As a high-growth online retailer, there are few faster ways to find out whether it’s going to be a good or bad day in the office than to check your business bank balance.
Life is great when the sales are rolling in and your customers are singing your praises. But what happens when you run low on inventory with no restocks in sight? Or when you suddenly need to take your brand digital overnight?
With 23% of growing companies citing a lack of capital as their biggest business challenge, the question isn’t “How can I get more sales?”
If you want sustainable growth for your e-commerce brand, the real question is, “How can I build strong, consistent cash flow to help keep revenue on track?”
We’ll share stories of how three growing brands overcame their cash flow challenges while investing in future revenue growth.
The scoop on e-commerce cash flow
- Are you making these common cash flow mistakes?
- How 3 e-commerce brands battled funding woes to come out on top
- The secret to healthy cash flow
A healthy Amazon business is possible. Check out our complete guide to Amazon ROI for tried-and-tested strategies that work.
Are you making these common cash flow mistakes?
Whether you’re fresh on the e-commerce scene or a longtime industry expert, at some point you will have had your own facepalm moment with cash flow.🤦🏽♀️
And that’s ok. Cash flow mistakes are a natural part of the e-commerce game.
To get clear on what to avoid, let’s explore some of the common cash flow mistakes e-commerce entrepreneurs make.
Mistake #1. Not planning for seasonality
Seasonality can impact even the most stable products.
During these periods, your cash flow will be put to the test. For peak periods, you’ll not only have to secure your inventory early, but you may also need to buy more inventory upfront to account for supply chain delays.
On the flip side, during slow periods, you’ll need cash to cover operations and working capital to pay for upcoming seasonal stock as you wait for sales to pick up again.
Without proper preparation for both scenarios, even the smallest blip could send your cash flow tumbling.
Mistake #2. Underestimating project costs
Planning for a new product or business project typically starts off well. But all it takes is an unforeseen cost or underestimation of service or material goods to throw your cash flow off track.
Without surplus capital on hand, e-commerce owners often find themselves without enough cash to keep their operations afloat, let alone invest back into the business.
Mistake #3. Zero cash reserves
Love them or hate them, the personal finance influencers are on to something.
Having 6-12 months of expenses saved in your store’s capital reserve is essential for growth and security on your e-commerce journey.
Without a financial buffer, your store could be one setback away from the kind of cash flow crunch that halts your sales long-term.
Mistake #4. Too many product launches
We get it. Taking a product from concept to reality is a thrilling process.
And when done correctly, adding new items to your product portfolio can jumpstart your store’s growth and profitability.
But running multiple product launches can quickly add up. If you don’t have enough liquid capital to cover the additional expenses, you’ll be putting your cash flow at risk.
Mistake #5. Over-reliance on external funding
When an e-commerce brand uses external funding as a band-aid to cover structural problems in the business, it can become a ticking time bomb for your cash flow.
No matter how good your funding partner and terms may be, no amount of external capital can solve deeply ingrained cash flow problems.
By choosing your e-commerce funding solution carefully, you can limit the amount of external funding needed to grow your business and work with a transparent long-term partner who puts your own best interests first.
How 3 e-commerce brands battled cash flow challenges and came out on top
If you’re sacrificing sales due to tight cash flow, you’re not alone.
Many online retailers have been right where you are. Fortunately, with the right tools, strategy, and e-commerce funding, you can reclaim your cash flow and build a solid foundation for your store to grow on.
Let’s take a closer look at how three fast-growing e-commerce owners did exactly that.
Cath Kidston: From going digital overnight to 85% in global sales during a pandemic 👩🏽💻
“Our business transformed from being a brick-and-mortar retailer to a predominantly digital business nearly overnight.” — Selim Baraz, Chief Financial Officer, Cath Kidston
When the pandemic struck, UK-grown lifestyle, homeware, and fashion retailer Cath Kidston had to take its mostly brick-and-mortar business online.
And they had to do it fast.
If the high street retailer wanted to continue generating income throughout the lockdown era, it would need to transform into a digital-first operation.
Almost overnight, Cath Kidston upgraded its e-commerce platform and customer relationship management (CRM) software, while at the same time implementing a cross-border payment and shipping solution to cover over 200 overseas markets.
