Amazon Now Lending Cash to Struggling Sellers

Sites include Amazon.com . Published on October 9th, 2012. Written by Anthony West.

For the small-time seller that sells on Amazon, finding the cash to buy much needed inventory can be hard, and when these types of sellers struggle, Amazon doesn’t make any money—at least not from them.

The retail giant as you may know charges sellers a percentage of each sale and Amazon has taken a bold step towards ensuring that those margins are maintained by announcing plans to lend money directly to cash-strapped merchants.

‘Amazon Lending’ as it the service is dubbed will allow merchants to “purchase inventory and increase your sales on Amazon.com.” as expected though, not all merchants will qualify and an application process will have to be endured. The good news, however, is that once approved the funds are made available in as little as 5 days. A massive bonus for those sellers who have serious cash flow problems.

The new move by Amazon is of course designed to do one main thing and that is increase revenues from third-party sales. But it also helps keep the interest earned from lending in-house since several competitors have sprung up in recent years to meet the growing demand for micro-financing among online merchants. companies like Kabbage which raised over $50 million in VC funding are direct competitors to Amazon Lending and so the sooner the service is rolled out, the better it will be for Amazon.

Google responds to Amazon by entering the credit business – issues credit card.