Amazon ramps up lending to third-party sellers

Internet Retailing

13th Jun 2017

Third-party sellers on Amazon Marketplace have borrowed more than US$1 billion from the e-commerce giant over the past year in order to grow their business.

This marks a dramatic rise from the more than US$1.5 billion Amazon lent sellers from 2011 through 2015.

Reporting on the practice last week, Reuters cited an interview with Peeyush Nahar, vice president for Amazon Marketplace.

According to Nahar, sellers have used the loans to expand their inventory or discount items on Amazon.

Helping merchants increase their sales is big business for Amazon, which typically charges merchants 15 per cent of the purchase price on every sale.

According to the latest Fung Global Retail & Technology report, half of all product sales made by Amazon worldwide are now made by third-party merchants.

Besides commission, Amazon also charges sellers to store and deliver their inventory through Fulfilment by Amazon.

Sellers that use FBA can expect to pay around 25-30 per cent of every sale to Amazon.

The e-commerce giant told Reuters that more than 20,000 small businesses in the US, UK and Japan have received a loan from Amazon, and more than half of those have taken a second loan from the company.

According to Reuters, loans range from $1,000 to $750,000 and sellers have reported interest rates of between 6 and 14 per cent.

Amazon reportedly said it will start offering loans in other countries where it operates marketplaces, a group that will soon include Australia.