Tag: FBA Sellers

What Is The Best Funding Option To Scale Your FBA Business?

Posted on by adminoo

As an Amazon FBA seller, you know that scaling your business and increasing Amazon sales rank is essential to growth. But what is the right funding option to help you reach your goals?
This blog post will explore the standard funding options for Amazon FBA businesses and highlight the benefits and drawbacks of each. By understanding the different funding options available to you, you can make an informed decision about which one best suits your needs. So, let’s get started!

The Best Funding Options For Scaling FBA Businesses:

With the growth of your Amazon business, you may find yourself in need of seeking additional funding to scale your operations. While many funding options are available, not all of them are good for scaling FBA businesses. We will provide tips on choosing the right funding option for your needs and the best funding options for growing your FBA business.

  • Amazon Lending:

This program is an invitation-only service offered by Amazon to help small and medium-sized businesses grow their business on the platform. The various financing options are both short-term and tailored for each seller’s needs. If you meet all the criteria, then you will be notified that you are eligible for the loan on the Seller Central dashboard.

The eligibility requirements are that sellers have an account in good standing with positive customer metrics with a steady increase in Amazon product sales over time and are also active sellers on Amazon.

This program is best for Amazon businesses already having a steady increase in sales. However, it might not be worth taking out a loan if your inventory isn’t moving quickly enough since you won’t have the means to pay it back on time.

The loan range is around $1,000 to $750,000, and the term loan length ranges from 3, 6, 9, or even 12 months, having fixed monthly payments. Additionally, you can expect your interest rate to vary depending on what kind of account you have and how much money is made. Sellers report receiving a 3% to 17% annual payment rate.

  • Business Term Loan:

If you are looking into getting a business loan for the first time, it is always best that your bank or credit union offers term loans. This type of finance works well with people who have annual revenues over $50k and good credit history because they can take out amounts up to about 5 million dollars.

This type of loan is potentially composed of interest plus fees in fixed monthly payments over time periods of anywhere from 5 to 20 years. Apply through an online direct lender who requires less stringent eligibility requirements to avoid paying more than you should. Some lenders may even factor in your amazon listing quality, so be vary of listing optimization.

  • SBA Microloan:

The Small Business Administration or SBA offers a microloan for those who want to start their own business or expand an existing one. The designated lenders make funds available, then qualified applicants can take out up to $50k in loans.

It may be surprising for you to find out that you can get a loan for business purposes if your company does not meet specific criteria. Microlenders focus on small for-profit businesses with no bankruptcies or foreclosures in the last one to two years, and they offer loans regardless of personal credit scores.

If you’re a business owner with limited experience or funds, this option can be great for your company. It’s also good if credit is an issue and/or finances aren’t recorded anywhere else, as it will help establish credibility in case any future creditors come looking.

The SBA provides financing to small businesses through designated intermediaries. The requirements for each intermediary lender are different, but generally, they require collateral and personal guarantees from you as the business owner.

The loan range is around $500 to $50,000, and the term loan length is up to 6 years max. Additionally, you can expect your interest rate to vary from 8% to 13% annual payment rate.

  • Personal Savings:

While it is uncommon for top amazon FBA sellers to recommend using personal savings when investing in their own company, this may be your only option if other avenues fail.

You could easily make back quickly as long as you are selling at a good rate and have enough money set aside for inventory purchases. Thankfully, the process is very simple, and you don’t need any kind of qualifications like credit checks or paperwork.

  • Fintech Lenders:

These days, the main challenge in getting a loan is that it’s not just your regular old banks or credit unions who offer them. You have to go through all sorts of electronic channels, which can be difficult if you need assistance from a bank or a credit union.

Why would you choose a traditional lender when there is an easier way? Fintech lenders provide the same services as your favorite bank but with some key differences. They offer loans or lines of credit that are much faster to receive and have less rigorous criteria for approval than other lending institutions, all while being more flexible and having inventory deals, so it works out better overall!

Examples:

Two examples of such vendors include Payability Capital Advance and Kabbage, which can give up to $250,000 in less than 24 hours.

