Lazada, an e-commerce operator owned by Alibaba that targets Southeast Asian markets, has partnered with fintech company Finaxar to offer Lazada sellers in Singapore an online application process for seeking to obtain a credit line for business capital, according to a TechCrunch report.
Lazada, which claims to work with 155,000 sellers and 3,000 brands throughout the Philippines, Indonesia, Malaysia, Thailand, Vietnam and Singapore, said the credit line offer may expand to additional markets in the months to come, according to TechCrunch.
Applicants for the credit line are evaluated online and based on previous transaction volume through Lazada. Those approved can access funds between SG$5,000 to SG$1,000,000 ($3,665 to $733,000 by current conversion rates), with a fee of up to 1.5% of the amount loaned charged every 30 days by Lazada.
It's been almost two and a half years since Alibaba initially invested in Lazada, and the Chinese e-commerce giant has now invested at least $4 billion total in the company, including a $2 billion infusion this past April. At that point, Alibaba saw great potential in a region of the world where online sales represented only 3% of all retail sales.
Partnering with Finaxar on a seller financing program shows how Lazada and its majority owner are continuing to build up this Southeast Asia marketplace to take advantage of that growth opportunity. If the strength of an online marketplace lies in the number and variety of sellers, brands and products that can be found there, it makes sense for the operator of that marketplace to support firms in growing their businesses.
Lazada is not the first player in the space to offer financing. For example, just last month, eBay partnered with Square Capital on a program to offer eBay sellers access to more funds for working capital. Just a few weeks before that announcement, Payability unveiled a program to give sellers who participate in multiple different online marketplaces faster access to needed financing.
Sellers in online marketplaces often may be too busy to think about their own growth road maps, and they may lack large enough sums to pursue growth even if they do have a roadmap. Seller financing, whether direct loans, credit lines or in some other form, can give them an opportunity to invest more in their own inventory growth, marketing and operations.
Correction: A previous version of this article misspelled the name of the fintech company Lazada partnered with. They are working with Finaxar.