There is a lot we already know about Amazon. We know they make a ton of money. We know you can buy just about anything on Amazon. But this article will reveal 4 interesting things about America’s favorite online shopping destination that you probably didn't know.

Amazon is in the lending business.

Their exact involvement in lending is unclear but they are probably somewhat of an affiliate, where the loans are being underwritten by a bank and Amazon is getting a cut for referrals. If you think about it, Amazon generates most of their revenue via an affiliate revenue model. Meaning, most of their money is made by indirectly promoting a bunch of smaller sellers, and in turn, getting a percentage of each sale.

For your information, the per transaction percentage Amazon takes can range anywhere from eight to forty five, depending on the category in which you are selling. So, it would make sense that they would engage in other affiliate-like relationships; in this case with banks to generate income.

If you’re wondering, Amazon loans are based primarily on your earnings on the platform. This makes sense because they are a data-driven company and they can see how well you are doing financially. The loan amount presented is usually going to be easier to obtain that a bank loan (less hassle). The loan amount is as close to being guaranteed as you can get. They probably wouldn’t offer an amount you are incapable of paying back.

If you accept the loan, the payback amount comes right out of your account each month. Here's a question: Is it possible that Amazon can one day act as a direct lender and compete with banks? When it comes to Amazon, never say never. 

Amazon is involved in the commercial liability insurance business.

For sellers generating approximately $10,000 per month, Amazon requires them to carry commercial liability insurance. The coverage threshold amount is $1,000,000. For sellers who don’t already have a commercial liability insurance policy in place, Amazon works with a broker to facilitate coverage via several companies. It appears they have no involvement in the underwriting process. But we can assume Amazon is not recommending these insurance companies for free.

It should be noted that you do not have to go through Amazon’s recommended insurance providers, but you must upload proof of coverage in order to maintain the ability to sell on the platform. 

Amazon prime deliveries may not come from Amazon.

If you are a member of the Amazon Prime service, you might assume that your products are originating from a nearby Amazon warehouse. And for many items, this may be true. However, for sellers that have exemplary shipping and delivery standards, Amazon engages in sort of a partnership whereby sellers can list specific products, and in turn display the prime badge [as if your order would be coming from Amazon]. Under a special program termed seller-fulfilled prime, eligible participants can list as many products as they want, as long as they can deliver them within two days.

On the buyer’s side, you will probably sort products by whether they are prime eligible. You then place an order. When you receive the order, it won’t show up in an Amazon box and it won’t have any reference to "Prime" on the outside of the box. That’s because your order came directly from the seller.

What seller-fulfilled prime tells me is Amazon doesn’t have the capacity to warehouse everything. They need a ton of help delivering and maintaining the “Prime” service level. So this program, in working with top-rated sellers is one way they are able to expand and elevate the service.

There is one interesting thing to note: Since Amazon is also a data service, they have the ability to show only sellers who offer what you are searching for that operate in close proximity to you. So even if the prime badge doesn’t appear on a product listing, and you are searching for pool noodles, and you live in Texas, the pool noodle listings recommended to you will probably be from sellers that are no further than a state away.

Amazon has a highly favorable shipping agreement in place with the United States Postal Service.

The agreement allows Amazon to ship and deliver most packages for a little more than a dollar. This type of deal is not unusual for publicly traded organizations. Larger companies tend to have some sort of nexus to the government: usually a subsidy in place, which allows them to obtain various forms of assistance.

An Amazon package can weigh 50 lbs. But if the postal service is handling the delivery, Amazon still only pays a dollar and change.

For sellers, Amazon also makes money by offering discounted shipping rates. For example, if a seller is using UPS, Fedex, or the postal service to ship packages, Amazon offers preferred rates for the same services. So, this translates to huge profits for the company whenever a seller goes through Amazon for shipping services, especially for postal shipping.

Now, let’s wrap up. We went over four things most people don’t know about Amazon. One: They are in the lending business and they make the process of securing funding for sellers much easier than going through a bank. Two: They are involved in the commercial liability insurance business. So again, we see that classic referral or affiliate revenue model, where you don’t have to actually be directly involved in the business, but instead, acting as a facilitator to generate income. Three: Amazon Prime deliveries may not come directly from Amazon. They simply don’t have the infrastructure to warehouse everything. So they partner with eligible sellers to help ship packages using the prime service. Four: Amazon’s partnership with the United States Postal Service allows them to ship most packages for a little more than dollar. Must be nice. If you found this information helpful, please share it with a friend.