E-commerce may be ubiquitous, but the reality for many start-ups and SMEs is that access to traditional debt and equity funding sources is a challenge. Often, the repayment terms, collateral and dilutive equity requirements do not consider the cash flow flexibility required to operate sustainably - and scaling a business in an evolving e-commerce landscape can be tough.

Enter e-commerce finance.

This flexible finance solution provides SMEs with immediate access to short term working capital for marketing, advertising and inventory spend. It is vital to increase throughput, to boost sales across multiple distribution channels, and to drive revenue growth.

With an increasing number of addressable merchants in this space, fintech originators are focused on solutions that support SMEs’ increasing working capital needs and are actively seeking lower cost funding alternatives to higher cost equity and debt funding sources.

In tandem, J.P. Morgan Payments is leveraging best-in-class origination platforms, with access to sophisticated data driven underwriting technology, structuring financing to drive loan origination at lower cost funding rates - supporting merchants’ ability to scale, generate revenue and remain competitive.

James Fraser, Structured Solutions Head – Trade and Working Capital, J.P. Morgan Payments agrees. “Through strategic investments, such as our initial investment with Wayflyer, we can leverage data-driven technology to gain further insight into technology platforms in the market.  Evaluating the right technology path - be it partnership, build or buy - as we continue to transform the e-commerce space, embedding our technology-driven integrated payment solutions will create growth opportunities for our clients and merchants.”

This is where the worlds of J.P Morgan’s Merchant Services and Trade and Working Capital collide. “Trade and Working Capital’s flagship US$250mm transaction resulted from our introduction of Wayflyer to Adobe Commerce (formerly Magento), an e-commerce marketplace platform, where we provided Wayflyer with an embedded working capital finance solution which supported merchants on Adobe’s platform.”

Fintech originators, such as Wayflyer, offer flexible and competitive working capital solutions to help high-growth companies scale their business and meet consumer demand.  Using technology-enabled algorithms and real time data across multiple reference sources, these originators can provide accelerated credit underwriting decisions meaning that SMEs obtain real time pre-approvals and quick access to working capital funds. A traditional bank model would significantly increase onboarding and approval timelines.

As a bonus for merchants, funding can be provided in a number of innovative ways such as merchant cash advances, loans, invoice based payments or credit cards to enable businesses to flexibly utilise and manage cash flow as needed.  Businesses repay funding at a rate aligned to revenue generated by sales; the higher the sales volumes, the faster it repays and conversely, if sales volumes slow down, then repayment rates slow down too.

As we continue to transform the e-commerce space, embedding our technology-driven integrated payment solutions will create growth opportunities for our clients and merchants.

What is driving the need for ecommerce finance?

  • Significant increase in e-commerce: The secular shift from traditional brick-and-mortar shopping towards online shopping – underway prior to the pandemic but has since been accelerated by it.  For example, in 2020, the global e-commerce market size was valued at US$10.36 trillion with the B2B market far exceeding the B2C market, accounting for over 63% of e-commerce revenues 1 As the economy opens up, the convenience and flexibility of 24/7 online shopping coupled with immersive shopping experiences and access to diversified products at competitive prices, will ensure that the e-commerce market continues to grow, creating opportunities for SMEs.
  • Supply chain resilience: A focus on supply chain resilience is another key trend emerging from the pandemic. The pandemic tested the global supply chain, causing businesses to rethink their existing inventory models by enhancing their operational resiliencies and recalibrating inventory management through logistics partnerships and inventory financing solutions focused on meeting customer demand. SMEs, in particular, benefit from flexible financing options whereby advances can be made based on specific inventory orders and repayment based on a percentage of generated sales.
  • New Entrants: Another key trend emerging from the pandemic is the significant number of new start-ups and SMEs accessing the e-commerce marketplace. he pivot towards online shopping created opportunities for start-ups who can gain immediate access to consumer and distribution channels with minimal capital and start-up costs. However, while market entry barriers may be negligible or non-existent in this space, the key challenge for these businesses is access to affordable working capital which is vital for the growth, profitability, and survival of these companies. Currently, there is an estimated US$5 trillion funding gap for SMEs2 which highlights the market opportunity to provide liquidity solutions which support SMEs’ ability to be competitive, drive sales growth and tap into new customer bases.

Connect with your J.P. Morgan representative to find the right financing solution for your business

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Grand View Research Market Report (E-commerce Market Analysis, 2016-2027).


5 Ways In Which SMEs Can Unlock Growth In A Post-Covid World, Forbes, 22 November 2021. 

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of J.P. Morgan, its affiliates, or its employees. The information set forth herein has been obtained or derived from sources believed to be reliable. Neither the author nor J.P. Morgan makes any representations or warranties as to the information’s accuracy or completeness. The information contained herein has been provided solely for informational purposes and does not constitute an offer, solicitation, advice or recommendation, to make any investment decisions or purchase any financial instruments, and may not be construed as such.

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