Amazon will mark its 22nd year in business this summer. During this period, the e-commerce site has transformed retail. Today it announced the purchase of Whole Foods for $13.7 billion. The company took advantage of technology, used an aggressive growth strategy and disrupted the entire industry. Amazon Marketplace enabled small companies to sell their products across the globe while at the same time providing customers with a reliable online platform and ease of payment. In doing so, Amazon connected buyers and sellers quickly and efficiently.
The result has been that time-strapped consumers learned to enjoy the convenience of shopping at home rather than facing the throngs at the malls. Now a whole generation of consumers has grown up knowing they can purchase whatever they want via their phones. Meanwhile, anchor stores such as Macy's, JC Penney-and Sears are struggling, and the mall business in America is dying.
Amazon's entry into small-business lending could transform the banking industry in the same way that the web-based retailer revolutionized retail. It started as an online seller of books and CDs in 1995 and has amassed sales of more than $400 billion. Being bold is what helped Amazon rise to the No. 4 company in market capitalization and a top 10 ranking among U.S. employers.
Just recently, Amazon announced that it has made $1 billion in small-business loans to more than 20,000 merchants in the United States, Japan and the U.K. during the past 12 months. Since Amazon Lending launched in 2011, it has surpassed $3 billion in loans to small businesses. Further, more than 50 percent of the companies eventually take a second loan from Amazon.
This is a very shrewd move by Jeff Bezos; his company will earn interest on the loans. Meanwhile, his third-party retailers will sell more products on his site and thus add to Amazon's earnings. Flush with a high valuation and lots of cash to lend, the online retailer has fairly easily tapped into a lucrative marketplace. The loan program is invitation-only, however.
Amazon Lending offers short-term business loans ranging from $1,000 to $750,000 for up to 12 months to micro, small and medium businesses selling on Amazon to help them grow their business. With access to more than 300 million active customer accounts worldwide, Amazon provides small businesses the opportunity to quickly reach customers in their neighborhood and in more than 130 different countries across the globe.
Additionally, the company has indicated that it would expand to other countries where it operates marketplaces. Potentially robust opportunities exist in places such as Canada, France, India and China.