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How Chinese New Year Can Affect Your Store (And What To Do About It)

In 2023, Chinese New Year (CNY) will officially kick off on January 22nd. But as an online retailer, the run-up to CNY also happens to be your busiest season. From executing holiday campaigns to preparing for 2023, you have a lot on your plate.

The last thing you want to deal with? Getting thrown off by factory shutdowns in China as the country celebrates the Lunar New Year.

What Christmas is to the U.S. and other western cultures, the Lunar New Year is to China. But when it comes to this particular holiday, celebrations can go on for weeks.

For online retailers, that presents a major problem. Chinese suppliers will shut down for anywhere from three weeks to a couple of months. Planning ahead for CNY needs to be an essential part of your business strategy.

And with ongoing supply chain disruption, port shutdowns, and increasing inflation, a plan for navigating CNY has never mattered more.

But here’s the good news. Planning ahead is totally doable. Not only that, the right planning for CNY can help you develop better inventory and supply chain practices year-round.

All About Chinese New Year Shutdowns:

  • What’s the Supply Chain Situation During CNY?
  • How Can Chinese New Year Affect Your Store?
  • How Can Online Retailers Prepare for Chinese New Year Shutdowns?

What’s the Supply Chain Situation During CNY?

If you’re in the wild world of e-commerce, you already know China is the leading supplier of goods to the U.S., with products from China amounting to nearly $506.37 billion dollars in 2021

CNY has always had a significant impact on the global supply chain. There are a few specific market conditions that may make CNY 2023 especially challenging. Let’s break them down one by one.

Drought Conditions Across China

The devastating heatwave across China, which ravaged the country over the summer, has let up, but drought conditions haven’t. 

From crop failures to wildfires to power outages, lower water levels took a major toll on China’s hydropower capacity. This led to restrictions on industrial power consumption and shutdowns across major companies.

Although the power is back up and running, there’s still a risk of disruption to global supply chains, further pointing to the fact that creating a proactive plan is absolutely crucial.

U.S. Export Restrictions

In an aim to slow Beijing’s technological and military advances, the Biden administration published new export controls recently, which included a measure to cut China off from certain semiconductor chips made with U.S. tools.

This, along with ongoing supply chain disruptions, suggests that a China+1 strategy — diversifying your production or supplier base by investing in operations in other countries — may be the way to go.

In fact, Apple is already moving toward a China+1 strategy and has diversified its manufacturing network to include countries such as Vietnam and India.

But despite the many challenges, the U.S. and other countries still don’t have the infrastructure in place to create a solid supply chain without China.

Retailers must continue to find ways to nurture relationships with Chinese suppliers while creating in-house supply chain solutions and exploring diversification options.

Higher Costs of Doing Business

To add insult to injury, U.S. retailers are now seeing a 30% cost increase when sourcing from China.

This, along with other cost increases, such as higher container prices and manufacturing rates, is making it harder to stay profitable when working with Chinese suppliers. Economists are also expecting economic growth to decelerate from 5.5% in 2021 to 3.2% in 2023, while global inflation continues to increase the cost of goods.

The key takeaway here?

Although it is getting harder to work with Chinese suppliers, you still need them as a core part of your strategy. 

Staying in close communication, focusing on creating a fair mutual exchange, and strategizing a backup plan in case a supplier falls through are three essential ways store owners can build positive relationships with Chinese suppliers — and protect their profitability

As suppliers take additional weeks (or even months) to get back to their normal operations after Chinese New Year, you may see:

  • A shortage of inventory
  • Shipping delays
  • Higher production costs
  • Reduced quality of goods

With exacerbating factors on the radar for CNY 2023, all of the above could be amplified. But there is an upside.

Accounting for these setbacks by planning could help you establish a resilient year-round supplier network. For merchants who sell in countries where CNY is celebrated, you may even see a spike in sales.

How Can Chinese New Year Affect Your Store?

Now that we’re clear on the bigger picture, let’s break down the CNY supply chain challenges in a bit more context.

What specific issues could you encounter with Chinese New Year 2023? And why should you start preparing now?

1. Little-to-No Supplier Communication

If you’ve been through a Lunar New Year or two, you already know it can be hard to get timely updates on inventory during the weeks before and after CNY. 

Order management, production, and shipping may all be put on hold — often with no end or certainty in sight.

Monitoring China’s policies and restrictions, particularly those related to inflation and supply chain disruptions, could help you gauge the level of expected factory shutdowns and the supplier communication challenges you may be facing next year.

2. Shaky Production Environment

Production pre-CNY and post-CNY can be completely different worlds. 

In 2021, we saw a mass exodus of workers from outside China going back home during CNY due to Covid lockdowns. Unfortunately, few of them returned

Factories may be in a similar pickle in 2023, as they scramble to find enough skilled workers to get production back on track.

Chinese manufacturers could also get behind in production, causing them to rush jobs and potentially reduce the quality of products. Suppliers and manufacturers across the supply chain may also have a hard time procuring raw materials for products, leading to even more production delays.

3. Unprecedented Shipping Delays

Immediately after the festivities, suppliers are likely to be swamped with pending orders. An overload of shipments could lead to delays, mix-ups, or even misplacements.

The best thing online retailers can do?

Account for potential delays, be transparent with customers, and make sure you have the right amount of inventory for your best movers.

How Can Online Retailers Prepare for Chinese New Year Shutdowns?

By now, it’s pretty clear that e-commerce sellers are up against a lot when it comes to planning for CNY. But it’s not all doom and gloom!

Let’s dive into some of the practical measures you can take to keep your inventory and sales on track during one of the world’s longest holiday breaks.

Stay Ahead of the Game

One big advantage e-commerce sellers have when facing the challenges of CNY is that we know it’s coming.

CNY might vary by a week or so every year, but count on these challenges as part of your planning. By spending a little extra time refining your inventory forecasts, you can also stay one step ahead of shutdowns and shortages. 

This leads us to our next tip: stock up! But only if you need to.

Stock Up! (If You Need to)

Now that you know what to expect with CNY 2023, you can use your sales and inventory data from previous years to estimate the amount of buffer inventory you’ll need in order to stay in stock while supplier factories are closed.

But proceed with caution. Don’t let factory shutdowns push you into panic-stocking

Take a look at any excess products you might already have in stock to prevent needless ordering and stale inventory.

Rely on sound sales and inventory data to order the right amount of buffer stock ahead of time. From there, you can establish a network of new or temporary backup suppliers in case additional quantities are needed.

But there’s another caveat here. With early discounting promotions causing fewer holiday sales this year, you’ll need to balance your inventory data from previous Q4s with this holiday season’s sales projections.

Coordinate with Suppliers

Chinese New Year is similar to Christmas. There are grand festivities and a huge migratory population during this time of year. 

For brand owners, this can mean only one thing: Disruptions in supplier communication.

The truth is, it would be nearly impossible to expect smooth communication with your suppliers during this busy holiday season. Be sure to get on the same page about communication expectations well before January 22. 

After that time, expect suppliers to go dark during CNY. Be sure to ask in advance for a clear date for when they’ll resume regular operations.

Consider Temporarily Switching Suppliers

While this might not be the ideal solution, it’s an option to consider. 

Like most sellers, you’ve likely worked hard to build your network of reliable Chinese suppliers. Deviating from those hard-won relationships is probably the last thing you want to do. But with port shutdowns and supply chain challenges now happening on a global scale, it doesn’t hurt to have options.

For example, you could think about taking on a local supplier on a short-term contract basis and resuming operations with your previous supplier once the uncertainty of CNY has died down. 

Just be sure to look into your contract obligations with your existing suppliers before taking steps toward making a switch. 

If you’re not able to (or don’t want to) switch suppliers, consider other shipping options. Some international shipping companies try to maintain normal operations during CNY and may be able to fulfill your deliveries on time.

While it can be challenging to switch suppliers on short notice, taking advantage of borderless payment solutions like the SellersFunding Digital Wallet can help you make timely payments in your supplier’s local currency and help make the transition smoother on both sides.

Don’t Let Chinese New Year Slow You Down

With poor weather conditions, new regulations, shipping backlogs, and inflation, there’s a lot to keep up with this Chinese New Year — but you don’t have to let it slow you down.

