Amazon's empire

The simplest way to introduce an ecosystem the size of Amazon’s is to give a brief history of how it evolved. We give a sketch here. More detail is given in Roel Wieringa & Jaap Gordijn “The Amazon Ecosystem and Its Business Models,” The Value Engineers, June 2020,

A brief history of

Amazon started in 1994 as an online bookshop, and in 1998 extended into other kinds of products that could be easily shipped, such as CDs and toys. This turned the bookshop into Amazon Retail. In 2001 it opened its online web shop infrastructure to third party sellers. This was the first of many digital transformations Amazon went through. It transformed the Amazon web site into an online marketplace where Amazon Retail was just one shop selling products on it, competing with third-party sellers on Marketplace.

Amazon Marketplace allows to offer a wide variety of products without keeping an inventory or paying for logistics — third-party sellers do that. It generates revenue from transaction fees paid by sellers on its Marketplace. In 2005, Amazon introduced the Prime program. Subscribers of Prime are entitled to two-day delivery. Over the years, many perks were added such as access to Amazon Video, Amazon Music and Amazon Photos, exclusive Prime deals, and an Amazon credit card. Today, one-day and same-day delivery is available, and in some cities, two-hour delivery is available for selected items. Once buyers are Prime members, they tend to stay members year after year.[i]  Prime members are important for Amazon because on average they buy twice as much as other customers on Amazon.[ii] Amazon Marketplace is reported to have about over 1 billion unique visitors per month, which attracts a lot of sellers.[iii] It hosts over 6M third-party sellers, of which nearly 1.6M are active, which in turn attract a lot of buyers.[iv] Amazon Marketplace competes with other online marketplaces such as Etsy, Alibaba’s Tmall and Taobao, Shopify and the Indian Flipkart. Amazon has acquired many other web shops, such as, Zappos and East Dane, which operate under their own brand. Some of them use the Amazon Marketplace infrastructure. They all compete with Amazon Retail.

Next to its online shops and marketplaces, Amazon has acquired and opened physical shops, such as Whole Foods and Amazon Go.  Amazon’s physical shops may be located in a shopping mall — a physical connection platform. They can be used as delivery points for products bought on Amazon Marketplace. Amazon supplies its digital and physical retail shops with a wide variety of brands. But it also supplies its shops with its own private labels that compete with the other brands that it sells.

Amazon's brands, shops and marketplaces

The following diagram organizes amazon's brands, shops and marketplaces plus its buyers in four layers.

Starting from the bottom of the diagram, marketplaces provide connection services to sellers and buyers. Amazon operates Amazon Marketplace, which competes with other marketplaces, including Etsy, Tmall, Flipkart and many others. In addition to Marketplace, Amazon operates Merch by Amazon, a marketplace where consumers can buy branded t-shirts which are printed on demand, and Home Services, which offers third-party home services ranging from cleaning to pet care. Amazon Retail is one of the web shops on Marketplace, competing with millions of third-party sellers. Amazon other web shops include for fabrics, sewing tools and accessories, Shopbop for high-end fashion, and Zappos! for shoes and clothing. And it operates physical shops such as Whole Foods for organic foods, AmazonGo to experiment with shop automation, AmazonFresh for grocery, and a Treasure Truck that offers a daily trending product. These compete with local physical shops. All physical and digital shops are a sales channel for brands, so we consider them to be a service-providing layer for the brands. There are two groups of Amazon brands, one for domestic, food and office supplies, and one for smart home products.

In the first group we find AmazonBasics, a brand for home goods, office supplies and tech accessories. Amazon Elements is a brand for domestic products, Solimo for kitchen and home goods, and Mama Bear for baby products. Wickedly Prime is a food label for Amazon Prime members only, Happy Belly is a snack food label for the rest of us, and Amazon Fresh is a label for grocery delivery. Vedaka is a food label for groceries in India. Core 10 is a brand of women’s athletic and leisure apparel.  These Amazon brands compete with non-Amazon brands of domestic products, apparel, office supplies etc.

The second group of Amazon brands consists of smart home products. This includes the Amazon Kindle e-reader, which competes with Rakuten Kobo. The Amazon Echo smart speaker competes with Google Home and Apple HomePod. Ring doorbells and Blink smart cameras compete with Google Nest. The Dash smart shelf is a connected shelf that can reorder products when the weight of the products stacked on it falls below a threshold.

