT (2 months ago)
most stuff on ebay are cheaper than amazon but what makes me buy from amazon is the customer service
Reece Mayer (2 months ago)
Because they dont pay taxes lol. Get real
The Philosopher (2 months ago)
They should connect the profits of a company with the minimum wage of its employees.. for example, if the company makes 5 bn$ the minimum wage of its employees increase by 25%... if 10 bn$ it increases by 50%,,, something like that.... Also there should be a labor union committee that check on these big companies to make sure the number of employees in a company do match the necessary requirements, and that these companies are not over-burning their employees to save unnecessary cost.
Guy Tero (2 months ago)
Mmmmmm sheeple. I'm sure Amazon doesn't pay any tax wherever they are in the world. And Alexa is the scariest thing to ever hit the market.
Scott Hall (3 months ago)
They give the post office like 1 dollar to deliver each package
Friedrich Siefferman (3 months ago)
Woo America
Sahil Saleem (3 months ago)
I love Amazon.
Blue Sky (3 months ago)
1:50 AWS grew 4-5 years ago? This dumb @ss. LMAO AWS has been the market leader since 2009 dude.
Abhimaneu KJ (3 months ago)
*Let's buy some Amazon stocks*
Toby and James Goldsmith (3 months ago)
Amazon is really popular here in the uk
PhillyDjHook (3 months ago)
I wish I was blessed with a brain that could think of a way for me to make money. Anyway, I DJ LIVE on YouTube but I can't save any mixes there. Subscribe to my YouTube channel and hit that ALERT bell so you'll *NEVER* miss a mix. It's an Live DJ mix show where you can make song request and I'll play it.  .
Destiny Fan (3 months ago)
There's also the deal with NSA.
David James (3 months ago)
Every American should buy some of this stock
Huseyin UNKOC (3 months ago)
Mind... blown.
Being Fooled (3 months ago)
Be realistic guys, any talented people would rather kill oneself than to be delivering goods to make a living, like this amazon guy. A doctor has to be quite talented knowing all the biology and physiology of the body and going through the bootcamp like med school and hospital training. but the doctors cannot be billionaires. if they do, they would be considered immoral that they must have stolen money from the patients or public. If delivery goods can make a decent living, let say having a salary of few hundred thousands a year, that is good enough for the kind of service they do for the society. But becoming billionaires? something must be wrong in the system allowing them to do so. theoretically, doctors should be billionaires for the kind of work they do, but why the system does not allow them to be? because they have to stick w the moral code? How about those retailors, a kind of job for people have no talent to go to med school, and they become billionaires? Are they sticking to the moral code? Are they monopolizing the market, buying the politicians, getting corporate welfare, having too much tax break etc? If the retailers dont have to follow the moral code, why should doctors. how about this? the doctors should charge their fees according to the wealth of the patient. if you are poor, doctors charges nothing or just a few cents, if you are super rich, doctors charges $50M for a simple procedure. this is the only way to be billionairs as doctors. and it seems not breaking the moral code at all.
Ray S (3 months ago)
Didn't Amazon start out as a bookstore?
yahwehsonren (3 months ago)
So Amazon zero from delivery but from webservices wow
Guyana Online Shopping (3 months ago)
Wish they went more in debt
Guyana Online Shopping (3 months ago)
Wow amazing really when you think about it. That means the customer wins as prices will be super low no other competitor could stop Amazon.
KingRn7 King (3 months ago)
Ever since they Laughing it in and in 2017 & 2018 Amazon become India's #1 online shopping site
Miguel Torres (3 months ago)
Selling cheap crap
The Black Shadow (3 months ago)
Amazon not paying their taxes!!!
Damien Tong (3 months ago)
Record earnings and they got over 100 million back from taxes
Chris Levesque (3 months ago)
Thanks, you just made my Echo try to buy me coffee.
