Just How Big Is Amazon? Ask Its Vendors Who Rely On The E-Commerce Giant

We know just how big Amazon is thanks to the multiple metrics available by default of it being a public company. As of the end of March 2021, Amazon is worth $1.5 trillion after generating $386 billion worth of revenue in 2020, up more than $100 billion from the year prior.

Amazon is so dominant in the e-commerce universe it grew its US market share from 34% in 2016 to 47% in 2020. Some estimates call for continued growth as $1 out of every $2 spent online in the US will go through Amazon.

There is another way to examine how big Amazon is by taking a look at all the third-party vendors and partners that rely on Amazon's ecosystem.

Millions Of People Depend On Amazon To Sell Goods

Amazon's retail business consists of two distinct characterizations: first-party (1P) or third-party (3P).

A 1P relationship with Amazon means a business sells its products directly to Amazon. Amazon then sells and ships the products to the end consumer.

By contrast, 3P businesses sell their products directly to the consumer on Amazons' marketplace. In this case, the seller is responsible for their own marketing and logistics.

Amazon is able to reach hundreds of millions of homes in two days or less so selling on the platform is a natural choice. In many cases, it is a mandatory choice as there are few if any other ways to target so many people in one platform.

According to Amazon, independent businesses that sell on Amazon combined for $4.8 billion in worldwide sales from Black Friday through Cyber Monday in 2020. Throughout the entire holiday season, Amazon facilitates the sale of nearly 1 billion products.

But Amazon is much more than just a retail marketplace. Thousands of independent authors collected more than $50,000 in revenue through the Amazon Kindle Direct Publishing business. Amazon provides a venue for no-name authors to reach an audience with minimal effort.

Amazon notes that more than 1,000 authors collected more than $100,000 in royalties. In total, Kindle Direct Publishing authors collected more than $1.5 billion in royalties since its launch in 2014.

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(Source: Statista)

Payment Processors Rely On Amazon For Growth

Amazon announced on Feb. 1 that all third-party sellers on its platform must transact either with their local bank or one of just 10 approved payment processors.

Some of the more notable names included in Amazon's new Payment Service Provider program include Airwallex, Payoneer, NetEase Global Pay, Skyee, and OFX Global.

Amazon stated the purpose of its Payment Service Provider program is to better detect, prevent, and take actions against bad actors. The program is a token of confidence for Payoneer as it means it had to undergo and pass a rigorous audit of its business. 

As part of the data-sharing agreement, participating payment processors have to share with Amazon information about their clients' identity and their accounts. Amazon will use the information to identify and take actions against individuals involved in abuse, fraud, and other illegal activities.

Taking a look at some of the payment processors that play a part of Amazon's ecosystem shows just how important the e-commerce giant is to their growth prospects. Many of the payment processors expanded their valuation over the years by billions of dollars in unison with Amazon's explosive growth.

Payoneer, for example, was valued at just $880 million in 2017 but within days of Amazon's updated program in 2021 it was valued at $3.3 billion as part of a special purpose acquisition company (SPAC) deal.

AWS Powers The Who's Who Of Corporate America -- And Small Businesses

Amazon boasts that it has more than 1 million AWS users that rely on its superior technology to become more productive. The company likes to tout its many large corporate clients, including Wall Street behemoth JPMorgan Chase, media giants Netflix and ViacomCBS, auto leaders like BMW Group, among many others.

AWS evolved to become a $51 billion annualized run-rate business which management described during its fourth quarter conference call as "arguably the most profitable important technical technology company in the world."

Amazon also offers small businesses across the world free resources to help them realize their true growth potential. The company donated more than $1 billion worth of free cloud credits via its cloud business Amazon Web Services in 2020 to help early startups focus more on their business and less on costs.

Some of the vital tasks AWS provides to small businesses include computing, storage, database, analytics, Internet of Things, machine learning, and much more. In simpler terms, without AWS, a small business would need to invest in expensive storage infrastructure and then maintain it internally. 

Instead, small businesses can outsource complex yet vitally important tasks to AWS.

Conclusion: Amazon Is Vital To Businesses Of All Sizes

Amazon might be best known as the company that can deliver the most obscure product in two days or less. The company is certainly on the receiving end of negative press and headlines, especially from some of the highest-profiled members of the Democratic party.

While some of the claims might have merit, Amazon is responsible for helping millions of small business owners make a living. While the company is also known for its higher than average minimum wage, larger businesses that work with Amazon represent a viable path to indirectly generate millions of additional jobs.