Amazon Loans Expand This Year
Over the past year, Amazon.com has started offering loans for marketplace sellers. The Amazon Lending program, according to a recent report, states that Amazon loans have been provided to about 600,000 small business owners in the United States, the UK and Japan, with a grand total of over $1 billion.
These loans are crucial for new business owners – but when factors like interest rates come into play, it’s clear that Amazon isn’t just doing this to help their sellers. The loans range from 1,000 to 750,000 with interest rates that range from 6 to 14 percent. Amazon is using the Amazon Lending program to capitalize on new sellers who would not have the ability to scale their businesses without it. Essentially, they provide their loans to generate more buyers to the marketplace overall. And when you calculate the fees involved here, Amazon’s profit due to Amazon Lending is much higher than many sellers may believe.
Amazon Lending: A Winning Equation
Naturally, this creates a win-win situation for Amazon – and for the right seller, it may be their golden ticket to success. It’s a mutually beneficial program for both parties involved. Amazon Lending gives small business owners the financing they need to run an ecommerce business, and they continue to profit while doing so – the only downfall for Amazon is that this program does put their own credit at a slight risk. However, they have this covered with a calculated, invite-only system for new loans. In addition, the company protects their own finances and reputation by utilizing advanced data that displays a particular seller’s activity in real time to ensure that they don’t provide a loan to a faulty or fraudulent seller.
According to Fox Business, Amazon Lending plans to expand their financing service to Canada, China and France in the next year.