Written By: Muhit Masood | Last Updated: May 14, 2025

TICKER | AMZN |
Company Name | Amazon.com, INC |
Shariah Compliance | Compliant |
DP RATIO | 4.51% |
Shariah Issues in Online Retail and Marketplace Sector:
Companies involved in these industries may have some very significant shariah compliance issues.
Islamic investors are concerned that the companies are selling products on the platform which may not be in accordance with Islamic principles, meaning they cannot include haram (forbidden) items such as alcohol, pork, or gambling-related goods. Then raises the second and the main concern, which is the provision of media related services in these platforms.
The Islamicly Shariah Board is of the view that such industries must adhere to the Shariah principles, and the products sold by the platform must be in accordance with Islamic principles. Additionally, the Shariah Board also concurs that the provision of video streaming services is not permissible, as it contains movies, music television shows and musical performances, which goes against the Shariah principles.
Shariah Compliance Issues in Amazon:
When examining Amazon’s revenue streams from a Shariah compliance perspective, several Compliance issues arise:
Amazon engages in non-permissible activities. Notably, the physical stores segment includes non-permissible activities due to sales from alcohol, pork, and tobacco products, particularly within its whole foods segment. A shariah compliance concern arises regarding the revenue derived from the subscription services segment, which includes fees associated with Amazon Prime memberships granting access to various digital content, including video, audiobooks, music, and e-books, alongside faster delivery services.
Here are the key areas to consider:
Primary Revenue Streams
1. Online and Physical stores
This is Amazon’s largest segment, generating significant revenue from the sales of various products on their online platforms (through third party vendors), as well as physical stores, which include products sold by the platform themselves. This activity is generally permissible in shariah as it involves the production and sale of tangible goods. However, it was found that the physical stores also include sales of pork, alcohol and tobacco products, albeit not a very significant portion of their entire catalogue. Hence, to estimate the sales from the same, we have taken a conservative assumption of 10% to account for these sales from the physical stores.
2. Subscription Services
The subscription services segment is multifaceted, comprising two key components: access to expedited delivery of goods, deemed permissible, and access to entertainment content, which poses Shariah compliance challenges, albeit not all content offered being non-permissible. The pivotal question arises: do Amazon Prime subscribers primarily pay for access to entertainment content or for expedited delivery services? While the company’s perspective emphasizes the latter, the lack of disclosure regarding revenue bifurcation complicates the assessment.
In such scenarios lacking clear revenue segregation, the Shariah Board applies the 50-50 rule, assuming half of the subscription revenue as non-permissible. With subscription services accounting for $44.4 billion, representing 6.9% of total revenue, the application of this rule deems 3.45% of the subscription revenue as non-permissible, within the permissible threshold. Consequently, the Shariah Board concludes that Amazon Inc. complies with the business sector screening criteria, factoring in the peculiarities of its subscription services revenue.
It is essential to highlight the Shariah Board’s acknowledgment of the unique nature of Amazon Inc.’s subscription services revenue.
Let’s have a look at the operating segments from which the company derives its revenue and apply the Shariah screens to them:
Revenue Segment Breakup: (In millions of USD)
For the year ended 31st December 2024
Segments | Revenue | Non – Permissible Revenue | % of Non – Permissible Revenue | Non – Permissible Criteria Classification | Segment Description | Shariah Compliance Comments |
Third-party seller services | 156,146 | – | – | – | Includes commissions and any related fulfillment and shipping fees, and other third-party seller services. | No Shariah concerns found |
Advertising services | 56,214 | – | – | – | Advertising services to sellers, vendors, publishers, authors, and others, through programs such as sponsored ads, display, and video advertising. | No Shariah concerns found. |
Online stores | 247,029 | export sales from the third-party seller online stores to customers | Amazon’s online store sales are considered to be Compliant, since the Shariah Board considers such sales to be Shariah Compliant | |||
Physical stores | 21,215 | 2,121.5 | 10% | Alcohol, Pork, Tobacco | Sales of goods in their physical stores | Sales of non-permissible products (pork, alcohol, tobacco) have been accounted for and have been estimated as shown in the table. |
Subscription services | 44,374 | 22,187 | 50% | Movies, Music, Video Services | Subscription Revenue from Amazon Prime | The 50/50 rule has been applied in order to account for premium delivery services as well as prime video services |
AWS | 107,556 | Amazon Web Services, provides on-demand cloud computing platforms and APIs | No Shariah Concerns found. | |||
Interest income | 4,677 | 4,677 | 100% | Non-Islamic Finance | Interest Generated from cash balances | All forms of Interest Income generated by a Company are deemed to be considered Shariah non-permissible |
Total | 642,636 | 28,985.5 | 4.51% | – | – | – |
Let us look into the Non-Operating revenue of the Company.
Non-operating revenue: (In millions of USD)
For the year ended 26th June 2025
Segments | Revenue | Non – Permissible Revenue | % of non – permissible Revenue | Non – permissible segment classification | Segment Description | Shariah Compliance Comments |
Other income | 49 | – | – | – | Equity investment in Rivian Automotive, Inc. | No Shariah Concerns found. |
Total Non-Operating income | 49 | – | – | – | – | – |
It is clear from the table above that the non-operating income of the company is Shariah Compliant. This amount is included for the calculation of the Sector Compliance and Dividend Purification.
Sector Compliance Calculation:
Total revenue | 642,636 |
Non-permissible operating revenue | 28,985.5 |
% of non-permissible revenue | 4.51% |
Sector compliance | Compliant |
Dividend Purification Calculation:
Revenue Description | Non-Permissible Revenue |
Non-permissible operating revenue | 28,985.5 |
Non-permissible non-operating revenue | – |
Total non-permissible revenue | 28,985.5 |
Total revenue of the company | 642,685 |
Dividend Purification Ratio | 4.51% |
Financial Ratio Screen:
(All figures in Millions of USD for the Year ended 31st December 2024)
Amount | Remarks | |
Market Cap (as on 31st December 2024) | 1,540,650.08 | – |
Total Debt | 75,805 | – |
Debt Ratio | 4.92% | Passes the threshold of 33% |
The Company here passes the Financial Ratio screening, as the Debt Ratio is found to be within the 33% threshold.
Source: All the above information is based on the website of the company and the latest Annual Report for the period ended 31th December 2024.
Conclusion
Given the above information, we at Islamicly believe Amazon.com Inc. is Shariah-compliant