E-commerce Loans: How there are benefits for everyone involved
The growth of the e-commerce industry has been off the charts in the last few years. While this means plenty of options for consumers, sellers are facing near extreme competition.
Avinash Sorte, Head-Ecommerce Finance, Bajaj Finserv, had this to say about the burgeoning e-commerce market, “When you look at e-commerce as a business, it’s nothing but a marketplace where you have buyers and sellers. The challenge is connecting buyers with sellers. When we thought about this business we realized that the easiest thing is to finance the sellers. Because with the help of this finance the seller will be able to sell more and consumer will be able to buy more.”
Generally, small businesses struggle to raise the finances required for their sustained growth and development. The e-commerce market offers them a platform to set up their businesses, but that isn’t enough. For entrepreneurs to take their business to the next level, investment is necessary.
This brought about the launch of the revolutionary E-commerce Seller Finance from Bajaj Finserv, a leading NBFC. Shedding some light on how seller finance is different from traditional lending, Mr Sorte said, “Unlike traditional lending that requires so many documents, e-commerce has the advantage of a lot of data. You go online, you can see the seller’s ratings, reviews, sales, the number of cancellations by customer, product listings, and seller’s growth on a monthly basis. On the basis of all these data points, it becomes easy to offer pre-approved loans to promising sellers.”
Apart from the advantage of having all the data available online, seller finance also opens up new doors for financial institutions. They get a new source of business, that not only helps them grow, but also helps expand their horizons when they tie-up with major e-tailers to fund sellers. While discussing the evolution of Seller Finance, Mr Sorte said, “We worked with one of our partners, brainstormed, and designed the entire program as it was a first for both the parties. Since most of the sellers are start-ups who usually don’t have finance, we wanted to create a unique experience that made the entire lending process hassle-free.”
And how hassle-free the experience is! The E-commerce Seller Finance offered by Bajaj Finserv offers loan amounts of up to Rs.1 crore, instant approval, and no collateral.
But the company had a tough road ahead when they first came up with the idea of offering finance to e-commerce sellers. Recounting the experience, Mr Sorte, said, “The challenge was to sell the idea both internally to the stakeholders and also externally to various sellers of which most of them were start-ups. But fortunately, Bajaj Finserv is always willing to experiment and stand by what we believe in. We backed our idea by a lot of data, sales that were actually happening, the amount getting credited to sellers’ account, etc. Hence, all the comfort factors were in place. After internal convincing, we went to the e-tailers, educating them about the benefits of our approach. This kind of a thing wasn’t heard about and they were willing to participate.”
With e-commerce loans, sellers not only gain easy access to a source of funds but also pave the way for a sustained partnership with their e-tailer. Thanks to the increased opportunities for expansion, the e-tailer will be keen on seeing the seller’s business succeed and will actively look for ways to better advertise their business.
This way the sellers receive the necessary support required to watch their business grow and flourish. The customers benefit from the seller’s getting finances too since they get access to better and more innovative products.
Commenting on the success of their new venture, Mr Sorte said, “We are constantly in touch with the sellers, taking their feedback and implementing it. Within no time, we have enrolled 150+ sellers and the response since then has been phenomenal. The model is very unique and the sellers are happy as their business grew 2 fold because of this unique financial facility available.”
As is quite apparent, the new loan product from Bajaj Finserv is advantageous for every party involved, be it the sellers, customers or the financial institution.