About to take marketplace finance? Let’s double check first!
Research by the ecommerce experts Rangewell, shows that over 80% of ecommerce sellers are not using the most effective source of marketplace finance to grow their business – and on average ecommerce borrowers are paying 23% more than the most affordable rate that could be achieved.
With Amazon widely publicising the exponential growth of £1m plus sellers in the UK and Shopify trumpeting a growth of 106% of new store creations in the UK over the last 12 months many alternative finance lenders have jumped on the bandwagon and are now offering “ecommerce loans” – but in many cases finance rates remain non competitive and overly complex in terms of marketplace finance requirements.
Whilst the range of marketplace finance available has exploded, the research shows that the lenders marketing their products the hardest or entering formal partnerships with the ecommerce platforms are often not the most appropriate or affordable.
Rangewell’s research also shows that the biggest loosening in finance in the last 12 months has been in the mid market ecommerce market – those with turnover of £300,000 to £5,000,000 where the number of lenders has dramatically increased leading to situations where borrowers who six months ago were being turned down for finance are now receiving multiple offers from lenders competing to “win market share”
The emergence of the Government Backed Recovery Loan has also been a boon to the sector with Rangewell’s research highlight that there were over 20 lenders on the Recovery Loan Scheme that would consider lending to ecommerce companies.
“In the ecommerce world where almost every cost is rising, finance is one of the few areas where quick and efficient savings can be made, but we see so many borrowers not taking a few hours to get the best deals.”
– Marium Mahmood, Head of Ecommerce Partnerships, Rangewell
Whilst overall lending has increased substantially the research also highlighted
- Finance specifically for advertising and marketing costs has shown the steepest reduction in the last 12 months – with many mainstream lenders now willing to offer ecommerce firms finance rates that meet or match those available to bricks and mortar retailers.
- Finance for stock purchase remains the most variable – dependent on the source of the stock and the type of product being purchased, rates in the survey ranged from 3.2% per year to over 5% per month.
- Financing for “general purposes” remains the most expensive, highlighting lenders’ residual nervousness about lending to a sector they are still finding their feet in.
To find our more about the latest range of finance available for all types of ecommerce providers, readers can attend the Tamebay / Rangewell finance webinar on September 14th at 11am which will go through real life case studies of ecommerce borrowers that have achieved substantial savings as well as having increased the amount and types of finance that they can access.