Jennifer He (3 months ago)
Dangers of this video: Alexa almost ordered coffee for me
Dach ..... (3 months ago)
If amazon were a girl, i would marry her,
Football Highlights HD (3 months ago)
Make a video on how they don't pay taxes
Patel Vidhu (3 months ago)
Amazon is a great company built on best customer service. Profitability will increase because Amazon is market leader in many products.
Filipe Barbosa (3 months ago)
Not with my money.
Dhante Swha'le (3 months ago)
Unless you're a prime member shipping can be expensive sometimes
Xipo86 (3 months ago)
best company
Valentino Scopelliti (3 months ago)
Who else loves amazon?
Xipo86 (3 months ago)
@GET ME 100 SUBS PLZ Amazon is the best company
Jack Reacher (3 months ago)
I like Amazon. Amazon has great customer service.
J C (3 months ago)
I seem to do much better selling on eBay than Amazon.. stuff sells faster and overall a little less in fees.. I like how they never mentioned eBay at all in this video, like when they said you either use Amazon or go at it alone. Lol k
AaronP11 (3 months ago)
Amazon is way behind Alibaba but no one ever talks about Alibaba
Nishant Jayant Gilatar (3 months ago)
I just wanted to know how amazon manages to sell an item below max retail price and spend on packaging and delivery without taking a delivery charge :/
the doge (3 months ago)
I ordered a mattress from Amazon and is really comfy, good price and free shipping. All hail Amazon huehue
NATASHA SOMMER (3 months ago)
Amazon is big in world,,.
Tampatec (3 months ago)
Very Innovative with fire TV stick, echo, Ring and sales from popular tech YouTubers.
Kiril Naydinidis (3 months ago)
Aurobindo Ghosh (3 months ago)
amazon made money after realizing just selling books don't fatten the wallet
Frank Liera (3 months ago)
Amazon should invest on better tape for their boxes. when Amazon prime boxes go through UPS hubs their cheap tape causes their heavy packages to open. so much money and such cheap tape.
Sc0rPsX (3 months ago)
Was pretty positive you were going to blame Russian bots...
Kirito Kirigaya (3 months ago)
Why would you use McDonald's as reference? Isn't it comparing oranges and apples
KHALIIL01 (3 months ago)
Still didn’t explain how Jeff Bezos made $150 billion.
Beck Stein (3 months ago)
Amazon is making robots to conquer the world.
crazieeez (3 months ago)
Amazon website looks like sheeit. So confusing. It makes me not want to shop online. Airbnb is so slow thanks to Amazon Web Service.
crazieeez (3 months ago)
Amazon website looks like sheeit. So confusing. It makes me not want to shop online. Airbnb is so slow thanks to Amazon Web Service.
MrHaterClay (3 months ago)
SquirrelyBlake (3 months ago)
The numbers aren't true. Amazon had a horrible year in 2018 and isn't doing that great this year either. Really sad to see companies go out of business due to Amazon and those still in business don't even try to compete. Stop lying with the numbers! Doesn't make you smarter.
sbasireddy19 (3 months ago)
Did Jeff Bezos make this video to flex on us?
Ramiro Garcia (3 months ago)
Anybody else feeling like Amazon is getting a little too big? They essentially have a monopoly over online sales.
Oliver Medina (3 months ago)
Sheer Volume in Shipping and Manufacturing. Also getting Grade A Buy Rates with Carriers like Fedex. USPS and UPS.
NZNSI Inc (3 months ago)
0:40 I've never heard "inventory" pronounced that way before
Jordan E (3 months ago)
AWS is so much overpriced compared to other cloud service data centers
mannygomez24 (3 months ago)
And still no taxes for them
Dick Plummer (3 months ago)
I rather it be Amazon than fake communist, Ali Baba baby-face.
Khurum Niaz (3 months ago)
Wait so Amazon Web services provides services to Netflix eventhough prime video is Netflix's rival
Khurum Niaz (3 months ago)
Wait so Amazon Web services provides services to Netflix eventhough prime video is Netflix's rival