Amazon India is avoiding rivals' cash-burn models by launching a short-term lending strategy for its quick-commerce brand, Amazon Now.
Amazon India is betting on a short-term lending model to fuel the growth of its quick-commerce brand, Amazon Now, without burning cash like many of its competitors in the segment, multiple executives aware of Amazon’s plans told Fe.
“Unlike traditional quick service players in India, Amazon is not looking to spend a lot of money to create inventory/stock at its dark stores; instead, Amazon is planning to offer short-term working capital loans to sellers to manage inventory for the company,” a senior executive from Amazon India said.
He added that Amazon’s focus is to grow its quick-commerce channels of the Amazon Now brand through partnerships with local wholesale vendors of fast-moving consumer goods, electronics and white goods in major cities in India.
Another executive aware of Amazon’s plans said that the world’s largest online retailer is planning to offer wholesale vendors short-term capital loans at rates lower than those offered by banks and non-banking financial companies in India.
“The short-term loans are being provided at anywhere between 6-13% annual interest rates, depending on the size of the vendor and its history of working with Amazon,” the second executive said.
Amazon did not respond to queries sent by FE till the time of going to the press.
Last week, Amazon India’s country manager, Samir Kumar, told FE that Amazon’s quick service model is inventory-light because sellers stock through Amazon’s micro fulfilment centres.
“Amazon doesn’t sell directly except for fresh produce. Customers clearly love quick commerce. When a product has customer love and scale, our responsibility is to make the model sustainable. That’s why I am optimistic,” Kumar told FE.
