Amazon India would be offering loans to its small and medium sized sellers

Amazon India has planned to offer loans to the key vendors that sell on its portal so that they don’t shift loyalties to its rivals Flipkart and Snapdeal.

Amazon India is inviting its qualified merchants to join its lending programme under which a seller can apply for short-term working capital loans so that he can be able to buy more inventories and increase his sales.

"Access to working capital is the biggest hurdle for sellers. With this we are minimising the fiction and barriers for the sellers to gloans and helping them focus on growing their business on our platform," Gopal Pillai, general manager, seller services at Amazon India, told ET.

The pilot programme was launched by Amazon in September last year, when it disbursed loans of crores of rupees to hundreds of SMEs. The loans were given through its third-party seller financing platform, Capital First, an NBFC based in Mumbai.

The loans, which range between Rs 5 lakh and Rs 2 crore at 13 to 15% ROI, are given for a period of four to six months. Rival companies like Paytm, Snapdeal and Flipkart have also launched similar loan schemes.

"This is a way in which the ecommerce firms are addressing a pain point of low inventory. Now that sellers will keep good stock, their sales will increase and bring them growth," Harminder Sahini, founder and managing director of Wazir Advisors, told ET.

"Since these are giant companies, the chances of financial risks are low as SMEs would not want to lose a big business partner," he said.

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