How Does Amazon Work? (Business Model Explained)

Amazon has evolved into a multi-dimensional business over the last few years. Its exceptional strength remains the e-commerce business, though. Amazon works both as B2B and B2C business models. Its wide range of products and services is also unmatchable.

The Amazon Global Network

Amazon reportedly has over 1 million employees, with the new hiring of 400,000 employees in the last year of 2020. It has 110 active fulfillment centers in the US and 185 international fulfillment centers.

It ships products to the US and international customers through its US and regional warehouse centers.

Here is a standard product order and delivery workflow at Amazon:

  • Depending on their location, customers order through one of Amazon’s e-commerce websites.
  • Amazon processes the order to its service centers. Amazon categorizes these centers as fulfillment centers.
  • The products are then routed through Amazon logistics to Amazon receive or delivery stations.
  • The nearest delivery station then delivers the product to the final customer destination.

Amazon’s fleet of logistics and supply chain includes:

  • Amazon Fulfilment centers include sort, specialty, receive, and delivery stations.
  • Amazon Trucks and Vehicles
  • Amazon Air
  • Amazon Prime Air, its latest drone fleet.
  • Amazon Spout

How does buying on Amazon work?

Customers from anywhere in the world can purchase with Amazon. As Amazon offers many international websites, it redirects the customers to their respective regional amazon sites for convenience. However, customers can choose to order with or its US website.

Customers need to create an Amazon account with an email or mobile number. They can then proceed with completing their account information. Customers can make an order for any traditional or digital product depending on the order type.

There are several orders that an Amazon customer can place:

  • E-commerce category and consumer products such as electronics, computers, smartphones, etc.
  • Amazon Live and Streaming subscriptions
  • Amazon Music and CDs, downloads, and subscriptions
  • Amazon E-books through Kindle memberships
  • Gifts and E-cards
  • Amazon and Android mobile applications and games

Customers can make payments with debit and credit cards. These cards include VISA, MasterCard, American Express, and JCB.

Selling on Amazon

Individuals and businesses can partner with Amazon to sell their products. You can join the Amazon network by creating a seller account and selecting the right payment plan. The two methods for individuals and businesses come with different pricing strategies.

  • Amazon Individual costs $0.99 per item if you sell less than 40 items monthly.
  • Amazon’s business costs $39.99 monthly if you sell more than 40 items.
  • Both plans also charge separate fulfillment, referral, and other costs too.

Amazon offers a significantly more comprehensive range of selling options to its business and individual customers. Some of the other widely used money-making options with Amazon include:

  • Selling e-books with Kindle
  • Amazon delivery service partnership
  • Amazon Flex
  • Amazon Auctions
  • Amazon Affiliate partnership
  • Amazon influencer for a curated list of products
  • Earning through video streaming on Amazon Video Direct
  • Partnering with Amazon Cloud and Web services like Amazon Alexa, App store, and AWS

Amazon Business-to-Business Marketplace

Amazon is a unique and blended marketplace of both retail and business customers. Individuals and businesses can take advantage of its millions of active global customer bases.

Some of the critical features of the amazon B2B seller program include:

  • Same pricing plans as a professional seller with a wider range of features.
  • Option to sell the products to businesses only or both retail and business customers globally.
  • Featured access to Amazon business services such as credit, marketing, and priority fulfillment.
  • All B2B marketplace features like customized quotes and pricing, bulk discounts, search for corporate customers, etc.
  • Profile and diversity certification, as well as product enhancement features.

Amazon products and services on offer

There isn’t a product or service that you can think of and cannot find at Amazon. The company claims that it offers everything “from A to Z.”

Amazon’s e-commerce range of products is standard and comparable with any other e-commerce platform. However, Amazon also produces its branded products and offers consumer services in the tech industry.

Some of the key products and services available at Amazon:

  • E-commerce products include home appliances, electronics, beauty and fashion, tools, toys and gaming, CDs, and downloads.
  • E-books with Kindle
  • Amazon Music, live stream, and digital subscriptions.
  • Amazon’s branded developed products include Alexa, music prime, Echo, Fire tablet, TV, Amazon Drive, Amazon wireless, etc.
  • Amazon’s feature services include Amazon Web Services (AWS) App store, Amazon Studio, and digital game store.

Amazon Subsidiaries

Amazon currently holds more than 40 subsidiaries that offer a wide range of specialty products and services.

Some key subsidiaries owned by Amazon include:

  • Audible
  • Amazon Fresh
  • Junglee
  • Twitch
  • Whole foods market