There is a lot to think about when you’re running an e-commerce business. From what to sell, how much to stock, when and how to market, and so much more. You can’t really focus on any of these areas unless you’re also considering cash flow. After all, you can’t invest in product development, buy inventory, launch marketing campaigns, etc. if you don’t have the necessary funds. Which means missed opportunities for growth and other problems for your bottom line.
But that’s not all. To help maximize your business’s growth potential, we’ve outlined key reasons you need cash flow, plus how to get it.
Why You Need Cash Flow
Besides the obvious (that having cash lets you invest in your business), there are e-commerce specific reasons why you need reliable cash flow, including:
Marketplaces like Amazon and Walmart offer seemingly unlimited demand. With millions of online shoppers visiting sites like these on a daily basis, your listings have the potential for maximum exposure. But there’s also a lot of competition, which means you need to invest time and money into things like marketing and improving your SEO so that your listings actually get seen and generate sales.
High Cost of a Missed Opportunity
As an e-commerce seller, growth opportunities often happen last minute. For example, your supplier could issue a flash sale on inventory for the next two days. If you’re able to take advantage, you’d increase your margins and accelerate growth. If you don’t have real-time access to cash, you’ll have to pass on the offer and associated boost in profits.
High Cost of a Stockout
If your inventory management strategy has any holes or if there’s a sudden surge in sales, you might run out of inventory faster than you’re able to replenish it. If you aren’t able to buy more product as you need it, you won’t just run out of inventory and lose sales. The consequences of a stockout are dire: you could lose SEO ranking, the Buy Box, even your selling privileges.
Shifts in Demand
If you sell trendy or seasonal products, you should expect your sales cycles to ebb and flow. During a down cycle, you need to be prepared to invest in a new product that will generate business.
A steady stream of cash flow can help you gain a competitive edge on the marketplace. If you can order more inventory faster, chances are you can hold on to the buy box longer and make more sales. Cash on hand will also help you sell more of different kinds of inventory leading to a more diversified business. Cash flow can also help you build relationships with suppliers. Paying cash up front or paying your suppliers early can give you the leverage you need to get discounts on inventory and build stronger relationships with your suppliers. If you always pay cash up front and on time, you better believe your suppliers are going to take your call first.
Better Inventory Management
A stockout can really hurt your business even if you only sell on one marketplace. But, imagine stocking out across multiple marketplaces. If you’re a multichannel seller or want to be, cash flow is vital. You will need to restock inventory faster and more often than if you are selling on only one marketplace.
As in any fast-moving business, unexpected expenses often arise. This is especially true for ecommerce. If you have a larger than usual sales day, you may need cash right away in order to pay for additional packaging and shipping supplies. Otherwise you won’t be able to fill all of those extra orders on time. It’s not just inventory that you need to constantly invest in, it’s every aspect of your ecommerce business.
How to Get Cash Flow
In e-commerce, cash flow is an ongoing challenge. When you’re not getting your payouts in real time, you’re likely struggling with inconsistent sales cycles and stagnant growth. But you can turn your cash flow around with services like Payability.
Payability is a financing company designed specifically for marketplace sellers. They offer a variety of solutions depending on your needs, from large lump sums of cash (Payability Instant Advance), daily and real-time payouts on your sales (Payability Instant Access), even access to your funds on weekends and holidays (Payability Seller Card). Since 2016, Payability has helped more than 2,500 marketplace sellers grow their businesses 2.5 faster than their competitors. Visit http://go.payability.com/RefundRetriever to see how you can set your business up for long-term growth. Sign up for Instant Access or Instant Advance and you’ll receive a $200 sign on bonus just for being referred by Refund Retriever.