Online Lenders, Podcasts
TS Podcast: Deep dive into Amazon’s heavy handed lending practices
- Amazon's small business lending has become a serious business.
- With its scale, merchants are beginning to examine the true cost of borrowing.

Joining the podcast today is Tearsheet reporter, Dan Pelberg. Dan covers the lending space and he wrote an article earlier this week about Amazon's lending business. He went out and spoke with a bunch of marketplace sellers on the platform and they're intimidated by Amazon's growing power.
Their reliance on Amazon puts them in a vulnerable place when Amazon comes knocking, asking them if they want to borrow money. This money is earmarked solely for buying inventory to sell on Amazon but more, Dan heard from sellers that they felt taking the loans meant Amazon might treat them more fairly in the future.
During our show, Dan expounds upon this issue and then extends it a bit forward -- more ecommerce platforms, like Shopify and PayPal, are becoming lenders.
We talk about what this means for commerce and merchants and what it may augur to in the future of lending. Lastly, we explore some other things Dan has been looking in to -- namely, crypto lending.
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The following excerpts were edited for clarity.
Amazon Lending
Amazon’s small business lending started in 2011 for third-party sellers on the Amazon Marketplace.
An invitation-only lending model for small businesses selling on Amazon, there is no way to apply for a loan. Only Amazon has the power to invite a business to accept financing
From the lender's perspective:
- Strong pool of potential borrowers, in 2018 the Amazon Marketplace has 2.5 million sellers, 24,000 sellers with over $1 million in sales on the platform
- So this lending helps support Amazon’s current marketplace and boost sales, driving more revenue for the business and Amazon who collects a portion of each sale on the platform
- Offered financing directly as opposed to applying for a new loan
- Very easy to use, invited to apply for a loan, generally takes 24-48 hours
- Repayment is taken right out of the seller’s account, they don’t have to worry about making payments to another party
- Other ecommerce providers like Shopify and PayPal are also in the lending space. Shopify, announced a 73 percent increase in merchant cash advances late last year, so these services are growing.
- Part of their growth comes from their easy access to small business borrowers: the 2.5 million Amazon sellers, Paypal's 21 million merchant accounts, and Shopify is closing in on 1 million customers
- Already have customers and have insight into their ecommerce business, along with data metrics like sales and inventory numbers. Access to business data makes it easier to mitigate risk for these ecommerce lenders