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video Finance Videos lends merchants $1 billion

Thursday, June 08, 2017 - 01:09

The online retailing giant has stepped up its lending to third-party sellers so they can expand inventory or discount items on its site. Fred Katayama reports.

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View Transcript is acting more like a bank. The online retailer has stepped up lending to third-party sellers, doling out more than $1 billion in small loans in the past 12 months. That's a hefty increase from the $1.5 billion it lent out over four years. The company benefits in several ways. The money helps merchants expand their inventory or discount items on Amazon's site. Plus, Amazon takes a cut on transactions on its site, and it also makes money from charging merchants for fulfilling orders and boosting placement in search results. Rivals Wal-Mart and eBay are also growing their marketplace businesses. But loans may help keep sellers loyal to Amazon. Morningstar analyst R.J. Hottovy said, "This has really helped solidify the marketplace for the last couple of years. Selection is key. The third party business has grown quite a bit. You wouldn't have hit that point without lending to small businesses." Small firms had a hard time getting financing from banks after the 2008 financial crisis. Today, more than 20,000 small business have received loans from Amazon, whose loan program is by invitation only.

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Thursday, June 08, 2017 - 01:09