What happened: Amazon Germany and ING have stopped their lending partnership (Manager Magazin). Through this partnership, Amazon merchants could apply for loans ranging from EUR 10,000 to EUR 750,000 with repayment cycles of up to three years. The partnership was announced exactly five years ago, in June 2020 (ING).
My comment: Bad news for embedded finance? Maybe, maybe not. There are three elements of this announcement that I found highly important:
- The ING lending product was not ‘embedded’, and it was a relatively traditional partnership. Amazon acted as a broker, presenting loan proposals to interested sellers. These sellers were directed to ING’s website for submitting a loan application. While such an approach might be great for testing user interest, it is surely not the best for maximising volume.
- ING actually cancelled the partnership, not Amazon. According to the article linked at the top (and other statements I have heard before), ING was extremely unhappy with the volume that the partnership was generating. The Dutch bank sought to expand its business banking operations in Germany, and collaborating with Amazon was a means to achieve this goal. Of course, we don’t know why the expected volume was not reached, but perhaps the point above is part of the explanation.
- It seems that Amazon has already replaced ING with Youlend. Therefore, German Amazon merchants can still apply for funding, and through a partner like Youlend, it is likely a lot more ‘embedded’ than the ING partnership. At this point, it is unclear whether Youlend is a quick fix to replace ING or the new long-term partner. However, what this shows is that Amazon does not want a day to pass without a lending offering.
These points are pretty fitting for the podcast episode I plan to publish on Thursday. In this podcast episode, I speak with a digital platform that offers an embedded lending product. And my guest said something like “In a way, we don’t care if our merchants use our financing products or competitive solutions, what matters to us is that financing is not an obstacle for their growth”.
