/// Amazon Quietly Jumps Into Another Business: Lending Money to Sellers
Amazon has started rolling out a new program that will provide short-term loans to merchants, which sell their products on Amazon.com. The program was first discovered by Channel Advisor , after Amazon sent detailed letters to merchants about the program. Channel Advisor provides tips to merchants, who sell items on marketplaces, like Amazon and eBay. An Amazon spokesperson did not return phone calls seeking comment. In the letters, Amazon said the new service, called Amazon Lending, can be used to “purchase inventory and increase your sales on Amazon.com.” If a merchant is approved for the program, the funds will be advanced to their Amazon Seller account within five days, and then a monthly fee will be automatically deducted from the merchant’s account. While many consumers may think that everything they buy on Amazon comes directly from the retailer, in many cases it is coming from an independent sellers, who choose to list their products on the marketplace for more visibility. Amazon collects 99 cents a sale, plus a percentage of each transaction if a merchant is selling fewer than 40 items, or $40 a month plus a revenue share if they are selling more. By lending capital to its sellers, Amazon may be able to help merchants increase their sales, since one of the many constraints that they face is having access to capital. This can be especially true ahead of the holidays as merchants stock up on inventory to meet additional demand. The loans, however, won’t come cheap. According to Channel Advisor, several merchants were offered an interest rate of 13 percent. Other companies, like Atlanta-based Kabbage, serve online merchants, which typically have a hard time getting attention from traditional lenders. Kabbage, which has raised almost $50 million in venture capital, has now lent money to sellers — mostly on eBay, Amazon and Yahoo — that earn a combined $800 million in annual sales.