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It was reported last month that Amazon is closing its marketplace in China because it’s failed to become a major player in the market and is therefore looking to step away. But Amazon isn’t fully abandoning Chinese e-commerce as it’s now introducing a lending program to help and attract Chinese sellers, according to CNBC.
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Here’s what it means: Amazon’s Lending Referral Program can help Chinese sellers on its marketplace grow their businesses.
The short-term loans are available to Chinese vendors that sell on Amazon’s marketplace, potentially enabling them to purchase more inventory and make other investments. The program is currently invite-only and has just one lending partner, Shanghai Fuyou Commercial Factoring, though it plans to add more lenders going forward. By giving Chinese sellers loans — something it’s done with sellers in other markets including the US, UK, and India — Amazon can make sellers on its global marketplace stronger and build out an attractive selection for consumers.
The bigger picture: This can make Amazon a more appealing sales channel for Chinese merchants, helping grow its selection.
- Chinese sellers account for a significant share of Amazon’s third-party merchants, and the lending program can strengthen that. Over 40% of Amazon’s third-party sellers are based in China, according to Marketplace Pulse. This means that Amazon’s short-term loans can help a number of its sellers improve their businesses, thus making Amazon’s marketplace a better place to shop. Additionally, the loans can potentially convince these sellers to focus more of their efforts toward selling on Amazon, and even attract new sellers to further flesh out its offerings.
- Incentivizing Chinese merchants to sell on Amazon may be key to its success as cross-border e-commerce becomes more competitive.Alibaba is increasing its global e-commerce capabilities by allowing foreign small- and medium-sized businesses (SMBs) to sell to consumers around the world via its AliExpress platform, while other e-tailers like JD.com have stated their global aspirations. This means that, in the near future, Amazon may be competing more directly with online marketplaces around the world for sales, consumers, and merchants, the latter of which make the loan program important. If Amazon’s loans can inspire loyalty from Chinese sellers, the e-tailer may be better able to compete with the likes of Alibaba and JD.com as it won’t have to worry about losing merchants to other marketplaces in exclusive deals.
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Source: Business Insider – dkeyes@businessinsider.com (Daniel Keyes)