A Note for the Small Businesses Killing It as Amazon Sellers

  • Over 1.9 million US businesses sell their wares on Amazon.
  • In 2019, 58% of Amazon’s total sales were thanks to small and medium-sized businesses. Today, that number must have increased, due to the lockdown imposed by the global pandemic.
  • Small businesses saw a growth of over 50% Y-o-Y on the platform.
  • The number of small businesses that sold goods worth over $ 1 million grew by over 30% last year.

There’s no question; small businesses are killing it on Amazon!

They are offering niche solutions, innovative products, great value propositions, and a compelling story that is attracting more buyers and driving brilliant business outcomes. In a year where physical retail crashed, online channels like these have kept many businesses alive and well.

But there are many details they need to look into to keep the momentum going. One interesting development is Amazon’s insistence that many sellers should get appropriate insurance cover. We have covered the essential information in that context in a previous blog. It seems clear that certain Amazon members will have to closely examine the various insurance options available for small business insurance. That could cover general liability, worker’s compensation, professional liability, and more.

Amazon Business Prime is already talking about tie-ups with new-age insurance companies that will offer sellers innovative and cost-effective ways to streamline their businesses and save time. They suggest that a partner company offering products to Business Prime in line with the objective of the program to provide unique value and benefits to members.

In the recent past, the eCommerce giant had also created a partnership with another insurance company to offer car and bike insurance in India. Their Amazon Care was also expanded to employers in Washington. They had plans to offer this program in all 50 states. Amazon Care offers in-home and virtual health care services. Partnerships in the insurance space seem to be getting more common with Amazon!

Why Do Small Businesses on Amazon Need Insurance?

As we have written earlier, acquiring appropriate insurance is a very smart move for the small businesses that are making a mark for themselves in the Amazon-led world.

In the past, it was not required for Amazon sellers to prove they have product liability coverage. But due to a barrage of lawsuits, Amazon has started to enforce this with sellers who have over $10,000 in monthly sales. According to Amazon, “Sellers with professional selling plans on Amazon.com must provide proof of Commercial General Liability insurance. This insurance, obtained at the seller’s expense, shall cover up to $1,000,000 per occurrence and in the aggregate and must include product liability, bodily injury, or personal injury, property damage, and other requirements as stated in the Participation Agreement. The insurance must indicate that “Amazon.com, Inc., and its affiliates and assignees” are added as additional insureds.”

Thus, Amazon is protecting itself from legal actions as well. There are certain requirements for the policies themselves:

  • Policy limits must be at least $1 million per occurrence and in aggregate, covering liabilities caused by or occurring in conjunction with the operation of your business, including products, products/completed operations, and bodily injury;
  • The policy must cover your sales through the Amazon.com website;
  • The policy must name Amazon and its assignees as additional insureds;
  • Policyholder name must match the name of “legal entity” provided to Amazon
  • The policy must be valid for at least 180 days from the date of submission.

Protect Your Amazon Business

Getting insurance for your Amazon business is easier than ever now. It helps all parties protect themselves from unforeseen circumstances. It will give your business protection and give you peace of mind. That way, you can focus on your business. If you have any other questions regarding your small business on Amazon, reach out to us.