Product display from small business Musee, as showcased for Amazon.
Small business brand Musee is one of the many small businesses utilizing Amazon as part of their holiday sales strategy. — Amazon/Musee

Why it matters:

  • More than half of the transactions on Amazon, the world’s largest online marketplace, involve third-party sellers, most of which are small-to-medium sized businesses.
  • Amazon is tapping into the growing consumer interest in supporting small businesses by identifying those sellers on its platform.
  • Amazon has added several tools, including new shipping software, analytics, and marketing features to help small businesses boost sales during the holidays.

Amazon, the world’s largest online marketplace, realizes that if the small businesses that sell on its platform have a good holiday season, Amazon also will have a good holiday season.

This year it has launched a number of new features to help small business sellers maximize sales during the crucial holiday season.

In recent years, Amazon has seen how its success rests on keeping small businesses happy and profitable.

Amazon’s small business boom

On Prime Day 2020, Amazon’s third-party sellers, most of which are small- to medium-sized businesses, grew their sales by 60%, outpacing Amazon’s own retail sales growth for the first time.

That trend continued in 2021, when small business Prime Day sales jumped by more than 100%, and Prime Day 2022, when small businesses rang up more than $3 billion in sales on the Amazon marketplace.

That came after Amazon invested more than $18 billion in software and services in 2020 to help its small business sellers as the number of third-party players on the platform surged during the pandemic.

During the third quarter of this year, third-party businesses, most of them small- to medium-sized enterprises, accounted for 58% of all products sold on Amazon, the highest percentage of third-party sales in the 20-plus years since Amazon began inviting brands and small businesses to sell on its platform.

[Read: 5 Things Retailers Are Worried About for the Holiday Season – And What They’re Doing to Prepare]

Amazon began adding the small business badges to product listings in mid-year, and the badges are driving shoppers to those products, Keri Cusick, Director of Small Business Empowerment for Amazon, told CO—.

Wooing SMBs with sales-driving tools as marketplace competition heats up

Since Amazon launched its marketplace, Walmart, Target, and other retailers like Macy’s, as well as social media sites have started their own marketplaces, giving small businesses numerous other places to sell online.

In the face of that competition, Amazon has added a number of tools to promote and help small businesses during the holiday season and throughout the year drive sales.

Those include:

  • Small business badges on Amazon that identify products being sold by a small business;
  • Veeqo, shipping software for sellers that helps them access discounted shipping rates. Amazon acquired Veeqo this year and is offering the software to its sellers for free;
  • Additional analytics and data tools to help sellers better analyze the success of their marketing campaigns and customer engagement efforts;
  • New ways for sellers to expand their email marketing efforts at no cost;
  • A merchant cash advance program with payments tied to future sales, with repayments only required during periods when sales are made;
  • An investment of $150 million in venture funds that back underrepresented entrepreneurs; and
  • An added focus on small business brands in Amazon’s holiday gift guides and holiday events.

[Read: 5 Recession-Fighting Marketing Strategies From Walmart to McCormick Spices All Businesses Should Watch]

Small business badges on millions of product listings generate a ‘really positive performance’

Amazon began adding the small business badges to product listings in mid-year, and the badges are driving shoppers to those products, Keri Cusick, Director of Small Business Empowerment for Amazon, told CO—.

“We see really positive performance in increased clicks from businesses with the badges, which confirms there is customer interest in supporting small businesses, and that the badge is helping them find those businesses,” Cusick said.

Businesses don’t have to pay for the badges or even ask for a badge, Cusick said. Amazon has done the work of identifying which business and brands on its marketplace qualify for the badges using the Small Business Administration’s definition, and the badges are added automatically, she said.

The badges have been added to millions of products already, Cusick said. On the U.S. marketplace, Amazon also has badges identifying products from Black-owned businesses.

Businesses that believe they meet the criteria and have not received badges can notify Amazon, and there is an easy process for receiving them, Cusick said.

 Headshot of Keri Cusick, Director of Small Business Empowerment for Amazon.
Keri Cusick, Director of Small Business Empowerment for Amazon. — Amazon

Equipping SMBs with tools to slay Black Friday — the make-or-break week to drive holiday sales

Cusick was interviewed at an Amazon holiday gift showcase in New York City that included a display of small business brands.

The long Black Friday weekend – the period from Thanksgiving through Cyber Monday, known as “Turkey 5” at Amazon – is the most crucial week for small businesses selling on Amazon, Cusick said.

For that reason, she believes the new tools that help small businesses provide competitive shipping offers and monitor their performance are among the most important new features for small businesses.

“We know customers are eager this time of year to get things quickly, so making sure small businesses have competitive ways to get their products in the hands of customers quickly is one of our top priorities,” Cusick said.

Amazon tries to prepare small businesses for the holiday rush well before November, Cusick said, by offering coaching and reminders on issues like inventory planning and marketing.

Amazon’s Director of Small Business Empowerment on her best tip for SMBs: Deliver ‘something that is deeply unique’

Cusick’s best tip for small businesses trying to stand out in a crowded holiday shopping and selling season is to focus on “something that is deeply unique to your business.”

“We try and remind our small business partners to make sure their marketing works backwards from their customers,” she said.

In other words, “Businesses that try to contort themselves to capture audiences outside their target [market], or do things not aligned with their mission, tend to perform less well,” Cusick said.

“What works for one small business brand is not going to work exactly the same for another,” she said. “So we stay away from generalized advice and tell them to use these tools to make really smart decisions for their businesses.”

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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Published November 22, 2022