Locking in Vendors into your Digital Marketplace

Times of India reports that Amazon.com Inc will launch its business loan program for small sellers later in 2015 in eight more countries including India and China, where credit is becoming a key factor in competing for new vendors and grabbing market share. Until now, the e-retailer has offered the service only in the United States and Japan. Amazon Lending, founded in 2012, now plans to offer short-term working capital loans in other countries where it operates a third-party, seller-run marketplace business, the head of Amazon Marketplace, Peter Faricy said.

The countries are Canada, China, France, Germany, Italy, Spain and the United Kingdom. The service is on an invite-only basis and is not open to all sellers on Amazon's platform. Other large retailers including eBay Inc's PayPal and Alibaba Group Holdings, which run third-party marketplaces, are also turning to credit to boost their vendor base. Some lending industry officials who help lenders assess credit risk say these retailers are taking on risky loans because they don't know the shape of the credit market in which the sellers are operating.

Digital marketplaces are attracting as many sellers as they can to build their vendor base. And they are fast developing their supply chains to compete with the likes of Walmart and Tesco. These loans will tie in vendors into a particular digital marketplace.

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