How FinTech is Helping Future-Proof Life for Amazon Sellers

August 25, 2022 Chuck Kessler

How FinTech is Helping Future-Proof Life for Amazon Sellers

Walmart, Shopify, Square, and Amazon are All Jumping On the FinTech Train. Find Out How Amazon Sellers Will Benefit!

Thanks to the emergence of mobile technology, the influence of social media, and the power of all-in-one marketplaces, e-commerce has exploded in the last several years. It was well on its way when the coronavirus pandemic poured fuel onto an already raging fire.

According to McKinsey, U.S. e-commerce doubled in the first quarter of 2020, resulting in 10 years of progress in just 90 days. In 2021, U.S. e-commerce reached $483.46 billion.

However, another big, sometimes unnoticed catalyst of e-commerce growth has been the rise of FinTech.

What’s All This Talk About FinTech?

FinTech (or Financial Technology), refers to cutting-edge software and emerging technology that can supercharge the way that you use financial services.

It includes online banking applications and money transfer apps like Venmo and Zelle. FinTech makes purchases as easy as flashing your Apple watch “wallet” or simply using a credit card issued by a traditional bank.

There’s a very good chance that you’ve already used some aspect of FinTech in your everyday life. Speaking for myself, I have a troubling mental image of my grandfather spinning in his grave every time I authorize a business to access my personal bank account with the watch I wear on my wrist.

This form of FinTech is said to be “embedded” into the commerce ecosystem. Even though Shopify, Amazon, Visa, American Express, and Mastercard are not purely FinTech companies, it is a large part of how their businesses run (and make money).

Recently, FinTech companies have shouldered themselves into the e-commerce conversation, and have launched applications for everyone from individual Amazon FBA (Fulfillment by Amazon) sellers, to the billion dollar companies “aggregating” Amazon businesses.

Not to be outdone, Amazon has hopped on the Buy Now Pay Later (BNPL) bandwagon with its new partnership with the financial services company, Affirm.

However, to make this possible, our internet needed to evolve.

Web 3.0?

The first incarnation of the World Wide Web (often referred to as Web 1.0) dates back to the 1990’s and early 2000’s. It can be quickly characterized as the internet of blogs, rudimentary message boards, early web portals and internet service providers such as AOL and CompuServe.

Then, as everybody is well aware of, came Facebook, Twitter, and YouTube. That’s Web 2.0. It’s most commonly thought of as the point where users began creating and posting their own content. They were no longer just internet “passengers,” they wanted to be in the driver’s seat!  

Welcome to the Future 

Now, there’s a lot of talk about Web 3.0. That’s the name that some futurists and technologists have attached to a very different version of the internet. Even though cryptocurrency has taken its lum

ps lately, and blockchain is something very lightly understood by most, this idea of an internet “owned by the (individual) builders and users, orchestrated by tokens.”

Everyone on the internet is trying to gain more control over their content. Web 3.0 is tilting the field in favor of the “producers” by decentralizing the internet and rebuilding it using blockchain.

What is it going to look like, really?

How about decentralized social networks, “play-to-earn” video games and an increased emergence of NFT platforms. If you’ve been following the latest innovations to e-commerce, you’ll see why many think that online selling is helping drive this move to Web 3.0.

The Gamification of E-Commerce

If you’ve been selling on Amazon for any time at all, you know to expect innovations coming from China. Over the last few years, Chinese e-commerce pros have made huge advances in the “gamification” of 

purchases. 

Using this model, shoppers take part in virtual exhibitions and performances, then are able to seamlessly make their purchases on the platform itself through branded games and quizzes that blur the line between commerce and game play. 

Shein, the Chinese fast fashion retailer founded in 2008, is well versed in this exciting new form of ecommerce, and recently passed Zara and is fast approaching H&M as one of the world’s biggest fashion brands. Shein is known for its viral social media tactics, including a strong video presence on both TikTok and YouTube.

Don’t like the idea of balancing awkwardly one one leg in a tiny changing room? Snapchat users can now try on clothing and accessories virtually with technology that responds to your own specific physical dimensions.

FinTech Money is Fueling E-Commerce

FinTech’s focus on e-commerce isn’t brand new. Still, the amount of money that is flowing into the global marketplace has begun to grow exponentially.

Several years ago, the financial services firm Payoneer introduced a program called Capital Advance, which gives advances up to $500,000 to Walmart and Amazon sellers.

SellersFunding recently announced that they had secured $166.5 million in a combination of Series A equity funding and a credit facility to continue the development of their e-commerce-specific technology and payments platforms.

SellersFunding has been offering capital since 2017, and more recently, has been the company behind Alta, the financial arm of Helium 10’s tool suite for Amazon sellers.

Just last month, Amazon, and Lendistry, an established minority-led Community Development Financial Institution (CDFI), rolled out a joint pilot program for a segment of the population that might not have received those personal invitations.

By providing U.S.-based Amazon sellers access to short-term loans of up to $100,000 at competitive and affordable rates, the program’s goal is to create growth opportunities for urban and rural small businesses in socially and economically distressed communities.

FinTech Continues its Meteoric Climb

Last year, in 2021, FinTech continued its unparalleled growth. With much of our financial lives moving online (mirroring much of the rest of our activities), speculation in cryptocurrency, and venture capitalists drawn to the goldrush atmosphere combined to flood the ecosystem with liquidity. 