By working to secure inventory early, establishing additional supplier relationships, and putting a clear plan in place to keep sales on track, you’ll be able to maintain business as usual during one of the world’s biggest holiday shutdowns.

At SellersFunding, we’ve seen how the needs of even the largest e-commerce brands can change from year to year. With our all-in-one e-commerce funding solutions — including our fast and flexible working capital and cross-border digital wallet, we help brands keep their sales on track, even during hectic seasons like Q4 and CNY.

Planning ahead can get you where you want to be in 2023. Learn more about how flexible e-commerce funding can help you secure the inventory and supplier relationships you need. Watch this quick two-minute demo.

What to Do If Your Amazon Listing Gets Hijacked

Imagine logging into your seller account in the morning, only to be hit by the following customer reviews:

“Do not purchase this product, it’s a total fake.” “Warning: This product is a dupe!” “The product I ordered fell apart in a day.”

Confused? Well, we hate to break it to you, but you got hijacked. Or more specifically, you had your Amazon listing hijacked

Here’s what probably happened: A fraudulent seller noticed your product was selling well, decided to make a counterfeit, and sold it for less on Amazon. 

Enticed by the low price, shoppers then bought the product from the hijacker instead of you (usually without even realizing it). Then they received low-quality products and marched right back onto Amazon to leave a scathing review of your listing.

Your hijacker profits. You and your customers both lose. 

Unfortunately, in the world of e-commerce, it happens to the best of us. But while Amazon listing hijacking might seem out of your control, there are ways to take action and regain power over your product listings.

The Truth About Amazon Listing Hijacking

  • What Is Amazon Listing Hijacking? (And Why It’s Just as Scary as It Sounds)
  • The True Cost of Hijacked Amazon Listings
  • First, Who Exactly Are These Amazon Listing Hijackers?
  • 3 Proven Ways to Give Hijackers the Boot 
  • Protect Your Listings from Future Hijackings

Selling on Amazon isn’t for the faint of heart. Before diving in, make sure you’re clear on the A to Z of Amazon Seller Accounts, including all the benefits and drawbacks of growing your brand on the world’s leading marketplace.

What Is Amazon Listing Hijacking? (And Why It’s Just as Scary as It Sounds)

According to JungleScout’s State of the Amazon Seller survey, 48% of Amazon sellers reported feeling concerned about hijackers, and for good reason.

Here are just a few of the ways Amazon listing hijackers can damage a growing brand:

  • Lower prices on counterfeit products means you lose customers.
  • By taking over popular listings, they also hijack your chances of winning the Buy Box.
  • High returns and bad reviews could get you suspended from Amazon.

Not to mention, it also takes a lot of time to resolve these issues. And Amazon Customer Service is notoriously complicated.

When asked about their biggest challenge, one seller interviewed by JungleScout put it like this: “Hijackers and Amazon glitches that have gotten my listing or account suppressed multiple times. I have spent more hours this year dealing with non-issue ‘issues’ than I have for product research.”

Amazon’s seller payment schedule can be tough to navigate. Fortunately, there’s an answer for that too. With SellersFunding’s Daily Advance, sellers can access up to 90% of incoming sales in as little as 48 hours. Find out how SellersFunding’s Daily Advance helps sellers see an average 75% increase in growth.

The True Cost of Hijacked Amazon Listings

Unfortunately, hijacked listings don’t just come with a time cost. 

When a hijacker successfully takes over your listing for an extended period of time, there are many damaging consequences and they all lead to decreased profits and conversions.

Negative Reviews

In a market where 94% of customers don’t buy from a business with bad reviews, hijacked listings delivering low-quality counterfeit products can deal a powerful blow to your brand.

This is even more true in the post-pandemic shopping era where customer interaction with reviews has skyrocketed by 50% compared to pre-pandemic levels.

Losing the Buy Box

It’s no secret the majority of Amazon sales are made through the Buy Box

Unfortunately, even if you manage to compete with a hijacker on price, you still may not be able to keep the Buy Box. That’s especially true if a hijacker has been selling counterfeit products in other markets on Amazon where you’re not yet active. 

With more time and reviews on their side, the hijacker is simply better positioned to hold the Buy Box in the eyes of Amazon’s algorithm.

A BIG Drop in Sales

Even if a customer buys a product from a hijacker, it’s still your listing that gets a bad rap. 

If your hijacker drops the ball on product quality or fulfillment, your performance index suffers which could even get you banned from Amazon

Clearly, hijacked Amazon listings are a drain on your time, energy, and sales. So what can you do about it?

Looking for more proven ways to protect your Amazon profits? Don’t miss our complete guide to a healthy ROI for Amazon sellers.

First, Who Exactly Are These Amazon Listing Hijackers?

The first item of business is to know who you’re dealing with. Whether it’s a competitor, troll, or automated scammer, an Amazon listing hijacker is a seller who has a counterfeit product listed under your brand’s name

Because both your product and theirs look the same (oftentimes, they’ll copy your exact listing), customers may not be able to tell the difference.

It’s important to note, resellers and hijackers are not the same (although both could position their products under your listing). Resellers sell versions of your products they have acquired through arbitrage, whereas hijackers sell counterfeit products.

How Hijackers Find Your Vulnerabilities

While nothing can completely protect you from being targeted by hijackers, there are some things that could increase the likelihood of a listing being hijacked.

Here are some of the potential weak spots to look out for:

  • Low inventory: It’s easier for a hijacker to come out on top when you run out of inventory and a customer is looking to buy your product.
  • Limited branding on packaging and products: If your products consistently come with your own branded packaging, customers may be able to flag the listing when receiving a counterfeit product. But without branded packaging, customers may be less able to tell the products apart.
  • Skipping the Brand Registry program: Amazon’s Brand Registry program lets you “trademark” your brand using the Amazon IP accelerator, which can help weed out the hijackers.
  • Promoting hard-to-believe marked-down products: Actively promoting big discounts makes it easier for hijackers to list low-cost products under your listing.

At risk for going out of stock on Amazon? The struggle is real, but the impact on your business doesn’t have to be. These practical steps will help you stay in stock and protect your Amazon profits.

3 Proven Ways to Give Hijackers the Boot 🥾

Now that we’re clear on the real damage Amazon listing hijackers can do, let’s look at ways to get hijackers out of your business and listings once and for all.

#1. Report them, report them, report them. 

If you’re already enrolled in Amazon’s Brand Registry and IP Accelerator, you can use your trademark documents to file an official complaint against the hijacker. 

By reporting them, you may also qualify for Amazon Project Zero, which can help you detect and remove counterfeits from your listing. To be eligible, you need to be registered with Brand Registry with at least a 90% acceptance rate of all the infringements you’ve reported. 

You can also enlist the help of the Amazon Counterfeit Crimes Unit which is dedicated to supporting sellers and customers in their battle against hijackers. The unit even provides legal support to businesses that want to take the issue up with law enforcement. 

#2. Send a cease-and-desist letter.

When it comes to listings hijackers, a little confrontation can go a long way.

Consider writing a strongly-worded cease and desist (C&D) letter to your hijacker letting them know you’re aware of what’s going on and that if they don’t pull their products from your listing, you’re not afraid to escalate the situation.

Remember to also include information proving that the product is your intellectual trademarked property that you have full rights to. This will immediately let them know that by law, you have the upper hand. 

But it’s important to note, this approach may also come with a downside, as business attorney Casey Hewitt shared with Helium 10

“If you send a Cease and Desist threat to another brand, it might make the people at the brand more likely to sit on their hands until you actually take the legal action threatened. If you are sending out lots of C&Ds that may be false or contain false claims, you could be opening yourself up to open-ended legal liabilities. Especially if you are doing something like sending counterfeit claims without making test purchases.”

Sending a C&D letter is a proven approach for dealing with Amazon listings hijackers, but that doesn’t mean it’s easy. You’ll need to test the counterfeits and ensure your C&D is 100% legit before sending, which brings us to #3.

#3. Buy the counterfeit product and collect proof.

As Casey mentioned, test purchases are essential to backing up your claims. To make sure it’s a hijacker and not a reseller, buy the product and compare it to yours. 

