“Sellers form the backbone of our business,” asserted Rohit Kulkarni, Senior Manager – New initiatives, Amazon India. And to keep its spine healthy and happy, the online marketplace is planning to offer loans to its sellers.
Working capital loans to earn sellers’ loyalty
Retaining top-sellers is high on the priority list of all ecommerce biggies. And offeringfinancial assistance is one way to stop sellers from migrating to other platforms.
Amazon had declared their plan to offer loans to sellers in India in June last year. Soon after in September, they launched the pilot finance program by collaborating with third-party seller financing platform, Capital First.
This time the ecommerce leader will provide short-term working capital loans to selected sellers. The objective is to assist merchants in stocking inventory and expanding their business.
Key features of this service are:
By-Invitation-Only loan program
A credit rating mechanism will determine loan-worthiness of sellers
Collateral free loans at low interest rates
Loans range from Rs 5 lakh to Rs 2 crore
Interest rate 13-15% for a period of 4-6 months
Gopal Pillai, Director & GM, Seller Services, Amazon India said, “Access to working capital is the biggest hurdle for sellers. With this we are minimising the fiction and barriers for the sellers to get loans and helping them focus on growing their business on our platform”.
Amazon designs ‘Dragon Boat’ to compete with Alibaba
While the above loan initiative will help Amazon to deal with national competitors, the American etailer also has to worry about international competitors. The rivalry between Alibaba and Amazon is legendary. India being their latest battleground, both the companies are trying hard to overtake each other.
Alibaba’s trick is to support Indian etailers like Paytm, Snapdeal and Flipkart and weaken Amazon’s position in India.
Now Amazon has launched ‘Dragon Boat’ project to compete with Alibaba at a global level. The project is rumoured to be a global shipping and logistics network, which will help to reduce the gap between sellers in China & India and buyers across US & Europe.
As cross-border ecommerce is growing, Amazon wants to build a strong logistics & delivery network spread across the world, which will help them to fight against Alibaba that also wants the coveted Global Ecommerce Leader Tag.
“The new business will locate Amazon at the center of a logistics industry that involves not just shippers like FedEx and UPS but also legions of middlemen who handle cargo and paperwork associated with transnational trade. Amazon wants to bypass these brokers, amassing inventory from thousands of merchants around the world and then buying space on trucks, planes and ships at reduced rates. Merchants will be able to book cargo space online or via mobile devices, creating what Amazon described as a “one click-ship for seamless international trade and shipping,” stated a Bloomberg report.
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