Amazon Launches Black Business Accelerator With A $150 Million Commitment
Born from the collaboration of Amazon's Black Employee Network and a coalition of strategic partners, the Black Business Accelerator (BBA) wants to build equity and sustainable growth for Black-owned businesses. Specifically, the initiative targets barriers to access such as access to capital, mentorship, and growth opportunities. The BBA will provide financial support, business education and mentorship, and marketing and promotion of their brands and products as third-party sellers on Amazon.com.
Amazon has formed strategic partnerships with the Minority Business Development Agency and U.S. Black Chambers Inc. These organizations will support BBA by leading community engagement and helping provide participants with mentorship, business development, training and educational resources to lead them to success. Thanks to their long-term experience in supporting Black businesses, they will be able to provide council to Amazon on developing BBA further, including expanding it to other underrepresented groups.
Covid-19 disproportionately impacted People of Color, both from a health and financial perspective. A report published in August 2020 by the Federal Reserve Bank of New York showed that the number of active business owners fell nationally by 22% from February to April 2020. Black businesses experienced the highest decline, with a 41% drop compared to the 17% drop recorded by white business owners. The report digs into several data points to try and understand the root causes of such decline. They look at Covid-19 infection rates, business locations, Paycheck Protection Program (PPP) data, and data on small firms' financial health from the Federal Reserve's Small Business Credit Survey. They found a high correlation between locations with high infection rates and the high presence of Black businesses. A low number of companies (15% - 20%) received PPP loans in areas where Black businesses were mostly concentrated. Finally, most Black-owned businesses lacked strong bank relationships, which meant that they most likely entered the pandemic in a weaker financial position than white-owned businesses.
In February 2021, an H&R Block survey of almost 3,000 small businesses found that 53% of Black business owners saw their revenue drop by half, compared to 37% of White owners, since the pandemic started. Black business owners also had more trouble establishing an online presence for their company and were more likely to have customers submit late payments, the survey found.
As we get closer to Prime Day, announced for June 21 and 22, Amazon reminds us that more than 60% of product sales recorded on Amazon.com in 2020 came from small and medium businesses. Amazon is committed to growing the number of Black owned businesses that belong to that pool.
The idea for BBA came from an Amazon employee who is a member of Amazon's Black Employee Network. Working with the sellers and seeing the success they were having, she could not help but think about her parents, who had started a number of businesses over the years. She started to think of how she could harness the store's power to help Black businesses. She wrote a document and started to socialize it internally and really gained momentum from there.
Amazon's BBA will invest $150 million over four years, including financial assistance and grants to help Black business owners to kick off their activity. Financial support comes in the form of Amazon credits and services valued at $3,900 that include free product imaging services and advertising credits. Amazon will also offer an initial round of $10,000 cash grants in partnership with Hello Alice, an organization dedicated to helping entrepreneurs launch and grow their businesses.
But money alone is never enough to build and sustain a business, especially if you are new to the process. Business education and mentorship are paramount, which is why the program offers both free for at least a year. Once Businesses are accepted into the program, they basically have access to over 300 million customers overnight that is exhilarating and highly daunting. The ability to connect with a dedicated network of business mentors, including Amazon experts and small business thought leaders, becomes critical in establishing the business and accelerating business growth.
The killing of George Floyd sparked together with shock and anger a wave of online support for Black Lives Matter and a call to support Black-owned businesses, which saw huge spikes in sales. Google searches for "black-owned businesses near me" reached an all-time high between May 31 and June 10 of 2020. According to a Black Chamber of Commerce survey, around 75% of Black-owned small businesses saw upticks in customers in the two months following Floyd's death. Sadly, however, that rise in sales did not last and numbers fell back down to pre-Covid rates. This is where initiatives like the Black-owned business storefront and promotions featuring Black-owned businesses help with discovery. And so does a recently launched discoverability enhancements that highlight products on Amazon from minority-owned businesses in related search results, allowing customers to find and buy from certified businesses easily.
BBA has the ability to lower the barrier of entry by providing support with the initial heavy lifting so that Black businesses that found establishing an online presence too intimidating might now give it a go. For some Black-owned small businesses that are already leveraging Amazon.com, online offered a lifeline during Covid-19 as their in-person customers declined, disrupted by temporary closure and limited capacity openings.
The success of the BBA beta bodes well for the initiative. As someone who is very intentional in purchasing from women-owned and Black-owned businesses, I look forward to BBA empowering more brands within the Amazon store so that these new brands can share their learnings in the future and help further amplify the impact.