Amazon offers financing to third-party sellers
Amazon is now providing cash advances to sellers on its platform.
The e-tail giant is launching a new financing solution provided by Parafin, a U.S.-based provider of growth capital for sellers. This secure financing option ties payment on a cash advance to a portion of sellers’ future sales for a fixed capital fee, paired with flexible payment plans.
Utilizing this new program, sellers can gain access to capital in a matter of days with transparent and capped rates, no fixed term, no personal guarantee, no credit checks, and no late fees. The program rolls out to some U.S.-based businesses on Tuesday, Nov. 1, 2022, and it will be available to hundreds of thousands of eligible sellers by early 2023.
Eligible businesses selling on the Amazon third-party marketplace platform can obtain access to capital from $500 up to $10 million. A flexible payment schedule is determined by a fixed percentage of the seller’s Gross Merchandise Sales (GMS, or total value of merchandise sold via the Amazon platform over a fixed timeframe) until the funding is paid off, with no minimum payments, no interest (only a fixed capital fee), and no collateral required. Payments are only required during periods that a seller has made sales.
“Amazon is committed to providing convenient and flexible access to capital for our sellers, regardless of their size,” said Tai Koottatep, director and GM, Amazon WW B2B Payments & Lending. “Today’s launch is another milestone in strengthening Amazon’s commitment to sellers, and builds on the strong portfolio of financial solutions we already provide. This latest offering significantly expands sellers’ reach and capabilities, and broadens their access to capital in a flexible way—one that helps them control their cashflow, and by extension, their entire business.”
“We founded Parafin with the mission to grow small businesses, and we’re thrilled that we have the opportunity to do that by providing Amazon sellers with this merchant cash advance option,” said Vineet Goel, co-founder of Parafin. “It’s a privilege to count ourselves among Amazon’s suite of financial solutions, and we look forward to making a difference for Amazon.com sellers looking to expand their business.”
Amazon reaches out to sellers
Amazon actively assists third-party retailers (primarily small-to-medium-sized businesses) to sell on its Amazon Marketplace e-commerce platform with at least 150 tools and services, and regularly adds new offerings.
Some of its more recent offerings for third-party sellers include launching Amazon Seller Wallet, a solution intended to provide the e-tail giant’s selling partners more capability to determine how much and when to convert their funds. The tool will enable third-party Amazon sellers to hold, view, and transfer Amazon store proceeds directly to their bank account on their schedule.
In addition, Amazon is offering a new hosted distribution center solution to its third-party sellers. Amazon Warehousing & Distribution (AWD) is designed to provide low-cost, long-term storage that gives sellers the option to store their inventory in Amazon distribution centers and then seamlessly replenish to Amazon fulfillment centers. The e-tail giant is supporting the service with new, purpose-built facilities for bulk storage and automated distribution.
Amazon also recently introduced a revamped version of its Account Health Rating, designed to help its 2 million third-party sellers adhere to Amazon’s policies and maintain positive account activities.
[Read more: Amazon upgrades success metric for selling partners]