Is Amazon A Nonprofit Organization? (No, They Are So Profitable!)

Amazon is not just one of the most prosperous e-commerce businesses of the modern era; it is also one of the biggest employers in the country. The company has a profound impact on the lives of millions of people around the world. There are also rumors that Amazon has paid zero dollars in taxes in the past. Therefore, it makes sense to question whether the online retail behemoth is a nonprofit. The following is what we uncovered.

Amazon is a for-profit organization. In fact, it is among the most profitable American businesses, reporting a revenue of $356 billion in 2022. The company's investments in emerging markets, such as robotics and groceries, have been a major factor in Amazon's increasing profit margins.

Since Amazon's revenue and profit margins have grown, it has been able to acquire several businesses, like Twitch and Whole Foods, boosting its market share and, therefore, its reported earnings. If you are curious to learn more about Amazon’s finances and how you can contribute to charity via Amazon Smile, this post is for you.

Table Of Contents

How Is Amazon So Profitable?

As aforementioned, Amazon is among the most profitable companies in the United States. The company ranks second in the Fortune 500 list, reporting a 38% revenue growth rate. Most of Amazon’s revenue is generated from its normal e-commerce operations. However, the company also generates substantial revenue from its cloud services and digital advertising services.

Amazon also sells Alexa personal assistant products, Fire TV accessories, and Kindle e-readers, among other things. Of all its ventures, Amazon Web Services (AWS) is the primary source of profit for the company. This is because of its dominance in the Cloud market, where it has captured about a third of it. This is substantially greater compared to its closest rivals—Microsoft and Google. When it comes to revenue, the retail sector outshines everything else.

Just in the last quarter of the last fiscal year, Amazon posted revenue of $14.3 billion. Even when the company reports such high profits figures, billions have been spent on marketing and operations such as employee training. The company has also invested in building an in-house logistics company unlike any other.

The company has spent billions on leasing and purchasing a fleet of cargo planes in an effort to reduce the amount of time it takes to get products to customers. This has led to more customer satisfaction which in turn increases the company's net figures. As you can see, Amazon functions like any other for-profit business and appears to have a long-term strategy that includes annual growth.

Does Amazon Pay Taxes?

If you have been following Amazon for some time, you may be aware that the company paid $0 in taxes in 2018, even after reporting an income of $11 billion. Since then, the company has been under criticism for employing various tax credits and deductions to reduce its federal tax bill drastically. To be clear, Amazon paid $0 in taxes not because it is a nonprofit; rather, it is due to the company's ingenuity in evading massive tax obligations.

This, however, didn’t last for long; in 2019, Amazon paid about $162 million in taxes. Despite the fact that this is a tiny fraction of the total taxes that a company of this size should be paying, it still demonstrates the company's legal responsibility to do so.

Thanks to tax evasion techniques, Amazon has been paying way less than the standard rate of 21%. For instance, in 2020, Amazon's tax rate was a mere 9.4%. This is, however, not so bad, seeing that the company received tax refunds in previous years.

What Is Amazon Smile?

Even though Amazon is not a nonprofit organization, it has a program called Amazon Smile, which enables customers to donate to their favorite charities as they shop. Amazon will give 0.5% of your entire purchase price through Amazon Smile to the charity of your choice. To use the service, all you need to do is shop at smile.amazon.com, and the donations will be made automatically.

With Amazon Smile, you can choose from a million public charities and support whichever you want. Over a million different organizations across the United States have benefited from purchases made through AmazonSmile, which has raised and donated $286 billion to charity. It covers a wide range of essential philanthropic causes, from those focused on alleviating poverty to those focused on teaching financial literacy, from protecting animal rights to providing legal aid.

Although 0.5% is not a huge sum, and you would have to spend a lot to generate a sizable donation, the program is a simple method to increase the amount you already donate to your chosen cause. It doesn't hurt to start conducting your regular Amazon purchasing through AmazonSmile to help out a good cause.

What Does It Mean For Amazon To Be Customer-Centric?

You may have heard that Amazon is customer-centric, but exactly what does that mean? Even though Amazon isn't a traditional charity organization, its mission is to better the world through its customers. Amazon's mission statement reads, "Amazon's goal is to become the most customer-centric corporation on Earth."

Amazon is committed to providing a safe and secure workplace for its employees, and this statement is one of the reasons why. Amazon's meteoric rise in recent years can be attributed to the company's policy of prioritizing its customers' needs ahead of those of its competitors.

Amazon has over a million employees and is still expanding to serve its consumers better and provide them peace of mind when they shop online. That is to say, Amazon sets itself apart from other for-profit businesses driven purely by profit and selfishness by emphasizing standards that are beneficial to its customers.

Bottom Line

Amazon is a for-profit, publicly traded enterprise. The company has acquired many different companies and invested heavily in new ventures. Amazon’s goal is to transform into one focused on its customers rather than on posting impressive financial results. If you want to contribute to charity as you shop on Amazon, try Amazon Smile. A charity of your choice will get 0.5% of your total purchase price as a donation from Amazon.