Take side-by-side pictures to document the differences. 

Pay special attention to packaging, branding of the product, and the material and colors. All of these elements can help you make a clear and undeniable case.

How to Protect Amazon Listings from Future Hijackings

Anyone who’s been through it will tell you, it can be hard to stay ahead of a determined hijacker. 

After all, even Amazon’s own listings get hijacked. But thankfully, there are practical measures you can take to safeguard your listings in the future.

Amazon’s Transparency program can be a great way to reduce the number of counterfeit products circulating in the market. Under this program, each item your brand sells is equipped with a unique transparency code scanned by Amazon before packing. This means you can rest easy knowing the chances of customers buying hijacked goods is low.

As mentioned, the Amazon Brand Incubator Program and Project Zero are also great opportunities for increasing your leverage against hijackers. They are particularly if you’ve already gone through the process when building your Amazon Storefront. You can also include certain offers like money-back guarantees or product bundles that your hijackers won’t be able to offer. Taking preventative measures like these can help you save time and money. Not only that,  you’ll be able to sleep better knowing your listings are much less likely to get hijacked.

Time to Reprice? 5 Ways E-commerce Sellers Can Adapt Pricing to Inflation

If your store has been feeling the effects of inflation, you’re not alone.  Though rising inflation in the US has begun to slow down in recent months, many e-commerce merchants are facing the fact that they may have to adapt pricing to inflation to protect their profitability.

But knowing how to react and adapt your price structure to inflation can be confusing. If you price too high, you risk losing valuable customers to your competitors. If you price too low, your profit margins may suffer.

So what are the best strategies to adapt pricing to inflation? And what are the best ways to communicate these price changes to your customers?

In this article, we’ll cover some of the latest insights on inflation and how it affects consumer spending. We’ll also cover how to adapt your e-commerce pricing strategy to inflation so you can preserve your margins and continue to grow a loyal customer base.

Making adjustments to product pricing while still retaining customers can be tough. But with the right strategy, you can adjust pricing in a way that fits your business goals, while still keeping your best customers on your side.

E-commerce Inflation and Pricing Covered

  • What does inflation mean for commerce?
  • What has been the impact of inflation on online shopping specifically?
  • How much should I raise my prices based on inflation?
  • 5 ways to adapt pricing to inflation
  • Adjusting to e-commerce inflation and pricing strategically

What Does Inflation Mean for Commerce? 

When it comes to commerce, working with instead of against inflation means getting creative.

It’s about rethinking your pricing strategies so you can meet customers where they are, without sacrificing your margins. Without understanding this intricate dance, both merchants and consumers risk not having their needs met.

Let’s take a closer look at how inflation typically affects the retail industry.

How does inflation affect the retail industry?

According to a report by Bank of America, 88% of business owners say inflation is impacting their businesses. Of those surveyed, only 31% felt confident that the national economy would improve and only 39% felt satisfied their local economy would improve.

As far as specific industries go, revenue is healthy in the beauty and luggage categories, but all other industries are taking a profit hit, especially apparel, electronics, and appliances, according to a recent report by JungleScout.

Unsurprisingly, the same report also found that grocery is one of the categories most affected by inflation, with some products jumping as high as 35% in the last year.

The good news?

Even amidst these drastic economic changes, 86% of brands reported positive experiences when raising prices, with revenues either increasing or staying the same.

As far as what lies ahead, McKinsey reports that inflation will create opportunities.

“Inflation is a challenge for commercial leaders, but it also creates opportunities . . . The first is to maintain margins and rectify the pricing mistakes of the past. The second is to help frontline salespeople move beyond mere pricing discussions with customers to deeper communication about shared business concerns.”

The way the experts at McKinsey see it, companies that do this well can improve their margins, revenue, customer loyalty, and even their ability to respond effectively to future shocks in the market.

Does raising prices increase inflation?

Since inflation measures how much more expensive goods and services have become over a certain period, raising prices does increase inflation.

At the end of the day, consumers and brands must do their due diligence to work with, not against inflation so everyone can win. This is particularly true when it comes to the world of online shopping.

If you’re not sure how much to increase your prices, the Adobe Digital Price Index provides a helpful benchmark. After this Q&A, you’ll find five proven strategies for adapting prices during inflation.

What’s the Impact of Inflation on E-commerce? 

Online shopping continues to shapeshift as inflation rises and falls. If you’re wondering how this teeter-totter impacts the world of e-commerce, we’ve got quick answers to some of the most frequently asked questions on the subject.

Let’s take a look.

How does inflation affect e-commerce sales?

To cope with drastic economic changes, it’s only natural that consumers have become more price-sensitive.

According to the previously mentioned JungleScout report, consumers are shopping for deals and savings more than ever before, with 52% of shoppers only buying discounted products or products that are on sale.

For a shopper to agree to pay more for an item, the product and/or brand must deliver tremendous value or risk losing the customer to a competitor.

How does inflation affect prices?

As the costs of goods, supplies, materials, and shipping costs continue to increase, brands have been forced to take matters into their own hands (think in-house production and distribution), get creative with marketing offers, and/or increase their prices to stay afloat.

Is Amazon affected by inflation?

Nobody is immune to the effects of inflation. That includes major retailers and e-commerce marketplaces, such as Amazon, Walmart, and Costco, as well as growing DTC brands.

How Much Should I Raise My Prices Based on Inflation? 

A solid understanding of your business and when and how to adjust prices is crucial to staying competitive, profitable, and keeping your customers.

When it comes to raising your prices, you need to consider your business’s unique goals along with consumer demand, competitor pricing, and updated manufacturing and material costs. Let’s peel back the curtain on this a bit more.

What to Consider When You Adapt Pricing to Inflation in E-commerce

The first step to adjusting your pricing is to take a hard look at your business budget. Are there any costs you can absorb or adjust to account for inflation? Can you cut out any middle suppliers or get your hands on more affordable, but still high-quality materials?

According to the McKinsey findings:

“We see best-in-class companies encourage their sourcing and engineering teams to reimagine products most affected by inflation. The aim is to adjust product design — materials, packaging, or even product features — in response to elevated production and servicing costs while maintaining the functionality customers require.”

Next, consider the market. Consumers are less price-sensitive with high-demand products, which means you have more flexibility to increase your pricing here.

From there, take a look at your competitors. What are they charging for best-sellers? What about low-demand products? Consider using software to help you automatically track changes in competitor pricing.

Finally, consider the time of year. Are consumers going through a financial tight spot after the holidays? Or did they just get a tax return and are ready to spend it?

By keeping these factors in mind, you can protect your margins, serve your customers, and respond to economic changes strategically.

5 Proven Ways to Adapt Pricing to Inflation in E-commerce

Now that we’ve laid the groundwork, let’s explore five specific ways you can adapt your pricing to inflation.

1. Charge more, give more.

When you have no choice but to charge more, you can make up the difference by giving more.

“In South Africa, the chain Albany Bakeries knew they had no choice but to raise prices. But their customers are very price-conscious and feel a lot of economic pressure. So when Albany Bakeries raised bread prices, the company also added four extra slices to their loaves. They charged more, but they gave more. By adding those extra slices, customers felt they were getting more for their money.” – Ravi Pillay, a faculty member at the University of Pretoria’s Gordon Institute of Business Science

While a simple change, Albany Bakeries knew that communicating additional value was the way to help their customers feel at ease about investing more money in their products.

Whether it’s including extensive features, adding a free sample item, or increasing product quantity, giving your customers more can help ease the blow of having to pay higher prices.

2. Offer BOGOs and other promos.

Due to lower consumer confidence and increased value-seeking behaviors, online shoppers are conducting ample research before they spend money. This has led to a 30% jump in search interest for the phrase “buy 1 get 1” (BOGO) based on year-over-year comparisons.

Despite higher prices, offering BOGO deals and other special promos can encourage consumers to continue shopping with the brands they love most.

3. Raise prices AND offer loyalty rewards. 

It’s also important to note that there’s been a 45% surge in search interest for the phrase “loyalty program” over the same period.

While price increases may be steep for some shoppers, offering loyalty rewards can make up the difference. If you have to raise your prices, consider starting a VIP program, a rewards program, or offering members-only deals your customers can’t say no to.

