Amazon announced today that it had originated over $3 billion in loans to more than 20,000 small businesses since 2011. One billion of those loans came in the past 12 months. Peyush Nahar, VP for Amazon Marketplace, released a statement on the milestone。
The Street.com aptly said the Amazon was “has secretly become a giant bank.”
The data points Amazon shared were pretty compelling. 50% of the small businesses that take out a loan come back and do it again. Loans range from as little as $1000 but go up to $750,000. Amazon is now lending in the US, UK and Japan.
But here is the rub. While other online lenders must pay a hefty fee to acquire new borrowers that is not the case for Amazon. The worlds largest retailer already has the relationship with these borrowers. Marketing to these small businesses cost, well, very little.
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Amazon is not the only internet mega-giant that has realized a digital relationship can be leveraged in many different ways. My guess is that Amazon has been watching Alibaba lead the way in China. While Amazon is only lending to three countries today they currently provide services in 130 different countries. No costly brick and mortar locations necessary.