Amazon Exec on How New Services Solve Its Small Business Sellers’ 3 Biggest Pain Points to Unleash Growth

Why it matters:

• More than 60% of sales in the Amazon store come from independent sellers, most of which are small and medium-size businesses, up from 40% a decade ago.
• As more of Amazon’s third-party sellers today are brand owners, the nation’s biggest online marketplace has launched new tech tools and services designed to address SMBs’ biggest challenges: supply chain management, marketing, and product development.

• The new Supply Chain by Amazon platform is designed to move products quickly, efficiently, and affordably from sellers’ manufacturing partners to customers around the world — including to other sales channels beyond Amazon.

Amazon wants to be a full-service brand-building ecosystem for the millions of small businesses that sell products on its site, even if that means equipping them to grow beyond its platform.

The world’s largest online marketplace is working to topple three of the biggest challenges that trip up its sellers and can thwart their success: supply chain management, marketing, and product development, Claire O'Donnell, Director, Selling Partner Empowerment, Communities and Trust, told CO—.

That’s why it launched Supply Chain by Amazon last month to move products quickly and cost-effectively from sellers’ manufacturing partners to their customers around the world.

What’s more, new data-driven customer insights aim to provide SMBs with a richer understanding of what drives consumer preferences and purchasing behavior to help them develop products that sell.

Amazon is also helping sellers create product listings designed to strike a resonant chord with consumers via the magic of generative artificial intelligence (AI).

The idea is that Amazon’s sellers can channel their energy toward what they like doing best, O’Donnell said. “Oftentimes, small business owners start their businesses because they want to build their brand; they have a great story; they have a great idea for a product — what they don’t find as interesting and exciting are some of the complexities of running a business, whether that’s logistics or managing customer returns,” she said.

Amazon ups its small business services amid heightened competition

Amazon’s new tools and services answer a growing need as the number of small businesses have surged on the site, executives said in September at the Amazon Accelerate conference in Seattle attended by CO—. “Ten years ago, most third-party sellers on Amazon were resellers,” said Dharmesh Mehta, Vice President, Worldwide Selling Partner Services, during the conference. “Now, they’re mostly brand owners.” So for many, “their product journey starts much earlier with manufacturing,” Mehta said.

Amazon is expanding its services to support that shift, as today more than 60% of sales in Amazon’s store come from independent sellers, most of which are SMBs, versus 40% a decade ago.

“Amazon's introduction of new features for third-party sellers is a strategic move to address pressing challenges faced by small and medium-sized businesses in a competitive online retail environment,” Jacob Bourne, Analyst for Connectivity and Tech Briefings with Insider Intelligence, told CO—.

Amazon itself “is undoubtedly under competitive pressure,” he said. “Initiatives like Walmart Marketplace are driving the tech giant to up the ante on innovation to retain its e-commerce standing. Then there’s Google that’s leveraging generative AI for tools to boost product listings in its search ecosystem — a direct threat to Amazon’s online product search lead,” he said.

“Amazon is trying to demonstrate that it's empowering sellers and fostering a robust marketplace for both consumers and sellers,” Bourne said. “The transition of Amazon’s seller base toward brand owners means it needs to offer tools that align with their unique needs for brand growth, customer reach, and operational efficiency.”

Amazon tackles the motherlode of pain points for SMBs with Supply Chain by Amazon

Supply chain management looms large as one of the biggest pain points for Amazon’s small business sellers, O’Donnell said.

While Amazon has offered Fulfillment by Amazon for years, sellers, who are now increasingly brand owners, told Amazon they needed more. The launch of Supply Chain by Amazon provides them an end-to-end supply chain solution that moves products directly from sellers’ manufacturing partners to customers around the globe.

It’s not only about moving merchandise from Amazon’s fulfillment centers to customers, which is what Fulfillment by Amazon does, she said. Now, Amazon will pick up sellers’ inventory from manufacturing facilities and ship, store, deliver, and replenish their stock. And it will fulfill orders not only for sellers’ Amazon customers but for all of their sales channels, including brick-and-mortar stores, leveraging Amazon’s scale to lower costs.

According to Insider Intelligence’s Bourne, “The launch of the supply chain platform could level the playing field for smaller sellers who can now leverage Amazon's distribution network, which is crucial during a time when supply chain disruptions are commonplace and consumers expect rapid delivery.”

[Read: How 3 Brands Tapped Technology to Slay Inventory Overhang and Save Millions]

Product listings supercharged by generative AI: ‘So much of customers’ purchasing decisions are driven by the quality of the product page’

Amazon is also moving to boost sellers’ e-commerce sales by supercharging its product listings feature with AI.

A new generative AI tool is designed to whip up enhanced product titles, descriptions, and listing details that take the guesswork out of online shopping for consumers while making it faster and easier for sellers to list new merchandise.

“So much of customers’ purchasing decisions are driven by the quality of the product page,” O’Donnell said. “‘Is it right for my needs? Am I interested in this? How do I make that purchasing decision?”

The tool prompts sellers to enter a few product description words. Then, Amazon taps generative AI to transform those words into a customer-facing product description informed by “what we know has worked with those types of products,” she said. “It incorporates best practices.”

For small businesses, the return on investment of Amazon’s AI-generated product descriptions is twofold. “One, you know you’ve got a great product page, and that drives drive sales and that drives conversions, and; two, it saves you time,” O’Donnell said. “You’re not the one who has to craft this perfect text; we’re taking care of that.”

[Read: How Artificial Intelligence (AI) Is Changing How Marketers Sell Everything From Food to Fashion]

AI-driven customer insights help SMBs with limited product development budgets

For many SMBs, the time-intensive process of product development often starts with poring over reviews of a business’s existing products in that category, as well as competitors’ product reviews, said O’Donnell. Small businesses also often pay for research on the product segment and only then, will they “start to formulate a perspective,” she said. Yet “a lot of small businesses don’t have huge research budgets for [product development].”

That’s why Amazon is availing sellers of its built-in research and development resources with an amped-up customer sentiments insights tool. The tool provides sellers with category-level customer feedback from Amazon’s treasure trove of data culled from product reviews and product returns.

While Amazon has long offered product data insights to its sellers, it’s never done so this early in the product lifecycle, O’Donnell said.

“A lot of our customer insights up until now have been more focused on ‘You already [sell] this item, how do we optimize this item for you?’ versus ‘How do we help you create better items?’ It’s really to aid with product development.”

Take mascara, for example. “We’ll look at all the mascaras that are selling on Amazon. What have customers said about them? What has caused the most returns of those items? Maybe they’ll say the biggest pain point to address is that your mascara is flaking at the end of the day,” O’Donnell said.

“So a brand owner might say, ‘How do I make sure I’m developing new mascara that doesn’t flake?’ Or if they know their mascara doesn’t flake, ‘How do I make sure that’s a top selling point?’ because that’s clearly something that’s resonating with customers.”

Amazon harnesses the power of all this data so that sellers don’t have to, O’Donnell said, serving it up “in a digestible way that will help them build better products, reduce returns, increase conversions, and save them time.”

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