There are several reasons why Amazon sellers need to have additional funding. As one of the new players in the world’s largest e-commerce platform, an entrepreneur must hit the ground running. While digital selling platforms can level the playing field in some aspects, a new entrepreneur must infuse time and money to build up its reputation. It can be challenging for rookie sellers to keep up with everything.
However, a little funding boost can offer extra relief. With these additional funds, new entrepreneurs can perform the crucial business expansion tasks.
Where Can Amazon Sellers Go For Additional Funding?
Traditional lending institutions may not be as welcoming to online sellers. Hence, Amazon sellers will have to approach online lenders, too, for cash support.
Luckily, the e-commerce giant offers direct short-term financing to qualified sellers. If your online store has had a good performance for at least one year, you can access anywhere from USD$1,000-750,000, with a repayment period of one year. However, this loan is only offered in select markets and may be exclusively used for your Amazon store’s inventory expansion, making it somewhat restrictive. Interest rates can vary from 6-16%, depending on your store’s statistics.
SellersFunding, an online funding solution, offers another Amazon seller financing option. Eligibility is reserved for Amazon sellers whose store has been around for six months or more and with sales of at least USD$5,000 per month.
Ways Amazon Funding Can Help Sellers
There are many other sources of Amazon seller financing besides the two options discussed earlier. Entrepreneurs should read the loan terms before taking them out to avoid problems down the road.
Without restrictions on how to use financing money, an Amazon seller may do the following:
- Increase Inventory
Online retailers need to have an expansive inventory to make it big in the digital platform. That’s unless they’re engaged in drop shipping, where they don’t have to keep the products themselves physically.
If you operate a conventional Amazon store and keep the items on hand, you can use the funding proceeds to buy more stocks to remain competitive. An ample supply of best-selling items helps make your store the first choice for buyers. This can attract more users to your online store, boosting your e-commerce business.
- Build Brand Awareness And Improve Marketing Strategies
While a business may already have a target audience, you’d need to spend to conduct research and surveys to find out more about them. There are over 500 million products sold on Amazon at any given time. This means your store will have to provide added value to your customers to beat the competition. Market surveys can help customize an Amazon store’s offers depending on their prospects’ preferences.
As a new business, entrepreneurs will have to act smartly and efficiently to increase their brand’s store presence. These can be done through digital marketing, requiring minimal or substantial investments depending on your objectives. Besides search engine optimization (SEO), an Amazon store can spend for pay-per-click (PPC) advertisements, e-mail marketing, and other strategies. Overall, a small to mid-sized enterprise is expected to pay from USD$1,000-7,500 for engaging a digital marketing firm.
- Improve Cash Flow
Engaging in an online retail business will require sellers to spend in advance for inventory. Additionally, operational expenses may cause poor cash flow management, which small businesses may suffer from now and then. However, if left unaddressed, poor cash flow may cause serious business failures that could lead to closure.
To avoid poor cash flow management, it’s imperative to analyze your cash cycles and find out where the delays are and in which stages you can improve. Scrutinizing your cash flow allows your business to plan your finance better.
- Business Resource Upgrading
Besides expanding Amazon store inventory, an online retailer can upgrade their business by investing in specific software to streamline operations. An accounting and payment application integrated with a customer relationship management (CRM) to the Amazon platform is the best choice.
Consider upgrading your computer, laptop, server, and internet subscription plan if you’re running your Amazon business on an outdated computer and networks system. Better photos and videos can help draw in more customers to purchase your products, so don’t skimp on your photography tools. The same holds for pieces of business equipment that can help streamline your operations and workflows.
Being a new Amazon seller doesn’t mean that your aim is merely to sell products to keep your new business thriving. Besides focusing on selling opportunities, a business owner will have to think about other core aspects of the organization such as inventory, cash flow, marketing, and customer service to build a stronger brand. To keep these crucial business processes going, an Amazon business may have to depend on external funding.