Amazon Reboots Its Lending Efforts

Amazon’s seller site

The common perception of Amazon is the company can do no wrong and moves from victory to victory, but the e-commerce giant has several notable failures in its recent history.

Amazon Restaurants, the company’s food delivery service, was launched in Seattle in 2015 and shut down this Monday, June 24. According to analysts, Amazon simply came to the market too late and could not scale up quickly enough. But Uber Eats was also late to the market. Perhaps because it already has thousands of drivers on the roads in major metropolitan areas, Uber is able to leverage its resources more effectively than Amazon.

Is it the same for lending? Amazon launched a lending service for its marketplace sellers eight years ago, but has seen little growth — its book grew just 2.6% last year. Critics point out that Amazon relies solely on its own data for underwriting and does have access to bank data, but the case is similar with its competitors.

The service is comparable to that offered by PayPal and Square. In its quarterly letter to shareholders, Square reported that its seller service, Capital, “facilitated approximately 70,000 loans totaling $508 million, up 50% year over year.” PayPal’s Dan Schulman said on the company’s April 24 earnings call that “Our merchant lending business is right now over $10 billion, since we started.” Amazon reported $661 million in loans in 2015.

The Financial Times noted of Amazon:

Now Amazon appears to be gearing up for round two, having placed job ads for dozens of positions across Europe, Asia and at its Seattle headquarters. The listings suggest that the company wants to overhaul its existing loan products, expand into several new countries and “turn the finance industry on its head”.

Amazon has been notoriously secretive about its financial services projects — Amazon Lending does not have a public website, and has banned press from attending its presentations at industry events.

But its latest pitch to prospective employees asks applicants: “Are you interested in helping us disrupt an entire industry?”

The FT points out that Amazon’s service has no public website, but multiple third party sites claim to offer access to Amazon loans.

A line of credit for small businesses is the number one product at 31% of small banks, according an 2018 FDIC report.