4. Raise some prices and lower others.

To keep up with inflation, consider lowering the prices of products that are less in demand and raising the prices of products that are high in demand.

You can also highlight cheaper products in segmented marketing campaigns to communicate to your customers that you still have budget-friendly options to choose from.

5. Price according to “good, better, best.”

Put the purchasing power back in the customer’s hands by creating alternative versions of the same product at higher or lower price points.

Consider using the “good, better, best” strategy that many SaaS companies use when designing their monthly subscription plans.

For instance, if you sell skincare sets, you might offer the following good, better, best options:

  • Good: Skincare Set 1 – Face wash, toner, moisturizer
  • Better: Skincare Set 2 – Face wash, toner, moisturizer, serum, mask
  • Best: Skincare Set 3 – Face wash, toner, moisturizer, serum, mask, eye cream, anti-aging oil

Adapting Pricing to Inflation Strategically

Retaining customers while you’re in the middle of a repricing plan can be challenging at best.

But with the right insights and strategy, you can modify pricing in a way that both fits your business needs and maintains customer loyalty.

At SellersFunding, we’re passionate about helping sellers navigate times of growth and change. With our flexible funding solutions, you can rest easy knowing your store will have the capital it needs to face any hurdle, no matter what’s happening in the economy.

Are you ready to adapt your pricing to inflation with care, thought, and integrity? We hope the insights and tips we’ve shared today have given you the confidence you need to reprice with ease.

Is Drone Delivery Really the Future of E-commerce?

While the idea of drone delivery has often felt like a sci-fi fantasy, e-commerce and delivery companies are working hard to bring this technology to life as quickly as possible.

From Alphabet-owned Wing offering deliveries in the US, Finland, and Australia, to Amazon’s recent drone roll-out in California and Texas, drone delivery is already making its way across several states and countries.

But the question still remains: Could automated drone delivery really be the future of e-commerce?

If so, what obstacles could hinder its success? Will legislation be able to keep up with these rapid technological advancements? And most importantly, what does this mean for the e-commerce industry as a whole?

Here’s what we know so far.

The Future of Drone Delivery

  • Common FAQs about drone delivery
  • Pros and cons of drone delivery
  • Ready to embrace the future of drone delivery?

Common FAQs About Drone Delivery

Let’s start by laying a foundation. In this section, we’re answering some of the most commonly asked questions about drone delivery.

First off, how much of a thing is drone delivery? Are drones the future?

As you might have guessed, drone delivery exists, but it hasn’t fully rolled out to the mainstream just yet.

In the meantime, suppliers are conducting rigorous testing and working hard to make sure their drones live up to Federal Aviation Administration (FAA) and consumer safety standards. As the FAA works to support suppliers by promoting advancement, and suppliers step in to make sure their devices live up to the hype, drones are expected to replace traditional delivery services, or at the very least, become part of hybrid delivery models.

Be on the lookout for brand use cases. Amazon, Walmart, DHL, Google/Wing, Domino’s, and UPS are making tremendous headway in the drone delivery space.

How big is the drone delivery market?

In the last three years, there have been over 660,000 commercial drone deliveries to consumers, according to a recent McKinsey report. The report also estimates that more than 2,000 drone deliveries are occurring every day worldwide.

As the growth rate accelerates each week, it’s estimated that there will be nearly 1.5 million deliveries by the end of the year. This is a staggering increase of over one million deliveries in the span of just one year.

Do consumers want drone delivery?

Consumers are always looking for the fastest, most efficient way to receive their packages.

If they know they can receive a package in 30 minutes or less, their answer to the above question (Do consumers want drone delivery?) is always yes, as long as it doesn’t compromise their values.

But there is some consumer resistance, specifically around safety and privacy issues. We’ll take a closer look at these concerns in the cons section below.

Pros and Cons of Drone Delivery

Though it’s been in the making for nearly a decade, drone delivery still sparks worries among consumers and brands alike. not to mention the additional legal and safety concerns some legislators have.

If you’re feeling skeptical too, you may be asking questions like…

Are we really ready for unmanned aviation to fill our skies? Is it safe and environmentally friendly? Is it practical to expect societal and government adaptation?

We’ll uncover some of the benefits and concerns of drone delivery below.

Pro: Drones provide lightning-fast last-mile deliveries.

As an e-commerce brand, you’re no stranger to the hair-pulling stress that comes from last-mile delivery complications.

In fact, experts like President of Alibaba Cloud Intelligence Jeff Zhang, believe last-mile delivery is currently the most expensive and inefficient part of the entire e-commerce supply chain.

To alleviate this pain point, Alibaba launched a logistics robot for last-mile deliveries back in 2020. And it’s not the only one to do so.

Walmart also swooped in to solve last-mile delivery woes when it partnered with Virginia-based drone startup, DroneUp, in 2021 and announced three delivery hubs in Arkansas.

Tom Walker, CEO of DroneUp said, “Teaming up with Walmart to launch three delivery hubs marks a significant leap forward in the broader use of UAS (unmanned aerial systems) to provide last-mile consumer delivery services and supply chain efficiency operations.

The service is available from 8 AM to 8 PM daily and delivers items in as little as 30 minutes from the time of order. This is a true testament to the speed and convenience brands and consumers can one day look forward to embracing.

Pro: Drones are central to carbon-reduction strategies.

Could 100% emission-free delivery be the new e-commerce norm? With drones, the future looks promising.

In fact, Smithsonian Magazine found that when drones delivered small packages over short distances, emissions were 23% to 54% lower than that of trucks.

“Delivery bots, RDVs, and drones are set to displace millions of truck and van deliveries over the next decade, as they are far smaller, more flexible, lower in cost, and naturally suitable for automation and electrification.” —Ryan Citron, Senior Research Analyst at Navigant Research

Since they’re fully electric, drones have the potential to be powered by renewable energy, creating emission-free deliveries.

Pro: Drones can deliver medical supplies in rural areas.

With challenging geographical locations, delivering medical supplies in rural areas used to be snail-like or impossible, resulting in devastating consequences.

DHL and other players are moving the needle forward by making rural delivery fast and efficient.

With its Parcelcopter 4.0, DHL has created a life-changing revolution. Tested over a period of six months in eastern Africa, the Parcelcopter delivered medical supplies and pertinent medical results to isolated areas in as little as 40 minutes.

But DHL isn’t stopping there.

“We’re more than convinced that the Parcelcopter has allowed us to create real added value in the field of logistics. In the future, this could take the shape of deliveries of emergency medical supplies or deliveries to regions situated in challenging geographical locations. The parcelcopter arguably allows us to offer people in such areas a new kind of access to the flexible and, most importantly, rapid dispatch and delivery of goods.” —Jürgen Gerdes, former Member of the Management Board of Deutsche Post DHL Group

Con: Drones are not without safety concerns.

Drones have been linked to a few safety concerns due to technical failures during test flights.

According to an FAA incident report obtained by Bloomberg, Amazon’s rigorous drone testing led to five crashes that occurred over four months at its testing site in Pendleton, Oregon, last year.

In June 2021, a drone flipped upside down and dropped 160 feet in the air. This resulted in a fire that spread over 25 acres of land and required assistance from local fire services.

Although Amazon has implemented sense-and-avoid technology, there could still be the risk of failure since its drones have to land when making a delivery.

Wing’s drones, on the other hand, don’t have to land when delivering goods. After arriving at the destination, they slowly drop to a height of seven meters and lower packages down to the ground.

Con: Drones are vulnerable when it comes to privacy and package security issues.

From cyberattack risks to weather complications to unauthorized parcel access, when a machine is in charge of delivering a package, we have concerns about consumer privacy and package security.

Are drone-delivered packages more vulnerable to thieves? Are they damaged more often than regular deliveries? Misdelivered more often?

Drone manufacturers are working to alleviate as many of these concerns as possible by:

  • Using smartphone technology to access a package upon delivery
  • Designing specific flight missions so drones know exactly where to go
  • Restricting flights during inclement weather

While there’s still a risk of cyberattacks or a package ending up in the wrong hands, drone delivery is too new for us to tell how far these risks will go.

