Here’s a golden opportunity for the sellers on Amazon.com (NASDAQ: AMZN). If they want to grow their business, then Amazon is here to give loans to them.
The e-commerce company has already started giving business loans to the small sellers under the scheme called as “Amazon Lending” since 2012. Earlier, only the United States and Japan were part of this program. This time, the company is including 7 more countries in its list including Canada, France, Germany, India, Italy, Spain and China. Amazon has mentioned that they keep the right to determine the eligibility of the merchant for this scheme.
Amazon Lending: A great way to establish online business
Amazon in lender’s shoe now
‘Amazon Lending’ is certainly not going to build the company’s empire; but It will offer the small retailers a very big platform to establish their own business.
Amazon is an American e-commerce company. It is the largest e-retailer company of the United States. The headquarters is in Seattle, Washington. Now it has started to develop itself and other small scale companies by providing loans to them. The merchants who will benefit from Amazon’s lending scheme will have a high market share.
Peter Faricy, head of the Amazon Marketplace, said:
“Amazon is gearing up for offering small loans in other countries where it operates a third-party, seller-run marketplace business.”
Amazon has given hundreds of millions of dollars in loans to the US and Japan traders since 2012 and most of them come back again to take a loan. The loan value ranges between $1,000 and $600,000 for about 3-6 months. Such amount and duration lets the traders establish their businesses on Amazon. The interest rate for loan for sellers is 5.9% with 1% arrangement fee. The loan taken should be paid back within 4-6 months duration. Amazon makes money on the interest and it also takes its profit on the sales. Amazon recently revised the share in the profit and it has now become 40% of the total Amazon site sales.
Peter further adds:
“..the company has become better at understanding the inflection points in a small or medium business where capital can make a difference.”
Amazon has a little share in the Chinese market. Due to this loan scheme, the company will have a better chance to establish itself in China. In India too, where online shopping market is growing day-by-day; this will be an advantage to grow and stay in the competition with other traders.