  • Merchant Cash Advances:

Merchant Cash Advances or MCA is an easy and fast way to get funding for your Amazon FBA business, even if you don’t have collateral. You can find a lender online with little or no paperwork required – so it’s very convenient.

Be wary of high-interest rates, especially if you have top amazon FBA sellers in place, since your half funding may go to your PPC campaigns. It’s an unregulated industry, and some companies may charge you fees while others don’t. Ask what they are before taking out any loans because it could vary widely from one lender to another.

Loans of all sizes are available, with the typical lump sum being based on credit card sales and repayment through an added fixed fee plus percentage. Loans between $2,500 to $250k tend to be more popular.

  • Peer-to-Peer Loans:

The first step in getting a peer-to-peer loan is filling out an application on one of the P2P websites. For investors to be comfortable with lending money, you need information about your credit score and debt to income ratio and why your business requires this financial aid. This is so the investors feel secure about investing in your business.

The P2P lending website has a few strict guidelines to follow if you want your loan approved. It can take up to a few weeks. You can help speed up the process by reviewing all of the details carefully beforehand on their site or talking with a professional who can answer any queries you may have.

  • Amazon Line of Credit:

Goldman Sachs has teamed up with Amazon to provide sellers the opportunity for a flexible and convenient way of taking out loans. Amazon Business Line of Credit is a new service that offers sellers the opportunity to access funds when they need them. This differs from lending a loan as you can request money when the need arises rather than taking one large sum.

The process of getting funding by Goldman Sachs line of credit is an invite-only one, with no general information about how it works. When you click on the invitation, you’ll be redirected to Marcus’ website to verify your eligibility. Amazon will share your data with Goldman, which is then used to underwrite a line of credit.

The option of a line of credit can be more beneficial for your business than taking an Amazon Lending loan. The ability to use the money when needed and not having any monthly obligations makes it worth considering other options available on their website.

The loan range is up to $1M, and you can expect your interest rate to vary in a range of  6.99% to 20.99% annual payment rate.

  • SellersFunding:

SellersFunding is the ultimate tool for sellers who want to take their Amazon FBA game up a notch. It uses an artificial intelligence algorithm to qualify your store, looking at performance metrics over six months of consistent selling at $30K or more per month.

In just 5 minutes, it can tell you if you are qualified, and to find out whether you are able to get your desired amount takes up to 1 to 2 days only.

SellersFunding offers attractive interest rates of 15% to 24% without any hidden fees or pre-payment penalties. The biggest advantage to this option is that you can take out another loan as soon as 50% of your current one has been paid back. However, be careful because getting too far into debt could quickly become overwhelming.

  • Personal Loans:

You can get a personal loan for any purpose you need, with many banks and fintech lenders offering both secured (collateral required) and unsecured loans. Many people turn to personal loans when they’re just starting, as these can be a good option for those without any sales history.

The internet is a great place to find personal loans, but not all of them will work for you. Your eligibility for a personal loan is contingent on your credit score, debt, and income- so take some time to evaluate before making any decisions.

This is the perfect option for individuals just getting started and who aren’t eligible to take out a business- or sales-based eCommerce loan. They allow you fast access to cash for prompt startups.

The loan range is around $1,000 to $35,000, and the typical term loan length ranges from 2 to 7 years. Additionally, you can expect your interest rate to vary based on your credit.

Conclusion:

Now that you understand the different funding options available to help you scale your FBA business, it’s time for you to decide which option is best. Depending on your specific needs and situation, one of these funding sources may be a better fit than the others.

Keep in mind that no single option is suitable for everyone, so it’s essential to do your research and compare your choices before making a final decision. However, most sellers will be able to find a suitable funding option from among the many available choices.

We hope this blog has aided in giving you a better understanding of what’s out there and how to choose the best funding source for your business. Please contact us if you’re looking for help getting started with an Amazon PPC strategy or want more information about any of the funding options we’ve discussed here. We’re happy to help! 

