Topic: E-COMMERCE

FINANCING

Presented by:
NANDHINI S
M.Com 1st year
Dr. RV Arts and Science College
INTRODUCTION
• E-Commerce, is a business model which enables any
commercial entity to conduct business on electronic
platform.
• There is a need for the e-seller to consistently replenish
inventory, effectively manage logistics and supply chain
management.
• There is a need for quick and flexible working capital loans.
• E-Commerce financing is a funding solution that provides
working capital for web-based businesses to stabilize the
cash flow and to cope with payments obligations
OBJECTIVES
• To provide detailed understanding of the
meaning, types and process of E-Commerce
Financing.
• To provide the overview of E-Commerce loans
in India.
Need for E-Commerce Financing
Issues:
• Long and irregular cash cycles
• Cash flow issues on Balance Sheet
• Marketing expenses for Key Opinion Leaders
• Creating a new digital image is time consuming and costly

Solution:
With E-Commerce financing, sellers can
• unlock working capital to cover advertising and affiliate
programme expenses, and purchase additional inventory,
• close the gap between the time the revenues are generated and
the time payment is made by the marketplace and speed up their
cash flow cycle.
 Participants in E-Commerce
Financing
1.The Online Seller

• the applicant requesting financing

2.The E-Commerce Marketplace Platform 

• a worldwide & well-known digital platform selling goods. For eg., eBay, Amazon or Alibaba

3.The Financing Platform

• a reputable financial lending institution providing liquidity by advancing funds to the

online seller
How does E-Commerce Financing
work?

SOURCE: Velotrade.com
 Ways to Finance the
E-Commerce Business
• Asset-Based Lending
• Revenue-Based Financing
• Lines of Credit
• Merchant Cash Advance
• Bank Loan
• Equity Investors
• Crowd funding
• Grants
• Bank Overdraft
• Invoice Financing
 E-Commerce Loans in
India
LENDERS OF E-COMMERCE LOANS IN INDIA
 Personal loan product by SBI, Canara Bank, Bank of Baroda and Punjab
National Bank in association with e-commerce platforms
 NBFC’s likeTata Capital, Reliance Capital Limited, Bajaj Finserv, DHFL,
Indiabulls, Fullerton, Cholamandalam Finance
 Venture Capitalists and few banks have made investment in unmatured e-
commerce companies which appear on the asset side of the balance
sheet of the bank
FEATURES:
• Type of unsecured loan, no collateral requirement
• Loan value extended could range between Rs. 1 Lakh – Rs. 1 Crore
• Loan tenure can range between 90 – 270 days
• Interest payment 1.5% onwards
• Flexible repayment mode – monthly, bi-monthly repayment schedule
available
• Loan sanction is capped at ‘x’ times of sales revenue per month
 How to select the right E-Commerce loan?

• Calculate all costs associated with sale on

internet platforms
• Low interest rate and flexible repayment
schedule
• Fast and easy disbursement of loan
• Underlying pledge for E-Commerce loans
 Eligibility criteria for availing
E-Commerce Loans

• The e-seller should have registered the business and

should have been in operation for at least 6 months
• Business should have an established presence in
atleast one of the popular E-Commerce platforms
• A stipulated volume and revenue per month should be
achieved, this would vary from one lender to another
• A decent credit score which will enable the borrower
to negotiate favorable terms for the
E-Commerce loan
 RECENT REFERENCES

• The Indian E-Commerce industry is experiencing rapid growth, with estimates

suggesting that it will surpass $62 billion in 2023 and follow a minimum 14% year-on-
year growth rate until 2028. This presents significant opportunities for businesses to
tap into the online marketplace and grow their sales and revenue.
(Source:Chitrangana.com )
• The E-Commerce market in India is estimated to be worth $38.5 billion in 2021, and
is expected to grow to $84.0 billion by 2025, at a compound annual growth rate
(CAGR) of 18.4% (source: Statista)
• In 2020, the online retail market in India was worth $26.8 billion, and is expected to
grow to $73.7 billion by 2024, at a CAGR of 23.2% (source: Mordor Intelligence)
• Thenumber of online shoppers in India is expected to reach 320 million by 2025, up
from 120 million in 2020 (source: Statista)
• The top three E-Commerce companies in India by revenue are Flipkart, Amazon, and
Mall (source: Economic Times)