Amazon.com Inc has been at the forefront of retail innovation ever since it was first established, and over the past decade, it has transformed the way in which people shop. However, the company knows that the merchants selling products on its website are just as important as the customers, hence, the company launched a merchant lending business back in 2011. That business is now bearing fruit.

Billion dollar bet pays off

In 2011, Amazon made a decision that they hoped would further enhance the reputation of its platform as the most comprehensive shopping destination on the internet. A large part of Amazon's online retail empire is dependent upon merchants who sell their products on its platform.

Naturally, it was a shrewd decision on the part of the company to provide the promising ones with short-term business loans.

According to the latest reports from Bloomberg and others, the lending business has really taken off and the company is now making money off of it. In the previous year alone, Amazon disbursed loans amounting to $1 billion to merchants in the United States, Japan and the United Kingdom. Since inception, the figure stands at $3 billion distributed among 20,000 merchants. The program has been another bold and innovative move from the e-commerce giant that has paid off handsomely.

A lifeline for merchants

Merchants who operate on Amazon often find it difficult to acquire Business Loans from banks, thus, they struggle to expand their business. However, Amazon's lending scheme is definitely a godsend for ambitious and hard working merchants that are also great sellers.

Top Videos of the Day

The company's analytics tools are used to identify merchants who are great performers as far as sales are concerned and only then are they offered the loans. The loan amount ranges from as little as $1000 to a maximum of $750,000. However, the loans need to be repaid within a year by way of sales made on Amazon's website.

The exact interest rate charged by the company has not been disclosed. However, the VP of Amazon marketplace, Peeyush Nahar, stated that the company charges less than the rates charged on credit cards or other cash advance schemes that might be used by a merchant. Nahar further explained why Amazon's lending scheme has turned into such a success quite succinctly, “We give them access to capital when others don’t because we get their business model when maybe others don’t." (Bloomberg).