Q4 has officially begun and the holiday shopping rush is about to kick off! This is by far the most exciting time of the year for Amazon sellers as it offers online retailers the biggest opportunities for growth.
Before you put the finishing touches on your Q4 sales strategy, it’s time to think seriously about how you’re going to pay for that extra holiday inventory you need to succeed this season.
No matter how small or large your Amazon business is, chances are financing inventory keeps you up at night. While it may seem impossible to get ahold of all the inventory you need to grow your business in Q4, it’s a challenge that’s easily overcome when you know your options. In order to help you make an informed financing decision and catch up on all the sleep you missed stressing over your next purchase order, we took some time to examine your options.
- Personal Savings
Dipping into your savings allows you to fund inventory interest-free and without the stress or hassle of applying for a loan. However, your savings may not be enough to fund all of the inventory you need and once it’s gone you won’t be able to fund additional orders should you sell out. If sales drop off earlier than you anticipated, you could end up with excess inventory and no savings to cover emergency or unforeseen costs.
- Credit Cards
If you’re just starting your Amazon business, credit cards can be a quick, convenient and useful way to cover your initial inventory. When your source of funding is already sitting in your pocket, it’s tempting to use it. However, your credit limit may not be enough to pay for all of the items you need. Plus, once you’ve maxed out your credit cards, there won’t be anything left to buy more inventory if your sales take off. Should sales slow down and you’re only able to make the minimum payments, this could negatively impact your credit score and ability to get future loans. Not to mention, you may be on the hook for more interest than you initially thought.
- Traditional Bank Loans
If you are a well established seller with 2+ years of very profitable sales history, then you might qualify for a traditional bank loan. If not, you will have to seek funding elsewhere as small businesses are rarely approved. Banks also require long and tiresome application processes. So even if your loan is approved, it may not come in time.
- Amazon Lending
Amazon will occasionally offer select marketplace sellers loans. Sellers can not anticipate or apply for an Amazon loan. If you’re one of the lucky few, you will receive an offer in your Seller Central dashboard. This loan is a one-time, non-negotiable offer with a set expiration date. Repayments and interest are taken directly out of your Amazon earnings.
If Amazon’s 14 day payment delays are delaying your growth, you may have a better alternative. Payability gives Amazon sellers daily access to 80% of their Amazon earnings at a 2% flat-rate fee. The other 20% remains in a reserve to cover fluctuations in your balance such as returns. It is then released to you on the standard 14 day payment schedule. Payability gives you the flexibility to fund your Amazon business with your own money rather than relying on loans or savings. It’s the only funding source that moves at the speed of your Amazon business. If your sales spike, you can cash out the next day and immediately invest in the inventory you need to grow without taking on the risk of a loan or touching your savings. Daily cash flow gives sellers the competitive edge they need to succeed in the Amazon Marketplace, especially in Q4 when the competition for sales is highest.
Now that you’ve reexamined your holiday sales strategy, we hope you have a better idea of how you plan to meet your Q4 revenue goals.
This is a guest post from Victoria Sullivan at Payability.