Amazon temporarily suspends sellers’ loan repayments amid coronavirus

REUTERS/Mike Segar/File Photo

Amazon.com Inc on Wednesday said it temporarily would not require sellers in its marketplace to repay loans it had made to them, as merchants confront the prospect of declining sales during the coronavirus pandemic.

The world’s largest online retailer notified sellers that its program known as Amazon Lending would pause repayments beginning Thursday until April 30. Interest would not accrue during that period, it said.

The program has offered sums between $1,000 and $750,000 to merchants looking for capital to acquire inventory, expand their product lines and advertise on Amazon.

“Loan repayments will restart on May 1, 2020 … You will have the same number of remaining payments once repayment resumes,” Amazon said in a seller message obtained by Reuters.

More than 20,000 merchants have gotten loans from Amazon, the company said in 2017. By the end of 2019, Amazon stood to receive $863 million from sellers to whom it provided financing through the lending program, according to a company filing. The loans’ terms range from three to 12 months, carrying interest rates from 6% to 19.9%.

As Americans turn to online shopping while quarantined, many online sellers, who are small and medium-sized businesses, are facing cash flow constraints amid supply chain and logistics issues caused by the outbreak. EBay Inc, another major online marketplace, said on Wednesday it will defer most selling fees for merchants for 30 days.

Amazon’s offer may provide relief to sellers, some of whom could be hard hit by Amazon’s recent decision to restrict its U.S. and European fulfillment services to household, medical and other essential goods during the outbreak.

Merchants of popular items from toys to apparel have worried that the temporary ban on stocking goods in Amazon warehouses, on which they depend for delivery, would mean low sales and difficulty paying back loans.

Jamison Philippi, an Amazon seller of toys and video games in Hackensack, New Jersey, had estimated to Reuters his income could drop by 75% just as he had a roughly $3,500 loan payment due to Amazon on April 1.

“That’s super awesome. I cheered when I got that email. That relieves a lot of stress right now,” Philippi said.

Amazon’s move came after at least one rival offered sellers relief.

Ricardo Pero, chief executive of lending company SellersFunding, last week told Reuters he was easing terms to help sellers on Amazon and other marketplaces navigate the rapidly changing retail market. SellersFunding offers lines of credit and term loans to new and existing borrowers. Both products offer a 90-day interest-only period.

Amazon, which had won customers by continually making shipping faster over the years, has now slowed delivery to weeks in some cases in order to manage a flood of orders. That could also dampen merchants’ sales as shoppers look elsewhere for goods.

Reuters

Singapore Reporter/s

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Following vacancies can be applied for (only in Singapore).   

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  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.