Amazon's significant profits stem largely from its advertising business rather than traditional retail. Despite e-commerce sales surpassing $450 billion in 2024, its retail operations yield minimal profit margins. Amazon's transformation into an ad-centric model is evident, as its retail media network shows impressive margins. In response, major retailers like Walmart and Target are launching their own advertising networks to compete, acknowledging the potential profits in this space, and changing the competitive landscape of e-commerce.
Major bricks-and-mortar retailers are establishing their own retail media networks, similar to Amazon's model, to monetize their digital platforms and boost advertising profits.
After three decades of refining its model, Amazon's e-commerce business barely ekes out a profit, relying heavily on its advertising revenue.
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