Exclusive: Amazon pauses sellers’ loan repayments amid coronavirus

(Reuters) – Amazon.com Inc (AMZN.O) on Wednesday said it would temporarily not require sellers in its market to repay the loans it had made to them, as traders face the prospect of falling sales during the coronavirus pandemic.

ARCHIVE PHOTO: The Amazon logo is seen in front of coronavirus disease (COVID-19) in this illustration taken on March 19, 2020. REUTERS / Dado Ruvic / Illustration / Archive photo


The world's largest online retailer has notified sellers that its program known as Amazon Lending would stop payments from Thursday until April 30.

The program offered amounts between $ 1,000 and $ 750,000 to merchants seeking capital to buy stocks, expand their product lines and advertise on Amazon.

"Loan payments will be resumed on May 1, 2020 … You will have the same number of payments remaining when payment resumes," said Amazon in a seller message obtained by Reuters.


More than 20,000 merchants obtained loans from Amazon, the company said in 2017. By the end of 2019, Amazon was receiving $ 863 million from sellers to whom it provided financing through the loan program, according to a company statement. The terms of the loans vary from three to 12 months, with interest rates of 6% to 19.9%.

As Americans turn to quarantined online shopping, many online sellers, who are small and medium-sized businesses, face cash flow constraints amid supply chain and logistics problems caused by the outbreak. EBay Inc (EBAY.O), another major online market, announced on Wednesday that it will postpone most merchant sales rates for 30 days.


Amazon's offer may provide relief to sellers, some of whom could be hit hard by Amazon's recent decision to restrict its customer service in the U.S. and Europe to household, medical and other essential goods during the outbreak.

Merchants of popular items, from toys to clothing, fear that the temporary ban on storing goods in Amazon warehouses, on which they depend for delivery, means low sales and difficulty repaying loans.

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

"This is super incredible. I applauded when I received this email. It relieves a lot of stress now," said Philippi.


Amazon's decision came after at least one rival offered relief to sellers.


Ricardo Pero, chief executive of the loans firm SellersFunding, told Reuters last week that he was easing terms to help sellers from Amazon and other markets navigate the rapidly changing retail market. SellersFunding offers credit lines and term loans to new and existing borrowers. Both products offer a period of just 90 days for interest.

Amazon, which has won customers by continually accelerating shipping over the years, has now reduced delivery to weeks in some cases in order to manage a flood of orders. This can also hurt merchants' sales, as buyers look for other products.

Reporting by Jeffrey Dastin and Lisa Baertleinn; additional reporting by Krystal Hu in New York; Editing by Alistair Bell and Lisa Shumaker


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