Con: Regulation doesn’t always keep up with technology.

Rapidly evolving drone technology coupled with the sheer number of government regulations for commercial flights currently limits drone delivery possibilities.

The biggest question of all is:

Will the FAA be able to keep up with the rate at which drone technology is accelerating?

Without regulatory frameworks in place to support that growth, making drone delivery the new norm will pose a challenge.

To position for success, drone manufacturers should focus on addressing privacy issues, safety concerns, and consumer resistance. From there, they should work to find creative solutions to extend the electric range of delivery drones.

Finding some common ground between the FAA and suppliers can help encourage the drone delivery market to scale safely and sustainably.

Is E-commerce Ready to Embrace the Future of Drone Delivery? Are Merchants?

What used to be fantasy has officially become a reality. Drone delivery technology will continue to expand quickly as brands look for creative ways to solve supply chain challenges.

If you’re ready to embrace the future of drone delivery, consider how you can become part of this new venture. What partnerships could help bring your vision to life? What specific ways could drone delivery help your brand reach new heights?

And when you’re ready, reach out to our team at SellersFunding to learn more about how we can help you profitably scale your brand. With our flexible working capital solutions, even your most audacious growth plans can become totally doable.

Amazon Prime Early Access Sale Kicks Off Holiday Shopping

Today Amazon introduced the “Prime Early Access Sale — A New Holiday Shopping Event for Members to Save Big October 11 and October 12.” News outlets are picking up the announcement for shoppers, but what about news for merchants? Read on for everything sellers need to know to maximize this quick-turn opportunity.

Key Details about Amazon’s Prime Early Access Sale

  • Deals begin Tuesday, October 11, and continue through Wednesday, October 12.
  • Deals are exclusively for Amazon Prime subscribers.
  • Amazon is marketing the Prime Early Access Sale as the beginning of the holiday shopping season. This is a full six weeks before the traditional Black Friday kickoff.
  • The Prime Early Access Sale is an international commerce event but not a fully global one. The two-day sale is limited to the U.S., Canada, China, Austria, France, Germany, Italy, Luxembourg, the Netherlands, Poland, Portugal, Spain, Sweden, Turkey, and the UK. This omits many emerging markets as well as heavy-hitters India, Japan, and Australia.

How Amazon Sellers Should Attack the Prime Early Access Sale

While many consumers and merchants expected an October Amazon sale, the official announcement came on September 26, leaving sellers only two weeks to prepare. Two weeks isn’t much time in terms of inventory and logistics, so do your best there and focus on the rest.

Here’s what sellers can (and should) do to make the most of the new Prime Early Access Sale:

  • Remember that this sale is all about Prime. If you have non-Prime products, put them on the back burner.
  • Make it easy for shoppers to choose you.
  • Concentrate on volume. The more you sell leading up to Prime Early Access and during the sale, the more sales velocity you’ll generate and the higher you’ll rank in time for Black Friday and Cyber Monday.
  • Advertise boldly to give organic sales an even bigger lift in terms of volume. To become the buyer’s choice, you’ll need to win key placements like Sponsored Ads and Sponsored Brands. To do so, you’ll need to outbid your competitors. Be prepared to spend more to make a lot more. SellersFunding will lend you the working capital for a full-on marketing blitz (or anything else you think will drive your business).
  • Be generous with promos to keep fueling sales volume and connect additional products that Amazon will suggest as “frequently bought together.”
  • Optimize your listings so that they keep with Amazon’s best practices and provide tremendous value to shoppers. If you take advantage of Brand Registry freebies like Amazon Storefronts, optimize those vehicles as well./li>
  • Always have cash on hand so that when the game changes (as it is apt to do on Amazon), you have the resources you need in order to pivot. You can get up to $5M in as little as 48 hours with no usage restrictions or get a daily advance where you get paid for your sales when they happen with no waiting on Amazon for payouts.

Listen to the Signals Amazon Is Sending

This sale is all about Prime and Prime integrations, including newer capabilities and benefits like free GrubHub+, Prime Music, Prime Video, Prime Try Before You Buy, and all things Alexa. This is a clear message that Amazon privileges Prime products and sellers who use FBA (knowns) and that the future of Prime isn’t about free, fast shipping. It’s about an innovative immersive customer experience involving content, multimedia advertising, and in-home interaction with products and brands.

The Prime Early Access Sale (in all of its exclusivity) is also a win-back campaign for former Prime members who felt that the price was too steep or wanted to move away from reliance on Amazon for social responsibility or environmental reasons. In showing the increased value of Prime and the array of offerings, Amazon is indeed trying to appeal to the three people who have never tried Prime, but it’s mostly speaking to the many who have discontinued Prime in the last few years. FOMO, anyone?

This Is Not Just a Test (But Use It as One)

Amazon is promoting the Prime Early Access Sale as “a new holiday shopping event,” but it’s actually a tried-and-true sales event. Or better still, an event proven through testing, a process we know Amazon takes very seriously.

A second Prime Day has been years in the making:

  • In 2020 (Covid year one), Amazon moved Prime Day (previously held in July) to October 13-14 (the second Tuesday and Wednesday in October).
  • In 2021, Amazon held two Prime Days. The first was June 21-22 to kickstart a lull in retail. The second was October 11-12.
  • In 2022, Amazon held the usual mid-July Prime Day. Now it is continuing with the additional second Tuesday and Wednesday of October teed up for the second Prime Day.

This isn’t a coincidence nor is it just an interesting sequence. Amazon, like Google, is a completely data-driven company. It was using the last two years to test when the best time for an alternate or second Prime Day would be. And the testing showed when shoppers would best respond and do so without cannibalizing traditional holiday sales. And it has settled on the second Tuesday and Wednesday In October.

In doing so, Amazon has created an additional shopping bonanza that ensures each month in Q4 has its shopping holiday. For Amazon shoppers, this is the ultimate in convenience, gifting, and deal-hunting. For Amazon, it is the ultimate in sales volume and revenue. For sellers, it is an opportunity to use Q4 to create your most-profitable year yet.

Sellers: If You Do One Thing for Amazon’s Prime Early Access Sale, Make It This

Follow Amazon’s lead. As explained above, Amazon’s testing and data are the best in the business. The marketplace giant has also done the science for sellers. If Amazon is banking big on Prime integrations and holiday shopping in mid-October, you should too. Ride the wave and put Amazon’s, promotions, and power to work for you.

But how do you make those gains actionable within your own Amazon seller presence? Follow Amazon’s lead once again and use the Prime Early Access Sale as your own laboratory. Consider this new shopping holiday a dry run for Cyber 5. Test everything. Do it methodically and log your results. This way, you can replicate successes when it matters most: Black Friday, Cyber Monday, and the two weeks before Christmas. Take chances now when the stakes are lower and use flexible funding to apply those findings throughout the rest of this multi-holiday-shopping quarter.

News from Amazon Accelerate

Amazon Accelerate has kicked off in Seattle. With it comes some powerful feature releases for Amazon sellers. The big news from Amazon Accelerate: updates to the Customer Engagement Tool. The not-as-big news: Premium A+ Content is now available to all eligible brands.

Target Repeat, Recent, and High-Spend Amazon Customers

At Amazon Accelerate, Amazon introduced three new audience types within the Amazon Customer Engagement tool to help sellers increase their email marketing reach at no cost. For the first time, sellers can now expand beyond brand followers when sending free marketing emails to reach their most loyal customers, such as repeat customers, recent customers, and high-spend customers. This expands the reach of the Customer Engagement tool beyond just brand followers.

Amazon is currently testing Tailored Audiences in a beta program, and the company plans to make it available to all U.S. sellers in early 2023. Through the Tailored Audiences tool, sellers can select the customer audience types and Amazon sends the marketing email directly to those customers. The tool will be available at no cost in Seller Central. Amazon also plans to enhance the messages’ design capabilities with custom HTML content and improved templates coming soon.

Monitor Your Email Marketing Impact

Amazon Customer Engagement’s Tailored Audiences also allows sellers to monitor the impact of their email marketing campaigns and customer engagement with performance and reporting metrics, such as open rate, click-through rates, emails delivered, opt-out rates, sales, and conversion.

