Amazon: loans for its online sellers?

By Helen Gradwell

Reuters has reported that Amazon.com Inc. is to offer business loans to some of its online sellers. Reuters sees this as a move that has the potential to boost growth of the Amazon marketplace - but does open it up to credit risks.

Sellers on the marketplace have apparently been sent emails detailing this new scheme. A spokesperson from Amazon declined to comment; the company has yet to announce it publicly.

If these claims are accurate, Amazon loans could help online merchants to buy the inventory they need to sell. This could be especially helpful during busy periods, such as Christmas. In the wake of the financial crisis, sources of loans for merchants decreased, so there is a gap in the market for alternative financing.

Scot Wingo, chief executive of an e-commerce advisory firm called ChannelAdvisor, says that Amazon is lending up to $800,000 (about £500,000) to some merchants. He added that Amazon could charge merchants interest rates of anywhere between 1% and 13%.

He said:
"This is definitely cheaper than credit cards and faster and easier than banks, so may fill a big hole for sellers."

Sellers will apparently be able to sign up for these loans through their Amazon merchant account. If they're approved, they could have the money in their account within five business days. The interest payments on the loans will be automatically taken from seller accounts, according to the email.

Image © iStockPhoto / TayaCho amazonc

Tags: Amazon, Scot Wingo, Reuters

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