Amazon Lending Widens Its Reach

In an effort to gain valuable market share in nations where online retailers are a relatively new concept, Amazon.com Inc. (NASDAQ: AMZN) is expanding its lending arm to offer credit to small businesses who sell using its platform. According to Reuters, the service, which used to be available in just the US and Japan, will be extended to Canada, China, France, Germany, India, Italy, Spain and the UK.Risky BusinessSome see Amazon's foray into the lending space as a risky move as it will expose the company to a great deal of uncertainty. Nations like India have a notoriously high failure rate for small businesses, which could harm Amazon's bottom line. Others say because of the wide range of vendors that Amazon houses, it will be difficult for the company to accurately asses the risk in so many differing markets.Risk ReductionAmazon's lending arm has been successful so far in both the US and Japan due in large part to its structure. The company deducts loan payments directly from a vender's proceeds, thus streamlining the repayment process. Additionally, Amazon execs say that although the company isn't familiar with every market that its sellers participate in, the e-commerce giant's close relationship with the small businesses that use Amazon's marketplace make it easier for the company to make smart decisions regarding new loans.A Big RewardMany see Amazon's lending expansion as a great way for the company to get ahead in the online retail space. Because small sellers are finding it increasingly difficult to get the credit they need to grow, Amazon will provide them with a unique opportunity and also benefit by widening its own product base.