The Next Must-Have Marketplace Feature: Capital-as-a-Service

Image of business growth revenue growth chart. Yardline Capital, led by CEO Ari Horowitz, offers ecommerce funding to help you grow your business.

The Next Must-Have Marketplace Feature: Capital-as-a-Service

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.

What is Capital-as-a-Service?

Capital-as-a-Service enables e-commerce marketplaces to provide funding directly via their platforms, allowing their sellers to access the capital they need to scale their businesses. Through a simple API integration, marketplaces can bring capital to their seller’s fingertips, overcoming a major business hurdle that e-commerce business owners face when looking to propel their business forward.

How does Capital-as-a-Service benefit marketplaces?

In addition to benefiting sellers, the right embedded capital solution has added strategic benefits for marketplaces.

Increasing incremental revenue. Capital fuels marketplace growth by fueling merchant growth. Capital allows sellers to increase inventory, expand product lines, and increase advertising spend – propelling more transactions in your marketplace.

Increasing platform stickiness. In the expanding marketplace ecosystem, it is important to be a full-service solution for your sellers.

Decreasing time to market. Turnkey, white-label solutions – including assets, technology and services – can get your capital solution up and running in a matter of days.

Creating recurring revenue. Because embedded capital can be tied directly to business growth, sellers can qualify for increased capital advances as their businesses grow.

What can Capital-as-a-Service allow sellers to do?

Every minute that marketplace sellers spend searching for capital is a minute not spent engaging on the marketplace itself. By bringing capital directly to the seller, marketplaces can increase both the time spent on 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 e-commerce sellers include:

-Advertising and promotion
-Branding and photography
-Product development
-Inventory investment and expansion
-Operations and supply chain management

How can you make sure embedded capital leads to seller success?

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.

Amplify your seller experience with a turnkey technical integration. 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.

Offer optimal funding options tailored specifically to e-commerce sellers. E-commerce businesses have very different data-points than traditional brick-and-mortar operations. Partnering with someone who knows the nuances of the e-commerce 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.

Provide flexible repayment and unrestricted capital use. 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.

Integrate seller success tools and support. 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 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. Which begs the real question, what are you waiting for?

Interested in exploring Capital-as-a-Service for your marketplace? Click here to learn more.