Snapdeal To Offer Rs. 1,000 Crore Collateral Free Loans to Sellers Ahead of This Festive Season
All e-commerce websites are gearing up for the festive season in the months of October-December 2016 and Snapdeal is no exception. The company just launched the free-mium Snapdeal Gold a week back to strengthen its hold in the industry.
Now, Snapdeal has come up with a way to boost its sales in the festive season coming up. The company will offer Rs. 1,000 Crores worth of collateral free loans to the sellers on its marketplace. This will equip sellers with enough money to stock up for the Diwali sales.
The festive season loans would be disbursed through its on-going programme, Capital Assist, which is now managed by FreeCharge and is available to all sellers and merchants on Snapdeal, Shopo and FreeCharge. Capital Assist is aimed at providing sellers on its platform some capital to meet their working needs, among others, as they look to expand their businesses.
Speaking about Capital Assist support to accelerate festive preparations, Vishal Chadha, Senior Vice President, Market Development, said, “The festive season provides an opportunity to our sellers to grow their businesses many times over with the sharp increase in demand. Through Capital Assist, we have made the funding process frictionless, so that our seller partners can scale up to their full potential, without any financial constraints. We expect more than Rs 1000 Crores disbursal to Snapdeal sellers ahead of this Diwali season.”
This will enable these SMB sellers to get quick access to capital when they need, without the hassles of a collateral. Not sure if other e-commerce players are following this but it looks like a very impressive initiative from Snapdeal.
How is Snapdeal providing so much capital?
The process is not as simple as it sounds, because providing collateral free loans has its own risks and issues. To make it relatively easy, Snapdeal has decided to shorten the documentation needed and provide quick capital to the needy.
Snapdeal has co-evolved a scoring process with partner banks and NBFCs(Non-Banking Finance Companies) to provide credit rating to its sellers. This process enables instant decision on loan applications and quick disbursal to the sellers.
These banks & NBFCs include State Bank of India, HDFC Bank, ICICI Bank, Axis Bank, Yes Bank, Tata Capital, Reliance Capital, and L&T Finance, Hero Fincorp, Aditya Birla Finance, Lending Kart and Capital Float among others..
Till now, loans worth Rs. 450 crores have been provided to more than 2,200 SMBs, and while Snapdeal must be having a smart algorithm to select the deserving sellers, we don’t know how the process will be fair to these SMBs, that do not have an elaborate credit history. However, FinTechs and global banks have been doing this for quite some time now and it makes sense to incorporate such a technique for its sellers.
Snapdeal has also kept aside Rs. 200 Crore budget for marketing expenses this festive season, so it seems that the company is looking to rival Amazon India in terms of sales and customer satisfaction. In any case, it will be advantageous for the buyers and equally comfortable for the sellers.