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Amazon (AMZN) Boosts Focus on Sellers With Generative AI Tools

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Amazon (AMZN - Free Report) is leaving no stone unturned to bolster its e-commerce business on the back of its deepening focus on sellers. It continues to strengthen its seller-focused offerings in a bid to sustain its momentum among sellers.

The latest introduction of generative AI-powered tools for sellers is a testament to the aforesaid fact.

These tools, which are based on using large language models (LLM), are designed to aid sellers in generating good product descriptions, including titles and other listing details.

With the new tools, sellers can also add or update their existing product descriptions.

Thus, the tools are designed to enhance the knowledge of the customers regarding various products, which, in turn, will likely boost the sales of those products.

The underlined tools are expected to drive sales growth of the sellers, as enriched product descriptions might expand customer reach., Inc. Price and Consensus, Inc. Price and Consensus, Inc. price-consensus-chart |, Inc. Quote

Competitive Scenario

The latest move by Amazon is expected to intensify the e-commerce competition further for companies like eBay (EBAY - Free Report) and Shopify (SHOP - Free Report) , which are also making efforts to instill generative AI within their marketplace.

eBay recently launched a new AI tool for marketplace sellers, which is currently available on the eBay app for iOS. It can create a product listing by automatically generating a title, description and information like product release date, category, subcategory, list price and shipping cost from a single photo.

The photo-to-listing AI tool addresses the "cold start" issue experienced by first-time sellers by removing the need to enter extensive information for competitive listings.

Meanwhile, Shopify Magic, Shopify’s newly launched AI tool, comes with the added feature of AI-generated product descriptions with a built-in wordsmith in the merchant’s admin.

Growing Solutions for Sellers

Apart from the latest generative AI-based tools, Amazon recently introduced an end-to-end, fully automated set of supply chain services, namely Supply Chain by Amazon.

The solution enables sellers to leverage Amazon’s advanced logistics, fulfillment and transportation capabilities to bring efficiency in operation.

Amazon will pick up inventory directly from manufacturing facilities across the world, ship it across borders and deliver it directly to customers. In between, it will also handle customs clearance and ground transportation, as well as store inventory in bulk.

This in turn will aid sellers in delivering an enhanced experience to customers as well as reduce logistics costs to a great extent.

In addition, the e-commerce giant also offers Amazon Warehousing & Distribution (“AWD”) for sellers. AWD is a pay-as-you-go service that reduces storage costs and saves time in the inventory management process.

AWD enables sellers to store their bulk inventory in Amazon fulfillment centers and avail of automated distribution.

All these endeavors position Amazon well to gain solid momentum among the sellers, which will bolster its seller base and strengthen its relationship with third-party sellers, which will further contribute to its financial performance.

This, in turn, is likely to instill investor optimism in the stock in the days ahead.

In second-quarter 2023, sales generated by third-party seller services rose 18% on a year-over-year basis to $32.3 billion.

For fiscal 2023, our model estimate for the same is projected at $134 billion, reflecting growth of 18.1% from fiscal 2022’s level.

Coming to the price performance, Amazon has gained 67.2% on a year-to-date basis compared with the industry’s growth of 43.3%.

Zacks Rank & Another Stock to Consider

Currently, Amazon sports a Zacks Rank #1 (Strong Buy).

Another top-ranked stock in the retail-wholesale sector is Arcos Dorados (ARCO - Free Report) , carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Arcos Dorados shares have gained 22.1% in the year-to-date period. ARCO’s long-term earnings growth rate is projected at 11.38%.

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