According to Digital Commerce 360, the top 100 global online marketplaces accounted for $2.67 trillion in sales in 2020. With the number of marketplaces globally growing by the moment, niche and retailer marketplaces are becoming increasingly common.
Marketplace sellers have extremely limited bandwidth and are generally selective about where and how they invest their time to grow. In order to meet sellers’ demand for growth opportunities, marketplaces must continually offer differentiated solutions to assist seller growth and reduce operational distractions – without increasing the operational burden for the marketplace itself. To meet these objectives and to keep sellers engaged on their platforms, more and more marketplaces are turning to Capital-as-a-Service.
Capital-as-a-Service enables ecommerce marketplaces to provide funding directly via their platforms, allowing their sellers to access the capital they need to scale their businesses. Through simple API integration, marketplaces can bring capital to their seller’s fingertips, overcoming a major business hurdle that ecommerce business owners face when looking to propel their business forward.
In addition to benefiting sellers, the right embedded capital solution has added strategic benefits for marketplaces.
Every minute that marketplace sellers spend searching for capital is a minute not spent engaging in the marketplace itself. By bringing capital directly to the seller, marketplaces can increase both the time spent on the platform as well as the total dollars running through the marketplace. Additionally, as the seller’s financial partner, you give them more reasons to grow their business on your platform – translating to increased sales and higher revenue for your marketplace. The most common uses for growth capital for ecommerce sellers include:
Not all capital solutions are created equal. When investing in a partnership to enhance your seller experience, it is critical to find a partner that is aligned with your goals financially, technically, and operationally. Here are a few things to look for when evaluating an embedded capital solution.
Activating a Capital-as-a-Service offering should be a straightforward API-based process. Once connected, the API should communicate with your platform to deliver personalized capital offers to your sellers based on the platform data.
Ecommerce businesses have very different data points than traditional brick-and-mortar operations. Partnering with someone who knows the nuances of the ecommerce space and can understand which metrics can predict an increased or decreased level of risk is imperative to being able to offer your sellers the best capital options.
Flexibility in capital comes in two forms: repayment structure and permitted uses. Businesses need capital for a variety of reasons (many of them listed above) and for varying lengths of time. It is important whenever you are offering a financing solution to your sellers that it has the flexibility to align with their business goals.
While an influx in cash may be every seller’s dream, if you aren’t arming them with tools to successfully deploy that capital, you are likely leaving money on the table. An integrated seller success program can maximize the utilization of capital, help seller businesses grow faster, and set them up to become eligible for additional financing. Capital-as-a-Service is an opportunity for marketplaces to enhance the experience for every seller on their platform. It is no wonder major marketplaces have already begun launching embedded capital solutions. This begs the real question, what are you waiting for? Interested in exploring Capital-as-a-Service for your marketplace? Click here to learn more.