(This is a guest post from our friends over at Payability, a technology firm that offers different financing options that give marketplace sellers daily access to cash.)
When you run an eCommerce business — especially one across multiple marketplaces — it’s vital to keep your risks to a minimum. In general, “risk” refers to anything that could potentially lower your business’s profits or lead to its downfall. In your case, such risk could include everything from how you operate across channels to your product strategy to how you manage cash flow — and so much more. The good news is, when you manage these (and other) liabilities well, you can more seamlessly grow your business.
To help you get there, we put together the top 8 ways to reduce risk in your eCommerce business:
1. Automate as Many Tasks as Possible
Managing an eCommerce business across multiple marketplaces can be a challenge. It’s almost like running a handful of mini businesses — after all, you need to keep track of orders, inventory, fulfillment, etc. from a variety of sources. It’s a lot of work and if you’re doing it all manually, you open your business up to mistakes (like costly data errors) and roadblocks (like data processing time). Thankfully, system integration solutions like nChannel exist to sync data and automate every day processes so you can improve efficiency, maximize the customer experience, and grow your business.
2. Outsource Fulfillment to the Experts
One of the most important pieces of your eCommerce business is fulfillment. Customers expect to get their orders in a timely manner and without damage or defects. So you can’t skimp here. That said, it’s incredibly time-consuming and could easily become your full time job if you handle it all yourself. By outsourcing to services like Amazon FBA or a 3PL, you can more efficiently process and fulfill orders across all your channels (not just Amazon). Not only will this create a more streamlined and accurate fulfillment process, but you’ll only have one inventory source to keep track of for all of your marketplaces.
3. Invest in Proven Products
What you choose to sell could make or break your business. That’s why you should only invest in proven products. Do some research to see what’s in demand and what has a strong selling history. That way, you’ll know that the investments you make up front will pay off for you down the line.
4. Be Smart About Bulk Investments
Speaking of inventory investments, you’re going to want to make bulk orders to save money. But before you bulk up, you want to be confident that you’ve tested and perfected any new products. Otherwise, you could spend all your cash on a discounted inventory order only to have that inventory sitting on the shelves. The last thing you want to do is tie up all your cash flow for the sake of a discount.
Another option to avoid buying and storing inventory is to drop ship your items. This practice can be used to quickly launch a new business, diversify your product line, or fix inventory issues.
5. Maximize Inventory Management
Once you know your products are worth investing in, you’re going to want to beef up your inventory management to avoid two different risks. On one hand, if you don’t order enough at one time, you risk stocking out and jeopardizing your selling privileges. On the other (and as we mentioned previously), if you order too much, you risk tying up all your cash flow in product that isn’t selling — which means you’re not only not making money, but you’re losing it as well. To avoid all of this, invest in a tried and true inventory management system that will monitor your stock levels in real time and tell you exactly how much and when to reorder.
6. Build Relationships with Your Suppliers
If you don’t have a good relationship with your supplier, start building one now. Why? You never know when you’re going to need a favor. Maybe your sales are increasing rapidly and you need a rush inventory order to keep up with demand. Perhaps you’re looking to cut production costs and want to negotiate better terms. Whatever the case may be, treating your supplier like a partner and keeping an open line of communication with them will bolster your inventory management and help keep your business running more smoothly and with fewer risks.
7. Prepare for the Unexpected
In business, surprises happen. You could wake up one morning to a sudden surge in sales, your manufacturer could change up its production strategy which affects your future orders, Amazon or your other marketplace(s) should change their selling policies. No matter the case, you want to be as prepared as possible for the unexpected.
One way to do this is to invest in safety stock, an extra supply of inventory you keep on hold in case of emergencies. Safety stock will protect you from stocking out while you wait for a resupply order.
8. Find the Right eCommerce Financing Option
When you have a reliable source of cash, you are more likely to prevent risks and control their effects on your business. When you’re just starting out though, how do you ensure you keep enough cash to run your daily operation or keep the right amount of inventory on hand? For many, you’ll need to look into some sort of financing option to borrow money and invest it into your business.
For today’s sellers, there are many choices – from credit cards to bank financing to online loans and marketplace-specific solutions. You can review your finance choices in-depth here.
One option that might make sense for your business is Payability, which helps high-growth marketplace sellers have daily access to cash. You can learn more about their product below.
Payability offers the following:
- Payability’s Financing Options: They offer daily marketplace payouts if you want regular infusions of cash (Instant Access), large lump sums of cash for larger investments (Instant Advance) as well as on-the-go access to funds on weekends and holidays (Seller Card). It’s not a loan, it’s just your money faster and in real-time.
- Payability’s Risk-Free Application Process: Because they are not a loan company, Payability won’t pull your credit as part of the application process. Instead, they look at your sales performance and overall account health to make their decisions. Then, once you’re approved, you could get your financing in as fast as 24 hours.
For example, a large private label headphones seller was running a multi-million dollar Amazon business. He financed the operation with daily payments from Payability. When his supplier started competing against him and he stopped selling his headphones, he walked away with $1 million in the bank instead of owing $1 million to the bank.
Aside from giving sellers the opportunity to scale their businesses without taking on the risk of a loan, Payability also helps sellers eliminate rollover balances that could hold your business back. Sometimes the marketplace holds back all or part of your balance until the next pay period. This can be a huge roadblock if you were relying on that money to buy inventory, make payroll or pay your credit card bill. Daily marketplace payouts not only give you the ability to reinvest in your business faster, they also insure that you always get paid in a timely manner and never have to guess when your next payment is coming.
Learn more about how Payability can help you grow your business risk-free here.
Keeping Improving your eCommerce Business
Building a successful eCommerce business doesn’t happen overnight. It takes strategy, persistence, and navigation of risks like those mentioned above. Knowing how you’ll address problems like ahead of time can help you overcome them.
To keep learning about ways to improve your eCommerce business, check out the following articles:
- 5 B2B eCommerce Tips Every Seller Must Know
- How an eCommerce Content Marketing Strategy Can Increase Sales
- eCommerce ERP Integration: WHy Retailers Should Integrate and How to Do It
- Essential Tips to Make Your eCommerce Business Successful
- Does Your Business Need eCommerce Automation?
Disclaimer: Please note that this post contains affiliate links. If you click through and purchase through these links, nChannel may receive a commission (at no additional cost to you). Our top priority is to provide valuable content and resources to our readers, which sometimes includes recommending products we find helpful and reputable. If you have any questions or concerns, please reach out directly at nchannel.com/contact.
About the Author
Victoria Sullivan is a Marketing Manager at Payability. She has over eight years of social media, copywriting and marketing experience. Prior to joining the Payability team, Victoria developed social media content and strategies for top technology brands such as Skype and Samsung. She holds a degree in Advertising from Syracuse University’s S.I. Newhouse School of Public Communications. She can often be found in a yoga class or working on her fashion blog.