Fintech, essential fuel for e-commerce and marketplaces

It is common to discover in foreign documentaries in France the village market as a symbol of French savoir-vivre. This fixed-date event is a distant variation of the Champagne fairs of the 12th century, the beginning of the modern market economy, according to historian Fernand Braudel. Ten centuries later, the lure of markets continues in a virtual form.

Let’s judge. In 2021, France will spend 129 billion euros on online purchases of products and services, an increase of 15.1% compared to 2020, according to FEVAD[1]. However, of the 20 most visited merchant sites in France, 17 are markets or “marketplaces”. With 42 million cyber buyers, the marketplace covers the shopping mall or the shopping center to become the foundation of online commerce.

A highly competitive world

It should be noted that marketplace refers to a platform, which is owned by a large company and connects sellers and buyers. The marketplace expands the company’s offer, attracts new customers and increases its turnover through commissions on sales made. In an ultra-competitive world, it must offer a wide and high-quality offer by convincing customers and third-party sellers.

Many new challenges must be overcome to win the game. Let’s mention image risk, linked to “doubtful” sellers, innovation in payment methods mastered, optimization of customer journey, optimization of supply chain and customer loyalty. This situation has prompted marketplaces to hire new strategic partners for managing their activities, including fintechs for payment and funding components. Why fintech? Because agility, speed of execution and the ability to graft their solutions into existing information systems are in their genes. They can certainly rely on traditional players, but three to four times faster than them.

We are talking here about the phenomenon of “embedded finance”, funding that is closely linked to marketplaces, even to brands, made possible by programs that are easily linked to each other such as a Lego making game.

Let’s start with the Buy Now Pay Later or split payment phenomenon that has dominated French and European commerce for several years. According to the Banque de France, this financing model already represents more than 4.5 billion euros per year. “BPL”, which has been very popular since Covid, allows consumers to access a deferred payment solution in a very simple way and the marketplaces and e-merchants to differentiate themselves while increasing their sales. Some fintechs are even talking about increasing the standard basket for e-merchants by more than 50% following the implementation of a “BPL” solution.

These developments for the end customer are just the tip of the iceberg. It has become important for marketplaces to have the best third-party sellers to expand their product range, while guaranteeing impeccable quality of service. The image risk can be great for e-merchants who sell products from the outside on their own sites, without any means of controlling the “sourcing” of these products.

Manage logistics management

To convince and retain the best third-party sellers, the first step is to make it easier for them to manage logistics. Today, the battle is raging over solutions to allow them to finance their stocks and the growth of sales, which have gradually replaced bank financing.

Amazon, which indicated in 2020 that it would invest $ 18 billion throughout the year to develop services with its third-party sellers, unveiled its new “Amazon Community Lending” offer in September 2021. Using fintech Lendistry, Amazon offers up to $ 10,000 directly to third-party sellers to fund inventory and brand development.

Beyond inventory funding, there are ways for consumer insurance, and even supply chain insurance for sellers. Here again, fintechs must offer fast and relevant solutions.

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[1] Analysis of e-commerce in France in 2021