Amazon Puts Numbers To SMB Support In New Study

By Patrick Moorhead - August 7, 2020
The different faces of Amazon SMBs highlighted in its report.

Small and medium-sized businesses (SMBs) have had the hardest time during the COVID-19 crisis, and now more than ever, over 2 million independent businesses hang their livelihood on the largest online retailer in the world, Amazon. Unknown to many, SMBs are a significant part of the fiber of the company, more than readers might now. According to Amazon's 2020 SMB impact report, American SMBs sold 3.4 billion products in Amazon's stores and averaged 6,500 products sold per minute. SMB sellers had over $160,000 in sales on average, and the number of sellers that have reached $1M in sales grew by 20%.

While these numbers tell us a lot about SMB sellers on Amazon, I think it tells us even more about Amazon's narrative, which can be summed up by CEO of Amazon Worldwide Consumer Jeff Wilke in saying, "Our success depends on [SMB sellers] success." When Amazon's SMB sellers succeed in every facet of business, Amazon ultimately succeeds as well. I previously wrote here on how Amazon is going with the grain of its sellers even though it has its own retail brand.

Of course, Amazon helps also helps consumers. SMBs provide Amazon customers access to millions of items. SMBs are a critical part of the Amazon customer experience.

I’m not saying the company isn’t perfect, it’s not, but I think the data related to SMBs speaks for itself.

Let's dive in.

What does "3.4 billion products sold" mean for Amazon?

Despite the COVID-19 crisis, Amazon's SMB sellers have successfully sold 3.4 billion products, up from 2.7 billion year over year. Although it is fair to say that the .7 billion difference is from small businesses moving from stores and online to all online because of the COVID-19 crisis, I think another statistic from the impact report tells us otherwise. If we follow Amazon's investments, in 2019, Amazon invested $15 billion in logistics, services, tools, programs, and people to foster the growth of its SMB sellers. Amazon, like many large tech companies, recognizes that the future of business is going to be digital.

More than 450,000 worldwide SMB sellers on took advantage of Fulfillment by Amazon (FBA), and their sales grew by 34%.

What benefits do SMBs have with selling on Amazon?

Another testimony to Amazon's narrative is what services and benefits AWS has provided for its customers to give SMB sellers an edge in the online market. Amazon has provided more than $1 billion in AWS credit since 2019 to help startups accelerate their growth and development, doubling its 2018's provisions of $500 million. Also, AWS has a host of benefits, including technical support and training benefits, helping hundreds of thousands of SMBs. The easier it is for SMBs to succeed, the more successful Amazon is, and Amazon's $1 billion investment is paying off as well. SMBs selling on the U.S. store have created an estimated 1.1 million jobs and counting compared to 2019's 830,000 jobs.

If Amazon making it easier for SMBs to sell online isn't convincing, what about Amazon's drive to create jobs through Amazon Delivery Service Partner businesses? Amazon reported in its SMB Impact Report that there are more than 1,000 Amazon Delivery Service Partners in the U.S. alone, employing more than 82,000 drivers. Out of the many difficulties of having an online business (product, not service, specific), starting up and delivery are a few of the most laborious and most costly.

The top 10 states with the most digital entrepreneurs. Amazon SMB sellers are based in all fifty states. Forty-seven states are home to more than 1,000 sellers, while twenty-six states have more than 5,000 sellers. These are the states with the most sellers, per capita. 

If Amazon were looking to exploit its SMBs, I don't think it would let other SMBs fill the gap of delivering packages. Would delivery services and fees not be a controlling factor for Amazon to take advantage of its employees. On top of this, U.S line haul service providers that move Amazon packages between fulfillment centers to and from air hubs employ more than 13,000 drivers, an increase from 3,700 in 2018. I think these are great examples of how Amazon is not trying to control online SMBs, but rather to guide them towards a digital presence and innovation.

Alexa and Kindle are incredible platforms for content creators

I think we can even look back to what Amazon was originally, a bookstore. A part of Amazon's SMBs impact report is how authors, content creators, developers, and IT solutions providers are impacted.

In the past 12 months, Kindle Direct Publishing (KDP) has earned authors more than $319 million and a total of $1.28 billion since the launch of Kindle unlimited. KDP allows authors to self-publish and distribute books to millions of people around the world. Amazon's impact report also says that thousands of independent authors have earned more than $50,000, with more than one thousand surpassing $100,000 in royalties. I think it's incredible that in a world where online video and podcasts rule the media consumption space, books have such a presence.

Amazon reports that engagement with Alexa has nearly quadrupled over the last two years, with interaction being in the billions each week. 

Alexa, which is also an online shopping tool for consumers, is a platform for SMBs to develop and build innovative and creative voice-first customer experiences. Amazon says there are now more than 700,000 developers for Alexa and more than 100,000 Alexa skills built with Alexa Skill kits. Just as Amazon is giving SMBs control over-deliver services through Amazon Delivery Service Partner, Amazon is giving SMBs Alexa Skill kits to develop on Amazon's Alexa platform. Likewise, just as Amazon has built up a platform for SMBs to have a delivery service, Amazon has built up Alexa to have hundreds of millions of Alexa devices in the world and in the hands of customers. Amazon reports 100,000 smart home products that can be controlled with Alexa under more than 9,500 unique brands.

Wrapping up

I think Amazon's SMB impact report speaks volumes to how Amazon is impacting SMB in the most positive way, especially in our time of crisis. I'm not saying the company is perfect in this area. They're not. But these numbers tell me Amazon has helped its SMBs sellers, but quite contrary to some of the ongoing and inaccurate narratives. Amazon's SMB impact report has shown me just how much Amazon is investing in SMBs, from AWS credits to Alexa Skill kits. It's all an investment.

Finally, I urge all of you to ask Walmart, Target, Costco, and Kroger to the degree the companies support small businesses, and I think you might be surprised.

You can find the full report here.

Note: Moor Insights & Strategy co-op Jacob Freyman contributed to this article.

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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.