“With these capabilities, Amazon is helping to put more control into the hands of brands around how they market to their customers,” said James Gossling, director of e-commerce at Sports Research. “As a health and wellness company, repeat customers and subscribers are so important to our business. We’ve been really intrigued with the new Tailored Audiences tool. These email marketing capabilities are exactly what we’re looking for to increase the lifetime value for our customers.”

Premium A+ Content

Amazon also recently rolled out Premium A+ Content, an upgrade to the standard content management system that supports new, larger modules on product pages — such as video, interactive hover hotspots, image carousels, and Q&A — to all brands worldwide that meet the eligibility criteria. Participating brands have seen sales increase up to 20% for products with Premium A+ Content.

Why These New Offerings from Amazon Accelerate Matter

Amazon is again leaning into the concept of brands as it did years ago with Brand Registry and Sponsored Brands Ads. A big part of brand building and long-term success is building a community. This new update to the Customer Engagement tool is a step in that direction. Amazon sellers can now market directly to past buyers and brand followers, something not allowed within Amazon’s Buyer-Seller Messaging center. While this feature is being beta tested, we highly encourage Amazon sellers to prepare in order to activate Tailored Audiences as soon as this feature becomes widely available.

As brands are working on scaling in the long term, community will play an integral part. Premium A+ Content will play a large role in a brand’s relatability, bringing in even more potential buyers. The update announced at Amazon Accelerate is a true upgrade to A+ Content, making it even more interactive for shoppers browsing the website.

Once again, it pays to be a member of Amazon’s Brand Registry. The benefits in terms of tools, offerings, and protection are mighty.


Grow Your Amazon Business with Fast, Flexible Funding

Your Amazon business moves quickly and so do we. Access working capital funding to scale faster, grow more quickly, and increase profitability.

What can you do with working capital from SellersFunding?

  • Launch new products without sacrificing inventory budget.
  • Increase advertising efforts to reach new customers.
  • Stock up for increased seasonal sales.
  • Expand into new countries and markets.
  • Choose how you’ll grow next – no limitations!

E-commerce Funding Options: The Ambitious Seller’s Guide to Knowing What’s Available

Scaling an e-commerce business can be challenging at the best of times. Spikes in revenue are a beautiful thing, but as you grow your store, you’re looking at increased inventory, additional skilled labor, and supercharged marketing — all of which cost money. You need to have a firm grip on your e-commerce funding options.

The problem is, that many marketplaces have rigid payment schedules and with ongoing supply chain issues, troubles with inventory can easily lead to chronic cashflow gaps (or worse, stockouts). 

If you’re like most fast-growing sellers, you might try approaching financial lenders like banks to secure a loan or line of credit to help solve these challenges. And like most sellers, you’ll quickly find that many banks don’t offer viable e-commerce funding options. The good news is, you’re not alone.

This business lending vacuum has led to the emergence of new funding options specifically designed for growing e-commerce stores — businesses that have a completely different structure and set of challenges than their brick-and-mortar counterparts.

In this article, we’ll take a look at the range of funding sources available to e-commerce businesses and dive into the pros and cons of each one to help guide you to the solution that best aligns with your brand’s current growth trajectory and vision for the future.

Ready for a healthier e-commerce business? Don’t miss our whitepaper on how to Break Free from Slow Marketplace Payouts for Increased Sales and Cash Flow!

The Scoop on Your E-commerce Funding Options

  • Bank loans
  • Friends and family
  • Credit cards
  • Private investors
  • Invoice factoring
  • Marketplace loans
  • SellersFunding solutions

#1. Bank loans

Let’s start with the most classic form of business lending: the bank loan. 

From a bank’s point of view, an online store is a relatively new business model, and the banking industry is still trying to figure out how it fits in.

Though there are some early signals that banks are slowly starting to embrace e-commerce, most still don’t offer the flexibility store owners would look for in a funding option. Also, a bank typically requires quite a bit of paperwork to grant a loan, a process that can take weeks or even months — an eternity in the fast-paced world of online retailing.

Pros of bank loans

  • Banks don’t ask for revenue share as a form of repayment
  • The interest rates are generally low, ranging from 3% to 13%
  • The repayment period can be spread over a long time, giving you low monthly repayment installments
  • Banks don’t micromanage how you use the funds once they disburse the loan

Cons of a bank loan

  • Banks have challenging approval requirements – you’ll need to provide an ironclad business plan and sales history with your application
  • Set monthly repayments could cause further cashflow issues if your business experiences low sales
  • Bigger loans can be difficult to secure since banks tend to be risk-averse
  • Banks may require you to use personal assets as collateral for the loan

#2. Friends and family

Loans from friends and family can offer a flexible source of e-commerce funding. But the informal nature of these loans requires a high level of trust between the parties involved, and Sunday dinner suddenly doesn’t taste so good when that trust is broken.

As the borrower, it can also be hard to ask your friends and family for funds. And naturally, the lender (in this case someone you know personally) may be on high alert regarding repayments because there’s typically no paperwork involved. On the upside, if this arrangement works, it could save you a bundle in interest fees and potentially build a stronger relationship between you and the person you’re borrowing from.

Pros of loans from friends and family

  • No credit checks and business performance information are required to secure the loan
  • The repayment terms can be friendly and flexible depending on the relationship between the lender and the borrower
  • Loans from friends and family attract little to no interest – this is subject to the agreement between parties
  • There’s usually no collateral needed to secure a loan from friends and family
  • Friends and family won’t typically ask for equity or revenue-sharing

Cons of loans from family and friends

  • Borrowing from friends and family may create awkwardness
  • There’s likely a cap to how much money friends and family are willing to loan you
  • The lack of clarity stemming from the informal nature of the loan may result in misaligned expectations between the parties
  • Misunderstandings between parties could damage important relationships

#3. Credit cards

Traditionally, credit cards wouldn’t be considered a viable source of business funding. In fact, until 2009, retroactive interest rate increases were commonplace in the credit card business. This made credit cards too risky and volatile as a source of business loans since card issuers could raise rates on existing loans unrestricted.

The CARD Act of 2009 changed the credit card landscape by creating regulations to protect borrowers from retroactive card increases and cap credit card fees, making credit cards an attractive source of financing for growing businesses. Credit cards now play an integral role in helping businesses offset short-term expenses and cover cash flow gaps. But what would credit card business funding look like for an online retailer?

If you have high-ticket or high-volume inventory requirements, you’ll likely need a high-limit card to successfully pull off credit card e-commerce funding. At their core, credit cards are designed to cover day-to-day consumer expenses, so most of them don’t come with a high enough balance to take an already established e-commerce business where it needs to go.

Pros of credit cards as an e-commerce funding solution

  • You won’t have to share revenue as a form of repayment
  • Some credit card companies offer reward programs such as free air tickets and cashbacks
  • The loan application process is straightforward and doesn’t typically involve rigorous checks
  • Credit cards offer revolving credit that allows you to borrow a new loan once you pay a current loan
  • You won’t be required to put up collateral to access credit

Cons of credit cards as an e-commerce funding solution

  • There is a greater risk of merging personal and business expenses if you use one credit card for both
  • Credit cards charge an annual fee which, in addition to the interest, could make the loan expensive in the long run
  • You are liable for the credit card loan, so failing to repay the loan on time could ruin your credit
  • Low limits might not be enough to help you grow your e-commerce business

#4. Private investors

Private equity can offer your e-commerce business a stable financial base for growth. Top private equity firms like Advent International, Blackstone, and Investcorp have been betting big on e-commerce. They see the potential in e-commerce growth projections, thanks to the post-Covid e-commerce industry growth, and they want in on the action.

For example, on April 13th, 2022, e-commerce fulfillment platform Shipfusion secured $40 million in private equity funding from Kane Anderson Capital Advisors. While this funding isn’t from a private investor to a B2C e-commerce business, it still proves that even blue-chip private investors are starting to take a strong interest in e-commerce businesses as viable investment options.

