Amazon offers loans to sellers in China
Until now, the e-retailer has offered the service only in the US and Japan. Amazon Lending, founded in 2012, now has decided to offer short-term working capital loans in other countries where it operates a third-party, seller-run marketplace business, the head of Amazon Marketplace, Peter Faricy said.
The countries include Canada, China, France, Germany, India, Italy, Spain and the United Kingdom.
The service is on an invite-only basis and is not open to all sellers on Amazon's platform.
Amazon offers three- to six-month loans of $1,000 to $600,000 to help merchants buy inventory. It makes money on interest and takes a cut of all sales on its marketplace, which now account for about 40 percent of total Amazon site sales.
Amazon said it has offered hundreds of millions of dollars in loans since 2012, with more than half of its sellers opting for a repeat loan. The company declined to provide specific figures and also did not say how much it plans to lend this year.
Amazon's Faricy said the company has become better at understanding the inflection points in a small or medium business where capital can make a difference.
"We know a lot about our sellers' business and invite only those who we think are in the best position to take capital and grow," he said.
Other large retailers including eBay Inc's PayPal and Alibaba Group Holdings, which run third-party marketplaces, are also turning to credit to boost their vendor base.
Small businesses have high failure rates, especially in China and India, added William Black, a former U.S. banking regulator and professor of Economics and Law at the University of Missouri.
Amazon said it can safely offer loans based on internal data and because it takes loan payments out of the sales proceeds it pays sellers.
PayPal spokesman Josh Criscoe said eBay merchants who use PayPal are eligible for the working capital loans and credit is offered to only those customers that have a strong PayPal sales history.
PayPal has provided more than $500 million in capital since September 2013, with an average loan disbursement of $2 million per day.
A spokeswoman for Alibaba's financial services arm Ant Financial, which offers these loans, said credit is offered to Taobao, Tmall merchants and other small business owners who meet certain conditions. The company also offers such loans to customers in some countries like the United States and Britain.
Since 2011, Ant Financial's Ant Micro Loan program has issued 400 billion yuan ($64.42 billion) worth of loans, and the non-performing loan ratio is 1.5 percent, the spokeswoman added.
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