4 ms·
Amazon's in the perfect position to give loans to their sellers. They have all the data in the world about how a seller is doing on the platform, so why not mak
by bdibs 7y ago
Amazon's in the perfect position to give loans to their sellers. They have all the data in the world about how a seller is doing on the platform, so why not make some (relatively) safe money off interest and boosted sales?
- vkou 7y agoAnd the best part is that because they can hold money from sales for months, before remitting it to a merchant, they can loan that money right out to other merchants.
- ikeboy 7y agoHuh? In the vast majority of cases money is released within 2 weeks of a sale. The exceptions are if an account gets suspended, or if there's a sudden increase in sales and it's flagged, in which case they might hold it for another week or two. The only time money is held for over a month is if the account was suspended and not reinstated by then.
- bootlooped 7y agoSome sellers even get settlements weekly or more frequently. I'm not sure how, but I know it was at least possible sometime in the past.
- epanchin 7y agoTwo weeks still sounds like a considerable float to lend from.
- ikeboy 7y agoThey have a bank backing the loans anyway, it's not their own cash.
- mcpherrinm 7y agoLoaning money to their merchants allows their merchants to buy more inventory to ship to Amazon to sell. Thus Amazon benefits by making more sales, too.
- pbhjpbhj 7y agoIt's crazy really, they loan the money they would in the past have to use to buy stock, but they also don't have to pay for warehousing (straight away). Presumably it helps with inventory management too - like the loanee indicates the inventory they're buying which means Amazon can factor that in. Then they charge interest ... However, whilst this sounds good for Amazon, is it more efficient - in economic terms - or does it just reduce Amazon's risks and costs.