Amazon.com Inc. (AMZN)

Revenue is measured based on the amount of consideration that Amazon.com expects to receive, reduced by estimates for return allowances, promotional discounts, and rebates. Revenue also excludes any amounts collected on behalf of third parties, including sales and indirect taxes. In arrangements where Amazon.com has multiple performance obligations, the transaction price is allocated to each performance obligation using the relative stand-alone selling price. Amazon.com generally determines stand-alone selling prices based on the prices charged to customers or using expected cost plus a margin.

A description of Amazon.com’s principal revenue generating activities is as follows:

Retail sales - Amazon.com offers consumer products through the online and physical stores. Revenue is recognized when control of the goods is transferred to the customer, which generally occurs upon Amazon.com’s delivery to a third-party carrier or, in the case of an Amazon delivery, to the customer.

Third-party seller services - Amazon.com offers programs that enable sellers to sell their products in the stores, and fulfill orders through Amazon.com. Amazon.com is not the seller of record in these transactions. The commissions and any related fulfillment and shipping fees Amazon.com earns from these arrangements are recognized when the services are rendered, which generally occurs upon delivery of the related products to a third-party carrier or, in the case of an Amazon delivery, to the customer.

Subscription services - Amazon.com’s subscription sales include fees associated with Amazon Prime memberships and access to content including audiobooks, digital video, e-books, digital music, and other non-AWS subscription services. Prime memberships provide Amazon.com’s customers with access to an evolving suite of benefits that represent a single stand-ready obligation. Subscriptions are paid for at the time of or in advance of delivering the services. Revenue from such arrangements is recognized over the subscription period.

AWS - Amazon.com’s AWS arrangements include global sales of compute, storage, database, and other services. Revenue is allocated to services using stand-alone selling prices and is primarily recognized when the customer uses these services, based on the quantity of services rendered, such as compute or storage capacity delivered on-demand. Certain services, including compute and database, are also offered as a fixed quantity over a specified term, for which revenue is recognized ratably. Sales commissions Amazon.com pays in connection with contracts that exceed one year are capitalized and amortized over the contract term.

Other - Other revenue primarily includes sales of advertising services, which are recognized as ads are delivered based on the number of clicks or impressions.

Source: 10-K (filing date: 2019-02-01).

Amazon.com Inc., Income Statement, Revenues

US$ in millions

	12 months ended	Dec 31, 2018		Dec 31, 2017		Dec 31, 2016		Dec 31, 2015		Dec 31, 2014
	Online stores
	Physical stores
	Third-party seller services
	Subscription services
	AWS
	Other
	Net sales

Based on: 10-K (filing date: 2019-02-01), 10-K (filing date: 2018-02-02), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-01-29), 10-K (filing date: 2015-01-30).