There is a common misconception that eCommerce businesses sit comfortably at the top of the totem pole with nothing to worry about. After all, eCommerce websites are becoming more popular by the minute, so it’s not like e-Commerce businesses will have trouble attracting and serving customers.
However, any eCommerce business owner will tell you that this couldn’t be further from the truth. In fact, the only things that have gotten easier for eCommerce businesses are getting eaten up by their ever-increasing competition from big-box retailers like Amazon and mismanaging their working capital.
eCommerce no longer has many entry barriers, so virtually any business owners and retailers can launch an eCommerce website to sell all kinds of products. Factor this in with the massive Amazon goods catalog, and you’ve got a highly-saturated market. Unless businesses regularly manufacture their own products, they must regularly expand their selection with unique products to increase average order value.
Since eCommerce businesses exist entirely online, online merchants must rely exclusively on digital marketing solutions for their eCommerce websites to stay relevant. But with so many digital marketing solutions available, eCommerce businesses must take advantage of any tools to generate quality traffic.
Converting that quality eCommerce traffic into profits is also aided by consumer finance with consumer credit products like Affirm that help customers finance their purchase. With the advent of consumer finance and consumer credit products, another barrier to building a successful online business has been in the United States has been lifted.
Perhaps the biggest challenge for the eCommerce industry, however, is cutting inventory costs. Profitability in eCommerce is directly tied to a company’s ability to purchase inventory quickly, so it must capitalize on bulk discounts and develop mutually-beneficial partnerships with vendors.
United Capital Source specializes in facilitating eCommerce Financing options for retailer businesses generating internet-based revenue from customers using credit cards and PayPal as a payment form. Contact us today for your FREE eCommerce business funding consultation!
eCommerce businesses take payments from customers via debit and credit card. Because these are the primary payment options accepted for an online customer, this makes these businesses the perfect candidates for eCommerce financing. A lump sum of financing is provided with a merchant cash advance in exchange for a fixed percentage of future debit and credit card transactions. Significant repayments to the loan amount/principal balance are only made when sales volume is on the rise since this type of financing is tied to sales volume.
In addition to this repayment system, what makes a merchant cash advance ideal for eCommerce financing is that good cash flow is not a strict requirement for approval with an eCommerce lender. eCommerce financing loans can be distributed at almost any stage of your financial cycle, regardless of seasonal ups-and-downs.
Many UCS clients use e-Commerce financing loans to finance inventory and marketing campaigns, both of which are typically long-term investments. Discounts for inventory may be offered when revenue is predictably down, and marketing campaigns must be launched well ahead of peak buying periods. Credit card processing loans (merchant cash advances) allows eCommerce companies to invest several months before paying off the lender debt with the increased revenue from your price-based promotions, expanded product selection, and increased order value.
Other types of small business loans and low-interest rate options that could make sense for your needs are the Brex card or a business line of credit. The former financing option can be a great way to access working capital and pay your vendors upfront or ahead of due dates. Obtaining funding from eCommerce financing lenders and making timely payments on your purchase will make you eligible for discounts, benefits and fosters a relationship that ensures quick access to new products throughout the year, not to mention better purchasing power over time.
Business lines of credit are geared towards short-term investments or last-minute inventory financing. If your customers love an item that is selling surprisingly well, you could order more and then pay off the entire balance with the sale proceeds received immediately afterward. Business lines of credit can also get you over the occasional financing “hiccup,” which are all-too-common given the eCommerce industry’s volatile nature.
We can also facilitate eCommerce financing for business owners with a low credit score. Your consumers don’t care one bit about your personal credit history, and in the same light, it shouldn’t matter to lenders either if those consumers purchase and love your products and services. Apply now to see how much you qualify for!
|LOAN TYPES||MAX AMOUNTS||RATES||SPEED|
|Merchant Cash Advances||$5k – $1m||Starting at 1-6% p/mo||1-2 business days|
|SBA Loan||$50k-$5.5m||Starting at Prime + 2.75%||8-12 weeks|
|Business Term Loan||$10k to $5m||Starting at 1-4% p/mo||1-3 business days|
|Business Line of Credit||$1k to $1m||Starting at 1% p/mo||1-3 business days|
|Receivables/Invoice Financing||$10k-$10m||Starting at 1% p/mo||1-2 weeks|
|Equipment Financing||Up to $5m per piece||Starting at 3.5% (SBA)||3-10+ business days|
|Revenue Based Business Loans||$5K – $1m||Starting at 1-6% p/mo||1-2 business days|