09 Jun The Future of Capital is Embedded: How the Convergence of Tech and Funding will Change E-Commerce
Embedded financial services have created richer user value propositions and a more streamlined consumer experience across e-commerce platforms over the last few years. However, this FinTech revolution has remained largely focused on elements of the consumer interface: point of sale, payments, and P2P transfers.
Leading a new wave of B2B innovations, Yardline’s Capital-as-a-Service takes these FinTech trends and applies them to online businesses. For consumers on CaaS-upgraded platforms, getting growth capital is as simple as processing an online payment.
What is Capital-as-a-Service (CaaS)?
Capital-as-a-Service is an API-based financial services infrastructure that can be integrated directly into marketplaces, SaaS platforms, and other digital applications. When paired with software development kits (SDKs), companies can easily embed and scale white-labelled financing solutions for their users.
Positive Implications for Marketplace Growth
Capital-as-a-Service empowers marketplaces to become hubs for seller success. By utilizing the information inherent to the marketplace or platform, Yardline can deliver pre-approved capital offers to clients in as little as 24 hours. As this capital is unrestricted use, sellers can quickly and easily put their funding toward scaling, stocking up, and marketing their goods.
In addition to fueling seller growth, embedding a capital solution allows marketplaces to:
- Keep pace with leading platforms like Amazon and eBay – Large e-commerce marketplaces recognize the increasing need for seller growth funding and currently offer proprietary embedded financing options.
- Focus on the core business – Capital-as-a-Service allows for scalable financial services capabilities using fewer internal resources.
- Increase on-site advertising – Sellers who take growth capital generally spend roughly 60% of the funds on advertising.
- Reduce high-performing seller churn – Embedded capital allows you to facilitate growth in sales for your top sellers; as their sales increase so does the value of your marketplace, making them less likely to churn.
Maximum Return on Minimal Lift
SaaS and FinTech platforms alike can benefit from the addition of an embedded capital solution. FinTech platforms can instantly expand their product offerings without having to build out the infrastructure and cashflow required for a growth capital specialization, whereas SaaS companies can use embedded capital as a lever for growth.
Because of the flexible nature of an API-based solution, Yardline’s Capital-as-a-Service product is also not restricted solely to growth capital use cases.
As an example, Perpetua, an e-commerce ad optimization software, utilizes the pre-qualification API to not only give their users access to capital, but to demonstrate the value of their intelligent marketing services.
Similarly, Flippa, a marketplace for buying and selling online businesses, can now offer a range of easily accessible capital solutions to the users of their platform, including acquisition funding, growth capital, and seller solutions for entrepreneurs.
Implications for the Future of E-commerce
E-commerce marketplaces and platforms depend on seller growth and engagement for their revenue. Lucky for them, e-commerce entrepreneurship is only increasing. For scope, in 2020, 169,782 new sellers joined Amazon’s marketplace alone.
To stay abreast of the seller demand, “We believe that every e-commerce-related platform will become a FinTech platform,” says Tomo Matsuo, President at Yardline.
Yardline’s CaaS product helps marketplaces and platforms stay ahead of the game, addressing the most common pain point for business owners trying to scale: access to flexible, non-dilutive growth capital—quickly and conveniently.
To learn how Capital-as-a-Service can add value to your marketplace or platform, click here.