Ahead of Black Friday, the consumer tech retailer Newegg joins the ranks of Amazon and Shopify in partnering with the New York-based ecommerce financier Payability.
The city of Industry-based ecommerce retailer will launch Newegg Capital Monday with the New York-based fintech company as it builds up their third-party seller base, a key to growth for giants like Amazon.
The new platform offers third-party retailers quick access to cash with no credit check so they can stay stocked ahead of the holiday season, typically the busiest for retailers.
"Our seller base needs the resources to expand their businesses and keep up with increased demand," said Robert Chang, chief financial officer of Newegg, in a statement.
A common problem for third-party sellers is not being able to access the funds they earn fast or get a cash advance they need to keep products in stock. Newegg Capital has two main products. Instant Access allows sellers to receive their payouts daily, rather than biweekly. Instant Advance gives sellers a merchant cash advance, provided they have nine months of positive selling metrics and history.
"We expect to see about 40% to 45%, if not more, growth in ecommerce broadly in 2020," said Jim Shook, chief marketing officer of Payability. "That growth relies on sellers to bring the best products to the market, and often the biggest barrier to doing so is lack of access to cash."
Instead of traditional credit checks, the company looks at sellers' ecommerce history, product category and supply chain to make their funding offers. Shook said Newegg has about 11,000 third-party sellers on its site.
Ecommerce sales grew 32% nationally from the first quarter of 2020 to the second, according to the U.S. Department of Commerce, as shoppers stuck at home during the pandemic bought everything from groceries to shoes online. The total estimated sales for the second quarter was $211.5 billion.
And analysts believe the shift in consumer behavior could signal a long-term trend. The online boom has been a blow to traditional brick-and-mortar stores that couldn't make the transition fast enough, but companies like Newegg are poised to benefit.
"This partnership helps [Newegg] with that positioning as far as their sellers are concerned, because a lot of these marketplaces are really competing not just for consumers, but they're competing for business on the seller side as well," said Shook.
Payability is also partnered with Amazon, Shopify, eBay and Walmart to provide similar financing platforms.
The announcement comes on the heels of another Newegg partnership with Behalf Inc. to offer their customer installment payment options. The company also announced a hiring surge in early November, in anticipation of a busy holiday season.