Here’s Why Amazon Wants to Lend You Money
Amazon (NASDAQ:AMZN) is pulling another trick out of its bag. An email sent to large sellers indicates that the world’s largest online retailer will begin a lending program for qualified sellers.
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The annual interest rate for an Amazon loan is 13 percent. Some sellers think the rate is high, but the upshot is that qualified sellers can receive money as quickly as five business days and pay the loan back directly from their Amazon seller account. Although the move exposes Amazon to more credit risk, there is substantial upside to be gained if it can successfully pump capital into its online economy.
This adds to pressure Amazon puts on brick-and-mortar stores like Staples (NASDAQ:SPLS), RadioShack (NYSE:RSH), and Best Buy (NYSE:BBY). Many retailers are already threatened by Amazon’s ubiquity and pricing and making it easier for online retailers to scale their operations could drive prices for goods ordered online even lower. Amazon, of course, stands to profit both from interest and increased transaction volume.
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