The Prime Example: How to Support Small Businesses

Amazon’s Prime Day was once again a smashing success.

After postponing the annual event back in July due to the COVID-19 pandemic, Amazon (AMZN) hosted a two-day sales event October 13-14 for its Prime members. Millions of items were discounted, including Echo Dots, Apple AirPods, Google Pixel phones, Roku streaming devices, Chromebooks, Kindle Fires and Paperwhites, televisions, iRobot roombas and much, much more.

Amazon reported that Prime members saved a whopping $1.4 billion during the 48-hour event.

On the surface, Amazon’s Prime Day appeared similar to its previous years’ sales event, with millions of personal electronics, gadgets and devices on sale. But, if you dig deeper into the details, you’ll discover that the biggest beneficiaries of Amazon’s Prime Day were not the Apples, iRobots and Googles.

The biggest winners of the 2020 Amazon Prime Day event were small- and medium-sized businesses.

This year’s Prime Day was geared to support small- and medium-sized businesses, as they were crushed during the global pandemic this year. More than 100,000 businesses in the U.S. have shuttered their doors since the pandemic began back in March,[1] and that has certainly taken a toll on the U.S. economy.

Small businesses are often dubbed “the backbone of America.” The reason why is simple: Small businesses generate nearly half of U.S. economic activity and account for about two-thirds of new job growth in the country.[2] Amazon clearly understands that small- and medium-sized businesses are vital to the U.S.’s economic recovery, and as a result the company took steps to drive more American consumers to their doorsteps.

In fact, Amazon has dedicated $18 billion to supporting small- and medium-sized businesses. A portion of this pledged funding was used to promote Amazon’s third-party sellers—nearly all of which are small- and medium-sized businesses—in the two weeks prior to Prime Day.[3] In fact, Amazon offered a “Spend $10, Get $10” promotion, which produced more than $900 million in small business sales during the two weeks leading up to the two-day sales event.

But, honestly, that was a drop in the bucket compared to the sales achieved during Prime Day.

According to Amazon, third-party sellers exceeded $3.5 billion in sales during Prime Day, or a 60% year-over-year surge. Many businesses achieved a whole month’s worth of sales during the two-day event, successfully reducing built-up inventories and providing a much-needed boost to top lines, as well as introducing new customers to their products.

What’s great is that Prime Day was just the beginning. Amazon recently launched a Holiday Dash deals event, which provides “Black Friday” discounts on products from small- and medium-sized businesses, as well as your big-name brands. New deals will drop every day, giving U.S. consumers more opportunities to save money this holiday season and driving more customers to the businesses that have been hurt the most during the global pandemic.

Amazon is certainly doing its part to help small- and medium-sized businesses recover and prosper in the wake of the COVID-19 pandemic. And these efforts will not only add to these businesses’ top and bottom lines, they will also support the U.S. economic recovery and Amazon’s overall business.

Amazon is scheduled to release third-quarter results on Thursday, October 29. While the recent Prime Day and Holiday Dash deals will not appear until the company’s fourth-quarter report, we’ll get a solid view of how Amazon’s business is thriving in the current environment and how it plans to continue to help small- and medium-sized businesses going forward.

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[1] https://www.yelpeconomicaverage.com/business-closures-update-sep-2020

[2] https://advocacy.sba.gov/2019/01/30/small-businesses-generate-44-percent-of-u-s-economic-activity

[3] https://press.aboutamazon.com/news-releases/news-release-details/amazon-prime-day-2020-marked-two-biggest-days-ever-small-medium