Amazon Loans Sellers $1B to Boost Sales

Amazon.com has doled out more than $1 billion in small loans in the past year to help third-party sellers grow their businesses. Sellers have used the money to expand their inventory or discount items on Amazon, Peeyush Nahar, vice president for Amazon Marketplace, told CNBC. More than 20,000 small businesses have received a loan from Amazon, with loans ranging from $1,000 to $750,000. Sellers have said interest rates are between 6 percent and 14 percent. From 2011 through 2015, Amazon handed out a total of $1.5 billion in loans.

Total Retail’s Take: When sellers succeed on Amazon’s marketplace, Amazon succeeds because Amazon takes a cut of the transactions generated on the site. Amazon has also profited by handling more leg work for sellers. Merchants pay the marketplace to fulfill orders and boost placement in search results — without which sellers might struggle to grab shoppers’ attention on the crowded marketplace. As marketplace rivals, like eBay and Wal-Mart, fight for Amazon’s market share, this loan program may help keep third-party merchants loyal to Amazon.