With a little help from our team at SellersFi, Cath Kidston secured a flexible line of £5 million in working capital to help:
- Finance its digital transformation
- Fortify its global online presence
- Achieve 85% in global sales
- Focus energy on the expansion (without sacrificing revenue)
“SellersFi (formerly SellersFunding) brought instant access to a flexible and affordable credit facility and unique e-commerce and cross-border payments expertise. It designed a deal to fit our new supply needs with bespoke terms based on our unique circumstances and brand equity. “
The SellersFi difference:
- Sufficient working capital credit limit
- Flexible terms and approval process
- Ongoing support to help Cath Kidston achieve its goals
Sunflower Ideas: From $500 to $180K in monthly Amazon sales
“The main challenge for us is cash flow. It’s a huge problem because you sell goods and need to purchase inventory, and it takes a while to get your payments.” — Sansarah Beermann, Sunflower Ideas
Scaling from $500 to $53,000 in just three months, the team Sunflower Ideas was experiencing some truly awesome success early on.
But when Amazon changed its rules on dropshipping, cash flow shortages quickly became a problem.
“Within a few months, Amazon dropshipping was almost impossible. We had to shut down for about a month to rethink our business strategies and adapt,” recalls owner Sansarah Beermann.
Although Sansarah was able to quickly get back in the game by switching to private labeling, she was still left with regular cash flow gaps. As sales grew and Amazon payment schedules stayed the same, Sansarah and her team struggled to secure the inventory needed in order to keep sales on track.
She began to shop the market for e-commerce funding solutions and discovered the Daily Advance.
Equipped with early access to her store’s sales, Sansarah was now able to:
- Bolster cash flow to match her store’s rapid expansion
- Increase sales from $90,000 to $133,000 and then to $180,000 per month
- Keep sales and inventory on track (without waiting around for Amazon payouts)
“Before getting funding, we had sold $90,000. I got a credit limit from SellersFi in December and, as soon as I got the funds, I was able to invest in my business. We increased to $133,000 in December, and the month we got a Daily Advance, we sold $180,000. So basically, we doubled sales.”
The SellersFi difference:
- Daily Advance to gain quick access to Amazon sales
- Increased liquidity without the pressure of monthly payments
- 100% human support from an experienced team that gets e-commerce
Dr. Gala: From stockouts to suppliers’ favorite with fast borderless payments
“My biggest hurdle is that I’m a starter brand. When I go to the suppliers, I’m not that important in their eyes.” — Nesrine Hamila, Dr. Gala
As a newer Amazon seller, Nesrine Hamila (or Nessy as her friends like to call her) had her work cut out for her when the pandemic struck.
While sales rocketed for her fitness and wellness brand Dr. Gala, several troublesome supplier-related issues cropped up just as fast.
Some sellers in Nessy’s niche were engaging in shady tactics, undercutting her with her Chinese suppliers. Soon, every Amazon seller’s worst nightmare struck — Dr. Gala was out of stock and suffering the consequences of lost rankings, sales, and ad spend.
To prevent this issue from recurring, Nessy needed a fast yet affordable way to pay suppliers overseas and she found it with a little help from the Digital Wallet.
With a low-fee cross-border payment solution, Nessy could:
- Fast-track international payments to suppliers abroad
- Pay for inventory quickly to gain trust with key suppliers
- Avoid high exchange fees to preserve her margins
- Expand into Amazon US, UK, Europe, and Australia
- Stop the stockouts for good 🙌🏻
“For me, the SellersFi (formerly SellersFunding) numbers spoke for themselves. I didn’t have to think twice. I was so happy to find it.”
The SellersFi difference:
- Fast, affordable international payments
- Increased cash flow
- Better expansion opportunities
The secret to healthy cash flow
Running a successful store isn’t just about pulling in sales. You need healthy cash flow and flexible capital to expand your operations and prepare your business for long-term success.
Start by assessing your store’s current finances. Take the time to do your due diligence to find out which funding providers might be best positioned to support your store’s unique growth journey.
Before you know it, cash flow issues will be a thing of the past.
At SellersFi, we’re always inspired by the perseverance, creativity, and growth of our clients. Learn how you better manage cash flow gaps in your e-commerce business with a quick two-minute demo on how we work.
