If you ask your neighbor what type of business is Amazon, they’ll probably point at the cardboard box sitting on your porch. It’s the obvious answer. Amazon is the place where you buy toothpaste at 11 p.m. and it shows up before your morning coffee. But if you actually look at where their money comes from in 2026, the "online store" label feels almost like a decoy.
Honestly, calling Amazon a retailer is like calling a Swiss Army knife a toothpick. Sure, it does that one thing really well, but there are ten other blades that actually do the heavy lifting.
The Three-Headed Monster
To understand what Amazon has become, you have to stop thinking about it as a single shop. It’s more like a digital utility provider that happens to sell shoes. As of early 2026, the company is split into three main buckets that feed each other in a way that’s honestly kind of terrifying for their competitors.
First, you have the Marketplace. This is the part we all know. But even here, there’s a twist. More than 60% of the stuff sold on Amazon isn't even owned by Amazon. They are a "service provider" for millions of third-party sellers. They take a cut of the sale, they charge for storage, and they charge to ship the items through their "Fulfilled by Amazon" (FBA) program. They aren't the store; they’re the landlord of the biggest mall on earth.
Then there’s AWS (Amazon Web Services). This is the real "cheat code" for the company. AWS is a cloud computing business. If you use Netflix, Airbnb, or even government websites, you’re using Amazon’s servers. In the third quarter of 2025, AWS sales hit $33 billion. The wild part? Even though it brings in less total revenue than the retail side, it generates the vast majority of the company's actual profit. In 2025, AWS accounted for roughly 66% of Amazon's operating income. It’s the bank that funds everything else.
The third head—and the one growing the fastest—is Advertising. You might not notice it, but every time you search for "noise-canceling headphones" and the first three results say "Sponsored," Amazon is getting paid. They have become the third-largest digital ad platform in the world, trailing only Google and Meta. By the start of 2026, ad revenue has surpassed $60 billion annually. Because Amazon knows exactly what you buy, their ads are incredibly valuable to brands.
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Why the "Everything Store" is actually an "Everything Engine"
In business school, they talk about the "Flywheel." Jeff Bezos famously sketched this on a napkin. The idea is simple: lower prices lead to more customers. More customers attract more sellers. More sellers lead to a bigger selection, which brings even more customers.
But in 2026, the flywheel has grown a bunch of new gears. It’s not just about retail anymore.
- Prime is the Glue: It’s not just free shipping. With the recent launch of Alexa+, Amazon is integrating generative AI into your daily workflow. They want Prime to be an "operating system for your life." If you use their AI to draft emails, summarize documents, and buy groceries, you’re never going to cancel that $139 (or soon to be $159) annual fee.
- Logistics as a Service: Amazon now has a shipping fleet that rivals UPS and FedEx. They don't just ship their own stuff; they are increasingly moving packages for other people.
- Physical Footprint: Between Whole Foods, Amazon Fresh, and those "Just Walk Out" technology-enabled stores, they are a major player in physical groceries.
Is Amazon a Tech Company or a Retailer?
This is the big debate. If you look at the employee count—over 1.5 million people—most of them are working in warehouses or driving vans. That looks like a retail and logistics company.
But if you look at the valuation, Wall Street treats them like a tech company. Why? Because of the margins. Traditional retail has razor-thin margins. You buy a shirt for $10 and sell it for $15. After you pay for the warehouse and the clerk, you might keep $1.
Tech is different. Once you build the software for AWS or an ad platform, selling it to the 10,000th customer costs almost nothing. That’s where the "Technology and Infrastructure" spend comes in—Amazon spent over $90 billion on property and equipment (mostly data centers and AI chips like Trainium) in the trailing twelve months ending late 2025. They are betting everything on being the infrastructure for the "Agentic Era" of AI.
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The Hidden Risks
It’s not all sunshine and cardboard boxes. Amazon is currently facing a massive antitrust trial (scheduled for October 2026) that could fundamentally change how they operate. Regulators are looking at whether they give their own products an unfair advantage over the third-party sellers who use their platform.
There’s also the "Temu effect." Discount apps like Temu and Shein have put massive pressure on Amazon’s low-cost apparel and household goods. To fight back, Amazon has had to become even more efficient, using warehouse robots and regionalizing their shipping hubs to get items to your door in hours, not days.
What This Means for You
Whether you’re an investor, a seller, or just someone who buys too many rechargeable batteries, understanding what type of business Amazon is changes how you interact with it.
- For Sellers: You have to realize you’re playing in a "pay-to-play" ecosystem. More than 70% of sellers now use Amazon Ads. If you aren't Factor-ing in ad costs and FBA fees, your margins will vanish. Success in 2026 is about "replens"—products people buy over and over—and building real brand loyalty outside of the search bar.
- For Investors: Don't get distracted by the retail growth numbers. The real story is AWS and Advertising. As long as those high-margin segments keep growing at 20% or more, the company has the cash to keep experimenting with things like satellite internet (Project Kuiper) and autonomous taxis (Zoox).
- For Consumers: You are the product as much as you are the customer. Your purchase data is the "oil" that powers their $60 billion ad machine.
Amazon is a conglomerate of digital and physical infrastructure. They own the rails that the modern economy runs on. They provide the servers for the internet, the logistics for physical goods, and the data for global advertising. They aren't a store; they are a utility.
Actionable Next Steps
- Audit your Subscriptions: With Prime fees likely increasing, check if you’re actually using the "extras" like Prime Video, Amazon Music, and the new Alexa+ features. If you only use it for shipping, the value proposition is shifting.
- Diversify Sourcing: If you run a business on Amazon, 2026 is the year to move toward a multi-platform strategy. Relying 100% on Amazon’s automated systems is risky, as one algorithmic flag can suppress your entire income stream overnight.
- Monitor the Margins: Keep an eye on the quarterly earnings for AWS. If cloud growth slows, Amazon loses its ability to subsidize the expensive shipping we've all come to expect.