Trade Working Capital Viewpoints: eCommerce Merchant Finance

The emergence of eCommerce platforms has made it easier for small and medium sized sellers to access growth opportunities. As eCommerce merchants are frequently small-medium sized enterprises (SMEs), funding that growth can be a challenge. Characteristics of SME businesses including their potentially short track record, limited sales turnover and new and emerging business models may contribute to not qualifying for funding from certain financiers. This makes it challenging to access low-cost capital to support continued growth. New capabilities are being developed, in some cases combined with traditional financing, that may make accessing capital easier for online merchants and marketplace operators. Some considerations include:

• Access to capital is an essential component to scaling a business: Access to capital can play a pivotal role in seizing growth opportunities, including expanding product offerings.

• Paths to capital continue to evolve, led by new innovations: A core benefit of the volumes of data available today is its ability to inform business decisions, including new ways in which lenders can extend credit.

• Enabling competitive advantages for marketplaces: Marketplaces which offer embedded financing solutions to their valued merchants allow them to generate incremental throughput, decrease merchant attrition and foster growth in an increasingly competitive landscape.

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