Reuters: Technology News: Amazon offers loans to its online sellers: ChannelAdvisor

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Amazon offers loans to its online sellers: ChannelAdvisor Sep 27th 2012, 18:58 A box from Amazon.com is pictured on the porch of a house in Golden, Colorado July 23, 2008. Credit: Reuters/Rick Wilking By Alistair Barr SAN FRANCISCO | Thu Sep 27, 2012 2:58pm EDT SAN FRANCISCO (Reuters) - Amazon.com Inc is launching a new business offering loans to some of its online sellers, a move that could boost the growth of its giant Internet marketplace, Chief Executive Scot Wingo of e-commerce advisory firm ChannelAdvisor said on Thursday. The new program is called Amazon Lending and sellers on the company's marketplace have been sent emails offering loans from Amazon Capital Services Inc, a unit of Amazon, according to Wingo, who posted a copy of one of the emails on ChannelAdvisor's blog. An Amazon spokesmen declined to comment. Getting into the lending business is a big step for Amazon that will expose it to more credit risk but may also fuel more sales by merchants on its marketplace. Amazon takes a cut of those sales, so revenue and profits could get a boost. Some online merchants lack upfront cash to buy all the inventory they would like to sell on Amazon.com, especially heading into the crucial holiday season. Banks and other sources of loans for merchants pulled back in the wake of the financial crisis, leaving an opening for alternative sources of financing, according to Wingo. "Some of these businesses are only constrained by cash flow," Wingo said. "These spot loans will help these folks grow by getting them extra cash to buy more product." ChannelAdvisor helps online merchants sell on Amazon.com, eBay and other online marketplaces. Some sellers forwarded Amazon's email to Wingo and have discussed the new program with him. Amazon is lending up to $800,000 to some merchants, Wingo said, adding that this is a pretty aggressive entrance into merchant financing. The company is charging some sellers interest rates of up to 13 percent, but some other merchants are being offered rates as low as 1 percent, he added. "This is definitely cheaper than credit cards and faster and easier than banks, so may fill a big hole for sellers," Wingo said. Amazon is pre-qualifying some sellers based on their performance on the company's online marketplace. The money can be used by sellers to buy more inventory and increase sales on Amazon.com, according to the email. Sellers can sign up for loans through their existing Amazon merchant accounts and if approved, Amazon said it will send the money to their bank accounts within five business days. Monthly interest payments on the loans will be deducted automatically from merchants' Amazon seller accounts, the email explained. Amazon shares rose 2.8 percent to $256.76 in afternoon trading. (Reporting by Alistair Barr; Editing by Maureen Bavdek and Phil Berlowitz) Link this Share this Digg this Email Reprints

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