By the time that 2021 was over, venture capitalists had injected $133 billion into FinTech startups throughout the globe. That adds up to triple the amount invested just one year before in 2020. 

Today’s cryptocurrency troubles and the current recession have created ripples throughout the financial sector. Still, for most FinTech companies, the talk is all about the many different ways that the rapidly growing sector will continue to influence business in the next year.

Embedded Finance is Helping Amazon Sellers Connect the Dots

Embedded finance makes it possible for companies to offer consumers credit without having to leave their platform. That’s a critical innovation.

You’ve probably been offered the opportunity to “pay as little as $100/month or 0% APR with xxxx.” Embedded finance includes payment platforms, card payments, lending, investments, insurance and banking. 

Whether it’s SaaS (Software as a Service) company Helium 10 offering financing to Amazon sellers through its Alta financial services program, or Amazon’s partnership with Affirm, e-commerce has been quick to embrace making a user’s experience more streamlined.

Are Super Apps on the Horizon?

China’s WeChat was first released in 2011, and became the world’s largest standalone mobile app in 2018, with over 1 billion monthly active users. It has steadily evolved from a messaging app to a growing FinTech-embedded super app that offers everything from e-commerce payments to health services.

Consumers have rapidly come to expect an unbroken flow of assistance from their smartphone’s apps. To not have to close that same app when it comes time to check the inventory of their online business, then call for an Uber, or book a hotel room, is a golden ticket for those companies with the vision to imagine (and build) this new frontier.

Logiq, a global provider of award-winning e-commerce and FinTech solutions, announced plans to launch its first-ever super app in Indonesia that combines all of its mobile e-commerce and FinTech solutions into one mobile app.

Logiq said in the press release that, “the super app will provide access to PayLogiq™ e-Wallet, GoLogiq™ hyper-local food delivery and other mobile e-commerce solutions, as well as its recently announced mobile fintech platform for microlending, driver’s license testing payments and mental health consultations.”

Square and Amazon are Betting On a Different Way of Borrowing

As remarked upon earlier in this post, Buy Now Pay Later is helping many companies (and consumers) take a cautious step towards FinTech.

BNPL can easily be viewed as a “gateway” product that opens the door to more aggressive loaning (and borrowing).

Financial services company Square last year acquired the BNPL service provider AfterPay. Effectively a credit card, BNPL services allow shoppers to buy a product today and pay for it through scheduled installments.

The shares of Affirm Holdings (a point of sale financial lender of installment loans for consumers) recently skyrocketed after they disclosed a new partnership with Amazon.

That means that Amazon buyers can now split purchases for $50 or more into monthly payments. Interest rates are as low as 0% for qualified buyers and partner companies are offering special rates. This is an opportunity to use Amazon (and Affirm) money for free! The addition of Amazon now means Affirm is working with three of the most important ecommerce groups in the world, Walmart, Shopify, and Amazon.

What This Means for E-Commerce Sellers

When it comes to efficiently managing your online selling, ready access to additional capital is crucial. Running out of inventory can kill your Amazon business. You risk losing the rankings you’ve fought so hard for.

How about being able to quickly react to the success of an Amazon product by branching out and expanding your brand offerings? Powerful Amazon brands are built that way. But, it requires a lender that understands how valuable the current online selling opportunity truly is.

For conventional banks, the whole idea of selling on Amazon is outside of their area of expertise. FBA (Fulfillment by Amazon), online arbitrage, and drop shipping are probably a mystery to them. When you add the complexities of PPC (Pay per Click) advertising costs, most conventional lending channels are simply going to say no.

Many Amazon sellers were initially attracted by the fact that they don’t need a big bank account to get started. A lot of those same sellers successfully scaled up their e-commerce businesses after beginning with a shoestring budget.

When it comes to getting a small business loan, that same exciting aspect becomes a double edged sword.

E-Commerce is Just Good Business

Increasingly, FinTech is learning that loaning to Amazon sellers is just good business. What that means is that instead of hoping that a loan officer at your conservative banking institution is going to approve the small loan you’ve asked for, you could be speaking with a specialist who recognizes the tremendous potential of today’s exploding online marketplace.

The reach of e-commerce continues to expand across the globe. FinTech companies can help make sure that as a seller, you can navigate the many different currencies and tax requirements you are certain to encounter.

I have a feeling that this might not be a question of Amazon sellers searching for FinTech solutions to their cash flow problems. FinTech is probably coming to you, and sooner rather than later. The key will be knowing how to take advantage of the opportunities that FinTech will certainly provide.

How CANOPY Management Can Help

CANOPY Management is a full-service marketing agency for Amazon sellers. Our team consists of former Amazonians, multi-million dollar sellers, and award-winning experts. When you consider the many ways that CANOPY Management can help you grow your business, you’ll see why selling on Amazon is much easier “under the Canopy”:

  • Strategic Growth Planning
  • Listing Copywriting Optimization
  • Listing Photography
  • Product Videography
  • Advertising Management
  • Customer Service
  • Demand Side Platform (Amazon DSP)
  • Amazon Posts
  • Full Service Management
  • Amazon Review Aggregation

Ready to Grow Your Amazon Business?

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Chuck Kessler

I'm a western Colorado based trail runner, climber, surfer, and adventurer who loves to write. My focus is on eCommerce and technology as the Content Manager and SEO Strategist at CANOPY Management.