Pros of private investors

  • Private investors are only interested in the ROI you’ll generate for them, so they may not require a credit history check
  • A private investor can offer their business expertise which could be instrumental in growing your e-commerce business
  • It’s not a loan, so private investors assume the risk of not getting their money back if the business can’t afford to repay
  • Depending on the investor you partner with, you may be able to access high amounts of funding

Cons of private investors

  • Private investors expect a share of your profits since they’re investing in your business and not offering you a loan
  • There’s the potential for conflict from misaligned visions since private investors focus on growing their investment which may or may not align with your vision to grow the business
  • Private investors expect a high level of performance which could put a lot of pressure on you and your team

#5. Invoice factoring

It’s no secret that marketplace platforms like Amazon and Walmart hold the money generated from sales for a certain period before paying it out to sellers. Invoice factoring bridges that payout gap so you can access your sales revenue instantly from a third party.

You essentially “sell” your invoices to a third party (the invoice factoring company). The factoring company then gives you the funds, and you pay them back once the platform gives you access to your money.

Pros of invoice factoring

  • The approval process is typically quick and straightforward since you’re essentially borrowing against your invoices
  • There’s no collateral needed since you’re borrowing funds equivalent to the sales you’ve already generated
  • There’s usually no credit check required for you to access invoice factoring
  • It empowers you to ditch more restrictive forms of e-commerce funding like bank loans

Cons of invoice factoring

  • Invoice factoring charges a percentage of the invoice amount, which could amount to a lot of money if you need a large advance amount
  • This type of e-commerce financing is dependent on your sales, so the amount available to you might not be enough if you aren’t making a lot of sales
  • Your invoice factoring provider may want access to your customer’s payment history

#6. Marketplace loans

Some e-commerce marketplaces and platforms offer their lines of credit to qualified sellers in order to help them fill cashflow gaps. For example, Amazon offers Amazon lending, while Shopify has Shopify Capital

A marketplace loan can give you access to anywhere between $1,000 to $750,000 in funding, depending on your business size and sales history. The lender then deducts a percentage of your sales revenue to repay the loan. These types of loans are only available to select eligible sellers.

Pros of marketplace loans

  • The marketplace or platform already has your financial information, so the loan application and approval process is relatively easy and fast
  • Your credit score won’t usually factor into the approval process
  • Shopify Capital has favorable interest-free repayment plans where they take 8% to 17% of each sale with a 1.1 to 1.13-factor rate
  • Amazon sets monthly repayment installments with a 10.9% to 12.9% interest rate

Cons of marketplace loans

  • Marketplace loans are invite-only, so they are only available to a few qualified sellers
  • Amazon is strict about what you can do with the loan – inventory optimization, so you can’t use the funds in another area of your business
  • Marketplace loans are only available to sellers on their platforms, so you can’t access them if you don’t sell on these platforms

It’s never too early to get your inventory ready for Q4. Download our free guide for how to position your store to win with inventory, including six simple steps to crush your Q4 inventory prep.

#7. SellersFunding solutions

At SellersFunding, we offer e-commerce funding solutions specifically designed for a growing e-commerce business. Our Working Capital and Daily Advance solutions for example offer fast and affordable options to help fast-growing sellers cover the cash flow gaps preventing them from increasing sales.

With our Working Capital loan, you get access to a $5 million credit limit with flexible withdrawal terms and a repayment period of up to 12 months. Our Daily Advance plan bridges the marketplace payout gap, allowing you to access daily payouts of up to 90% of your sales.

Pros of SellersFunding

  • Straightforward process – we don’t ask for collateral or your business’s financial information 
  • Fast approval time of 24-48 hours
  • Terms are flexible and can be customized to your business needs
  • There is no impact on your credit score
  • Sellers get a dedicated account manager to help select the right terms and amount

Cons of SellersFunding

  • Our funding solutions are designed for fast-growing stores, not brand-new businesses
  • For working capital, you must have at least six months of sales history and at least $20,000 of net sales per month for either your marketplace store
  • For daily advance, you must have at least three months of sales history and at least $1,500 of net sales per month for either your marketplace store or eCommerce website

Get the best e-commerce funding options for your business

Without the right tools and information, finding the best e-commerce funding option for your business can feel like a minefield. But accessing the funds you need to scale your store doesn’t have to be stressful.

At SellersFunding, we’re proud to offer flexible and easily accessible e-commerce funding options to help your business soar to new heights. Read our customer stories to learn how sellers just like you are using e-commerce funding to get ahead with inventory, invest in digital transformation, and keep the revenue flowing.
When you’re ready to learn more about the types of e-commerce funding we offer, our two-minute demo will give you all the basics. Here’s to your e-commerce success!

5 Terrible Ways to “Improve” Cash Flow in E-commerce

To get to where you are in your eCommerce journey, you’re bound to have had your fair share of palm-face cash flow blunders.

They range in severity from annoying to straight-up paralyzing—and can even be disastrous to the health of your business. In fact, Dun & Bradstreet found that 90% of businesses fail due to low cash flow.

We’ve all been there: you fail to order a goods inspection, resulting in thousands of dollars stuck in defective, unsellable products. Or, maybe you forget about your annual subscription renewals, and the charges wipe your account clean days before your other bills are due. 🙈

In the game of business, there are a million cash flow crunching scenarios that can catch you off guard. And while mistakes are part and parcel of the journey, too many cash flow errors are a recipe for trouble.

If you’re left wondering how to cover your expenses each month, you’ll need a way to turn things around—and fast

To help you dodge costly mistakes, let’s take a no-holds-barred look at some of the not-so-helpful tactics eCommerce sellers sometimes use in a bid to improve cash flow, and explore some better ways to go about it.

Had one too many close calls with your bills? Learn more about how to master your cash flow with SellersFunding Daily Advances.

What we’ll cover

5 Terrible Ways to Improve Cash Flow in ECommerce

  1. Attention: Stock overload!
  2. Hiding from the truth (AKA your numbers)
  3. Widening your product selection before you’re ready
  4. Throwing money at customer acquisition and crossing your fingers
  5. Scrimping on ‘looking the part’
  • Top Tips to Get Your Cash Flow on the Straight and Narrow
  • Create an emergency fund
  • Track. Every. Expense.
  • Diversify your dinero
  • Secure Daily Advances
  • A Better Road for Your ECommerce Business

5 Terrible Ways to Improve Your Cash Flow in ECommerce 

#1. Attention: Stock overload!

Let’s imagine your supplier just offered you a 30% discount under the condition you buy an extra 1000 units of your product.

You’d buy these at some point anyway, so it seems like a no-brainer, right?

Not exactly.

Unless there’s a valid business reason for buying more stock—like planning for the Q4 sales rush—purchasing more inventory than you need can dry up your cash flow and cause some pretty sticky issues.

Here are a few of the worst:

  1. Cash locked in stock until you sell it (and there’s no guarantee you will)
  2. Needing to find funds to purchase and ship additional units
  3. Having to fork out for more warehouse space to store extra goods
  4. Stock going out of style or season before you’ve sold it, forcing you to heavily discount or sell at a loss
  5. The unplanned purchase drains money that could be used to invest back into growing the business

With the global cost of inventory mishaps hitting $1.1 trillion, it pays to think before you commit. 

Although discounts are tempting, it’s best to order inventory as precisely as possible in order to maintain liquidity in your business. Avoid “winging it” when it comes to inventory management, as overstocking can be just as tedious (and expensive!) to manage as understocking. And always remember to use smart tools to help you accurately calculate your inventory needs.

Getting the balance right can save your business money, avoid straining your cash flow and keep you in the good graces of your marketplace platform of choice.

Already committed to more stock than you can handle? Find out whether a SellersFunding line of credit can help you uplevel your marketing and get back on track.

#2. Hiding from the truth (AKA your numbers)

Most eCommerce sellers always know their revenue stats and can probably reel off their conversion rates from the last 6 months at the drop of a hat.

But it’s easy to bury your head in the sand when it comes to the numbers that really matter: those that directly impact cash flow.

To get a handle on your cash flow, there’s one stand-out rule to remember: push past the urge to focus on vanity metrics.

Why?

Because it’s possible to have great revenue and even be profitable, but still fail due to a lack of cash flow.

This problem occurs because when you invest, you don’t see returns right away. Businesses can find themselves pouring all their cash into new products and equipment, only to find themselves in a cash flow crisis struggling to cover day-to-day expenses.

