Interest-Free Money from Amazon?

October 14, 2021 Chuck Kessler

Interest-Free Money from Amazon?

Walmart, Amazon, Square, and Shopify are all jumping on the FinTech train. Find out how it can help you grow your e-commerce business.

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. 

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 that are making news every day. 

Not to be outdone, in 2020, Amazon premiered Amazon Pay Later in India, giving customers the option to obtain instant zero-interest credit on their (Amazon India) purchases. 

Thrasio is Paying Attention 

Yardline, a provider of growth capital and business optimization tools for e-commerce sellers, recently announced its launch with backing from Thrasio, the largest acquirer of Amazon businesses and one of the top 25 sellers on Amazon. 

Yardline remarked that its proprietary Capital-as-a-Service (CaaS) technology empowers e-commerce platforms, marketplaces, and direct capital providers with embedded capital solutions. 

Thrasio was all over the news last year as the company reached one billion dollars in valuation while setting a new U.S. record for unicorns (a private company with a valuation over $1 billion).

Carlos Cashman, Thrasio co-founder and co-CEO said, “Almost 40% of sellers who inquire about selling their business to Thrasio do so because they’ve taken their brand as far as they could without additional resources. Yardline will be an asset in creating more opportunities for these entrepreneurs and offering more sophisticated avenues for growth.”

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. 

Almost two 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. 

Even though an invitation-only loan program seems to defeat the purpose, since 2020, Amazon has been sending out invites to (hand picked) Amazon sellers to apply to Goldman’s Marcus for revolving credit lines to help them grow their e-commerce businesses. 

However, 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. 

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. 

Just last month, 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 eCommerce 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

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

Just 30 days ago, financial services company Square 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.  

The trial agreement (to be rolled out in the next few months) 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 e-commerce 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? That’s how powerful Amazon brands are built. 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. 

Companies such as SellersFunding offer working capital up to $5 million in as little as 48 hours. Tired of waiting two weeks to receive your Amazon proceeds? FinTech companies can help smooth your cash-flow road with daily payouts. 

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. 

The CANOPY Management ‘Tribe’ is a team founded by top Amazon professionals, multi-million dollar sellers, and award winning e-commerce experts. When you’re with Canopy you’re more than a client, you’re a partner.

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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.