Are Online Marketplaces Becoming Non-Financial Banks?
Online marketplaces are, in effect, becoming lenders/non-financial banks to their sellers. Sellers can finance advertising through their online marketplace who will give them credit for advertising to be paid later. Online marketplaces offer loans, credits and other financial services to their sellers to keep them online.
Times of India reports that Amazon plans to allow sellers on its e-commerce marketplace in the country to advertise on its portal without advance payment starting this festive season. The advertising fee will be deducted from sales proceeds under the new system that has already been launched in the US, UK, Germany and Japan.
Listing benefits of the new system, the e-commerce company in an email told its sellers: "How will you benefit? No more need for advance payment for advertising; no more stopped campaigns because of ads running out of balance; no need to wait for two to three days for your advertising balance update; no more payment failures; you can run your ads even if you don't have net banking, credit card & debit card." ET reviewed the email. Gopal Pillai, director, seller services, at Amazon India, said, "This payment system has been very successful in markets such as the US and Germany, and we are confident Indian sellers will also benefit immensely from this." He said the system will allow sellers to focus on their core operations without worrying about advertising challenges, specifically during the festive season.