Let’s look at this in action.

The problem 

  • You run a successful eCommerce business but break only a small profit each month due to high outgoings.
  • You’ve found a new product and are convinced it’s a winner.
  • Your business doesn’t have any large cash payouts scheduled, you’ve just paid rent, and other bills are due soon, so it’s going to be quite the stretch to fund the new product launch.
  • But you believe it’s worth the risk and will figure out the numbers later. So, you charge your credit card as your near-empty bank account looks on in despair.
  • D-day arrives, and you haven’t managed to secure funding for the shortfall.
  • Now you owe your service providers and your credit card company with no way out of the impending doom.
  • It’s at this point things start to unravel for eCommerce sellers.

The solution: Gross Profit

The tragic part of this situation is it’s totally avoidable if you take the time to understand your gross profit.

Working out gross profit will tell you the true worth of your sales by showing the amount left over after you’ve covered direct costs. These include things like goods, freight, payment processor fees, merchant platform, and fulfillment.

Gross profit tells you how much cash you have left in your business, so you can reduce the guesswork and make informed decisions about your growth plans.

Calculate your gross profit using the following equation:

Total Sales – Total Direct Costs = Gross Profit

Let’s see how this works in action, based on $80K Total Sales and $35K Total Direct Costs:

$80,000 – $35,000 = $45,000 

Note: Gross profit can also be calculated on a per-unit basis.

Once you have your gross profit laid out, assess your performance compared to the industry’s norms to ensure you’re on the right track.

#3. Widening your product selection before you’re ready

Like most businesses, you’ll feel immense pressure to innovate to get ahead of the competition.

But beware of branching out into new product lines just because everyone else is. If you attempt to fund product launches with capital from your business when you’re already cash-strapped, you could land yourself in financial hot water.

Here are some top tips to avoid biting off more than you can chew in your product offering:

  • Don’t spread yourself too thin. Run numbers, like your cost of production, freight, and marketing, as well as the gross profit we just covered.
  • Commit to only launching new products once you can comfortably afford them. This way, cash flow won’t be at the mercy of spontaneous whims.
  • Don’t be afraid to put some ideas on the back burner. If you’re not financially ready to create a product, then you’re not ready to market and sell it either.

#4. Throwing money at customer acquisition and crossing your fingers

We get it. You’re determined to grow your business and will do what it takes to win.

But taking a “spray and pray” approach to marketing is risky business.

It’s true: marketing is essential. But there’s a huge difference between impactful campaigns that drive sales at a profit and dead-weight campaigns that don’t convert and burn through cash.

Here’s how to ace a cash-flow-friendly marketing campaign:

  • Learn the difference between campaigns that work and those that don’t, and cut underperformers loose to optimize top-performing campaigns for even better ROI across the board.
  • Ensure you’re performing at the optimal level by figuring out your industry and marketing vehicle’s average conversion rates, i.e. influencer marketing, email campaigns, Google PPC, or Facebook ads. Then benchmark your results against these figures.
  • Calculate your Break Even Return on Ad Spend (Breakeven ROAS). This equation helps you analyze how much you can expect back from advertising costs and whether the figure is profitable. Check out this excellent breakdown by Nozzle to learn how to calculate your Breakeven ROAS).
  • Remember: ‘Not all that glitters is gold.’ If a campaign is profitable but returns are minimal, it may not be worth the effort and capital sacrifice.
  • Take an analytical approach toward customer acquisition campaigns to assess whether the marketing avenue is feasible for your brand’s cash flow situation.

#5. Scrimping on ‘looking the part’

As the saying goes, “You don’t get a second chance to make a first impression”—and the same applies to your eCommerce store.

An 8ways study found that people make a judgment about your website in the first 0.05 seconds they see it. (Yes, you read that right!)

Weak branding damages trust and can have negative knock-on effects on the entire business. A lack of trust can also stifle sales, leaving you with minimal income to maintain cash flow each month.

To help dodge this bullet, these branding tips will build client trust and make your visitors do a double-take:

  • Invest in high-quality branding: This includes creating dazzling photos, a website, copy, logo, and design to wow your prospects at the door and convince them you’re worth their time and money.
  • Ensure packaging matches your brand ethos and vibe: For example, if you’re an eco-conscious brand invest in 100% biodegradable packaging and reduce the amount of packaging you use.
  • Show up on your target customers’ social platforms: Add consistent value to build rapport with them and hone your brand’s reputation as a thought leader.

Get these right and you’ll create the secret sauce needed to drive solid sales: Trust!

Top Tips to Get Your Cash Flow on the Straight and Narrow

Create an emergency fund

Every finance guru insists everyone should have an emergency fund—and that means businesses too.

Yet, according to LendingTree, almost 80% of small business owners don’t have a six-month emergency cash reserve, 70% have a maximum of three months’ worth of cash available, and 21% don’t have even one month’s expenses saved. 😲

Here’s how to avoid becoming one of those stats:

  • To give you some security, aim to save at least 6 months’ worth of expenses.
  • Calculate your business burn rate for essential expenses, multiply this figure by six, and you’ve got a savings target!
  • Each month, tuck away a portion of your profits. Once you’ve reached the goal, celebrate and carry on. 🙌

Track. Every. Expense.

As your business grows, it’s natural for its bills to expand too. But each expense siphons money away from your company, and too many could cause your cash flow to suffer.

Here’s how to avoid costly mishaps with your expenses:

  • Ensure each expense has a business purpose and that each cost stands alone. For example, confirm you don’t have more than one paid tool to track your SEO.
  • Operate with a ‘calculate first, buy later’ mentality. If you feel your business needs something you haven’t accounted for in your budget, pull out your business figures and triple-check whether you can afford it.
  • Get busy batching those bills! Calculate your available capital and then group expense payments to suppliers, i.e. utilities, stock, and warehousing. This will ensure you have specific points when cash leaves your account, so you can better prepare for them.
  • Be prepared to say ‘no’. Not all opportunities or strategies are worth pursuing, even when you’re just starting out.

This proactive practice of discipline will help you avoid dangerous impulse buys, which can add up fast and rugby-tackle your cash flow. Give it a try!

Diversify your dinero

Done right, eCommerce can be a huge money-making playground.

From eBay Outlet stores that help turn over stock faster or Instagram Shops that capitalize on your following, the opportunities to expand your horizons are endless.

Provided you keep your expenses low, having more sources of capital can improve your cash flow, diversify your payout times, and boost your saving capacity so you can increase your customer base.

To give you some inspiration, here are a few stats that highlight the power of multichannel eCommerce:

  • Research by Digital Ecommerce 360 found that 65% of people feel comfortable purchasing from retailers they’ve never heard of before.
  • According to Statista, Amazon had a market share of 37.9% in 2020.
  • More than half of Amazon sales are from third-party sellers.

In short, taking a multichannel approach to your eCommerce business can lead to some serious cash that you can re-inject back into your business.

Secure Daily Advances

You don’t always have to be loose-handed with money to end up in a cash flow crisis. Even if you do everything right, certain issues are still out of your control.

For example, a lengthy and unpredictable payout process can cause serious problems. Like when you need to restock your busy store in Q4 but Amazon is taking their sweet time to cough up your money. 🙄

This is where a Daily Advance can step in and save the day to give you the cash you need to make timely supplier payments and scale your business worry-free.

Psst! At SellersFunding, we can provide you with up to 90% of your previous day’s sales, and you can get approved in less than 48 hours. 😉

A Better Road for Your ECommerce Business

For some eCommerce sellers, managing cash flow is a path filled with anxiety and near misses. This pressure leads them to make risky moves in an attempt to resolve the issue.

But there’s a better way.

Master your cash flow by becoming familiar with your incomings and outgoings and trimming away non-essential expenses. Then expand your horizons by selling on other platforms and marketplaces. Finally, don’t forget to dress, walk and talk like an eCommerce store worth attention and sales by investing in high-quality branding and inventory mastery.

Following this route will improve your financial stability so you can take on more opportunities and grow a resilient eCommerce business that lasts.

Now that you’ve got your backend processes sorted, get in touch to secure a Daily Advance, and start redefining your business’ cash flow today.