Amazon Extends Its Long-Tail Reach

Like its “big five” brethren (Apple, MSFT, Google, FB), Amazon rarely does anything quietly, even when it wants to. But it managed to do so with last month’s under-the-radar acquisition of SMB eCommerce enabler Selz. The announcement was buried on Selz’ blog and sniffed out this week by CNBC.

The Australia-based 50-person Selz is a Shopify-like eCommerce platform to democratize online stores. It mentioned in its very short blog post that it intends to work with Amazon to “build easy-to-use tools for entrepreneurs.” Deal terms have not been disclosed, and both companies have been fairly quiet.

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Connecting the Dots

To fill that information void, we can step in with some good-old analyst speculation on what’s happening here. For one, it’s clear that eCommerce is a “Covid-advantaged” sector that’s seen considerable inflections in the past year. That goes for the SMB long-tail that’s been forced to scramble in the face of retail lockdowns.

But tapping the long tail isn’t just a pandemic-specific conquest. Amazon has fought the stigma for years that it’s an enemy to SMBs as it undercuts prices through economies of scale. In response, Amazon has cultivated an SMB marketplace that now has 2.5 million sellers and more than half of Amazon’s sales.

Not only is this a long-tail play for Amazon to grow affiliate eCommerce revenue, but also its burgeoning ad business.  In fact, Martech advisor reports that a whopping 73 percent of Amazon resellers utilize its search ads and promoted placements to stand out in Amazon’s crowded marketplaces.

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Opportune Time

Another factor at play is WalMart. Though its eCommerce activity is a small fraction of Amazon’s, it’s been on a clear path to ramping things up in the past few years and nipping at Amazon’s heels. And its partnership with Shopify to provide additional distribution to Shopify sellers has similarities to the Selz deal.

As background, and as we examined in June, Walmart partnered with Shopify to give its merchants automatic placement in Walmart’s marketplace. This helps Walmart beef up product catalogs and become more of a one-stop-shop (Amazon’s playbook); while Shopify gets to throw its SMB sellers a bone.

Amazon/Selz synergies could be similar, but we’ll warn again that this is our speculation rather than anything that was announced. This also differs in that it’s an acquisition rather than a partnership. Still, similarities lie in advancing major shopping hubs’ efforts to tap the SMB long tail at an opportune time.

We’ll keep watching closely to see if any of this is on target, and where it goes next.

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