Merchants increase revenue for holidays, Amazon gets more revenue from these sales
Amazon is entering new territory by entering the lending business. He clearly hopes that by advancing money to his merchants to increase their sales, Amazon will also increase the amount of money they make from those sales.
Amazon is launching a new service, called Amazon Lending, to provide loans to its merchants, Reuters reported Friday.
Channel Advisor job a copy of a letter sent to merchants explaining how the program works.
Merchants are encouraged to apply for the loan and then “use those funds to purchase inventory and increase your sales on Amazon.com.” If the merchant is approved for the loan, the funds will be advanced to their Amazon seller account within five days. After that, a monthly payment will automatically be taken from their account until the loan is paid off.
Channel Advisor, which helps merchants sell their items on marketplaces like Amazon and eBay, reports that the interest rate on loans appears to be around 13%.
Independent merchants on Amazon pay the retail giant 99 cents from each sale, plus a percentage of everything it sells if it has fewer than 40 items listed, or $40 a month and a share of the revenue if they list more than 40 items. All for the privilege of seeing their merchandise get more exposure by showing up on Amazon’s website.
By lending money to its merchants, Amazon will give them the upfront money so they can buy their inventory for the upcoming holiday season, in hopes of increasing sales and, therefore, their own profits.
Amazon will compete with other services doing the same, including Kabbage, which has developed a financial platform that picks up where traditional banks leave off when it comes to e-commerce.
Online merchants who want to grow their business but can’t get a loan from a traditional bank can turn to Kabbage, who will perform a credit check and review an applicant’s channel activity levels, as well as their volume of online transactions, to determine whether or not that person is eligible.
Currently, Kabbage only supports merchants selling on eBay, Amazon, and Yahoo, but over the next six months it will expand to support merchants on Facebook, Etsy, Shopify, and Marketplace on Sears.com.
Atlanta-based Kabbage recently announcement that he raised $30 million from Thomvest Ventures, the venture capital arm of Peter Thomson, as well as previous investors UPS Strategic Enterprise Fund, Mohr Davidow Ventures, BlueRun Ventures, Warren Stephens and David Bonderman, bringing his total raised to $56 million. The cabbage too recently hired dishonored former Yahoo CEO Scott Thompson to join its board.
Here is the letter that was sent to Amazon merchants in full:
Expensive
Amazon is always looking for ways to help its sellers grow. We are excited to announce a new service: Amazon Lending by Amazon Capital Services, Inc.
Based on your Amazon sales performance, you are pre-qualified for a loan up to
How Amazon Lending Works:
- Sign up for a loan. Log in with your primary Selling on Amazon account holder ID and password.
- If approved, funds will be advanced to your Amazon seller account within approximately five business days, and we will initiate a payout to your registered bank account.
- Your monthly Amazon Lending payment will automatically be deducted from your Amazon seller account.
Go to Amazon Lending to complete your loan registration. You will need to log in with your primary Selling on Amazon account holder username and password. You can also log into your Seller Central account, look for the Amazon Lending offer in the right column of the homepage, and follow the links to “Learn More” and “Sign Up”.
If you have any questions, please contact us at support@amazoncapital.com.
This offer expires . Signing up for Amazon Lending is by invitation only.
Amazon could not be reached for comment.
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