Amazon is further extending its online retail by extending into pharmacy (not shown in the diagram). It acquired PillPack in 2018 and started AmazonPharmacy in 2020, which competes with PillPack.[v] It is now experimenting with remote healthcare.[vi]

Amazon's content delivery ecosystem

The second significant value network that Amazon has built is that of online content delivery, shown in the diagram below. This one too is built on top of Amazon Marketplace, but there is more. Kindle Direct Publishing is a self-publishing service in which authors are paid per page read. It is a connection platform for readers and writers. Amazon Ignite is a platform for educators to create their own textbooks on Kindle. Other educators can buy this material. Audible is an audiobooks company that owns the Audiobook Creation Exchange (ACX), a marketplace where authors, literary agents, publishers, narrators, engineers, recording studios, and others can connect to produce an audiobook. Abebooks is an online marketplace for books, fine arts and collectibles.

Amazon Video streams video and competes with Netflix, Disney+, Apple TV and others. Amazon Studios is a film production and distribution company. Prime Video Direct is a marketplace where independent producers can upload their movie where Prime members can watch it. This makes Prime Video Direct a competitor of Google’s YouTube. Amazon Music sells digital audio tracks that buyers can stream using an Amazon app. Amazon also streams music directly, as part of the Amazon Prime subscription. Amazon sells games and also owns a game development studio. Twitch is a game streaming company and Luna a cloud-based gaming platform. Amazon University e-sports is a partnership that sponsors e-sports tournaments. Digital Photography Review (DPR) provides comprehensive reviews of digital cameras, lenses and accessories, buying guides, user reviews, and forums for individual cameras, as well as general photography forums. The e-books ecosystem is large. Amazon sells more e-books for the Kindle reader than it sells paper books. Amazon Publishing is a publisher with about 20 different imprints that compete with established book publishers. Book Depository is an online book seller that operates under its own label and competes with Amazon Retail as a book seller. GoodReads is a social catalog of books and reviews. Comixology is a cloud-based distribution platform for comics.

Amazon's supporting ecosystem

Turning now to the third group of value networks, all these marketplaces and shops are supported by a fulfilment infrastructure of logistics, marketing, and payment services, shown in the following diagram.

Amazon operates vans, planes, drones, and robots to deliver packages at the consumer’s doorstep or at pick-up points. It operates the AmazonFlex marketplace that connects freelance providers of transport, using their own car, with logistics jobs for Amazon. It has partnered with some large logistics providers such as UPS and also competes with these providers by offering its own logistics services to third parties. And it has started the Amazon Freight marketplace to connect the demand and supply of logistics. This competes with other logistics marketplaces like Convoy and Trinity. Amazon has also started advertising services. Amazon associates get a commission for referring buyers to the Amazon web site. Amazon Influencers create content that refer to the Amazon web site to buy stuff. Amazon also operates a payment service for its users. The payment service is also offered to non-Amazon shops, outside Amazon Marketplace.

All of Amazon’s services run on Amazon Web Services, the lowest layer in Amazon’s stack of platforms. AWS offers cloud services developed by Amazon alone or by Amazon with partners. These include computation, storage, analytics, and machine learning services. AWS also operates AWS Marketplace for software services made available on AWS by third parties. AWS is the fastest growing part of Amazon and generated US$ 62 Bn gross revenue in 2021 (up from US$ 45 Bn in 2020), which is 13% of Amazon’s total revenue of US$ 470 Bn. It generated US$ 19 Bn operating income, which is 74% of its total operating income of US$ 25 Bn in 2021. It is suspected that the revenue generated by AWS is used to subsidize other activities.[vii] For example, Amazon Freight operates 30% below market price.[viii]

The value models shown here omit a lot of information. Only a few of the competitors are shown, and information about partners is omitted altogether. But enough has been shown to make clear that Amazon’s network is an empire that spans several ecosystems.


[i] Daniel B. Kline, “Amazon Prime improves its customer retention rate,” Motley Fool, June 2016,

[ii] Dennis Green, “Prime members spend way more on Amazon than other customers – and the difference is growing,” Business Insider, 21st October 2018,

[iii] Eugene Kim, “Shopify just beat Amazon in one important metric, showing the intensifying competition between the 2 e-commerce giants,” Insider, 20th September 2021,

[iv] “Leading e-commerce websites in the United States as of June 2021, based on number of monthly visits,” Statista,, consulted 8 January 2022.

[v] Ingrid Lunden, “Amazon buys PillPack, an online Pharmacy, for Just under $1B,” TechCrunch, June 28, 2018,

[vi] Amazon Care is a telehealth service launched in 2017    ( It did not gain enough traction and will be shut down by the end of 2022 ( Amazon sees this as a learning experience and is committed to making inroads in the health care industry.

[vii] Kahn (2017).

[viii] John Paul Hampstead, “Amazon’s digital freight brokerage platform goes live,” FreightWaves. 26th April 2019,