A recent study by RedSeer focused on the credit needs for e-sellers. These are individual sellers listed on online platforms such as Flipkart and Amazon. E-sellers have been a primary target segment for lenders (banks and non-banking financial companies: NBFCs) during 2016 with access to credible credit scoring information through their e-tailing partners. Indian e-tailers report a total of more than 4.5 lakh e-sellers listed on their platform. However, a deeper analysis highlights that “Top” and “Active” e-sellers capture most of the total online GMV. These are the merchants with the greatest credit need having a quick online inventory turnover and long offline credit cycles.
Almost all merchants express the need for business credit, totaling up to rupees 11,000 crores. However, only a few of these merchants have the credit-worthiness to be avail loans from banks and NBFCs at an opportune interest rate with loan approval rates less than 10 percent. Over the past year, NBFCs and banks have disbursed around rupees 700 crores in partnership with leading e-tailing platforms such as Flipkart and Amazon. On the other hand, around 10 to 15 percent of these applicants eventually go to informal channels such as private moneylenders to avail credit at exorbitant interest rates. These represent an attractive category for NBFCs to identify the interest rate commensurate with the extended risk associated with these merchants.Commenting on the research findings, Anil Kumar, CEO, RedSeer Consulting said, “E-sellers will remain a target segment for lenders over the next year. Innovation will continue to be oriented towards lead generation and state-of-the-art credit scoring. However, most new-age businesses have focused only on automating existing offline processes through technology. The next big bet is on creating a product beyond traditional offers, that is palatable to the small business owner – to make an offer the merchant cannot refuse.”

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