9 Pitfalls for New Amazon FBA Sellers

Posted on by adminoo

Starting any business can be daunting especially when you don’t know the starting point. This also happens with Amazon FBA Sellers, who often fall into different pit holes out of sheer excitement and end up in resentment. Based on our experience selling on Amazon and client feedback globally over the years, we are going to share 9 traps usually new sellers encounter and discuss their solutions. We will touch a couple of topics briefly before addressing these mistakes.

1. Amazon FBA Sellers DNA.

We need to identify the DNA of a new Amazon FBA sellers as everyone come with their own mindset, targets and reasons to enter Amazon FBA. Some come for quick money, some want to leave their 9 to 5 jobs, some want an alternate income channel, some come for an exposure into Ecommerce while some come just to see what the fuss and the excitement is all about! Based on their objectives, sellers choose a business model according to their objectives i.e. Retail Arbitrage, Wholesale, Private Label, Drop shipping, FBA vs FBM.

2. Timing in the Year.

It is pertinent to mention here that the timing of starting Amazon FBA business is extremely important and usually new sellers are unaware of the calendar of Amazon sales.

If new Amazon FBA sellers are entering and venturing in January – March then they will experience slowest pace of sales for sure which can become demotivating and can kill the excitement altogether. While the sales skyrocket from October to December, the new sellers can start their journey on a positive note, profitably.

3. Copyrights

It is very easy to fall prey to this trap.

Selling on Amazon is usually induced or is at times executed after attending a course of a guru. What new Amazon FBA sellers see is the final result or the fruit after the tree has fully grown facing enormous hardships and challenges unique to the product. Their thought process usually goes like this.

Getting excited after searching a product on JungleScout chrome extension and getting an encouraging opportunity score like 6, 7, 8, 9, 10. Step 2 would be to have a quick search of keywords to see the frequency of searches on Amazon for the product. Then they quickly open Alibaba to find a supplier, shortlist and finalize their orders.

What they miss is to do patent searches to see if there is already someone who has the copyrights to sell the same product or has a similar design. Their inventory will arrive in the warehouse, once their sales start they will come on the competitor’s radar. A complaint will be lodged in the post-natal phase. It’s very easy to check the copyrights and patents via google patents you just have to spend some time to go through.

Alternatively, you can hire an expert to do this for you and you will easily find a competent/ experienced professional on fiver or up work.

4. Seasonal Products

Newbies are naïve and consider all products behave in a similar manner all year round. Amazon FBA Sellers are generally targeting products that will yield reliable and consistent profits to them all round the year.

If you are selling winter caps or bean caps, chances are that they will be in demand in the winters only and people will not be buying them in summers most likely. So, your sales might skyrocket in the winters while they will plummet in the summers.

We are not saying that seasonal products are a no go niche but in case you are planning to enter into it then you should be mentally and financially prepared to enjoy the ride while its moving at a fast pace at its peak and when it’s not at trough.

If you work on seasonal products in the right manner, you can easily reap off tons of money for that particular time of the year and they are a definitely a great add on in your portfolio of products. You just need to be wary of your expectations.

5. Prohibited Listings

Many times sellers procure products from suppliers without knowing whether they are allowed products or not. Below are some of the examples of prohibited items that you cannot sell on Amazon:

  • Products that are subject to recall or safety alert
  • Dietary supplements, such as weight loss products that contain undeclared or prohibited ingredients or are marked as unapproved new drugs such as:
    • Growth hormones or products that claim to support or promote hormone productivity
    • Homeopathic drugs that are prescription, mislabeled or unapproved new drugs
    • Patches marketed as dietary supplements
    • Sexual enhancement products
    • Steroids
  • Supplements claiming that they can be used to cure, mitigate, treat or prevent diseases
  • Supplement listings that include disease names in their keywords

Sellers still take chances what they don’t understand is that all it takes is for one person to come along and complain or report. You might get away by selling the above items using different names but you will eventually be caught. So this can never be a long term thing as Amazon can remove your listing or ban your account.

6. Identification of a Fad

There are products that will come and go, they will have some fashion life maybe for days or months but their days are numbered for sure. Like iPad or iPhone accessories will change with improvements in versions and eventually they will not be in demand as and when technology improves.

Similarly fidget spinners were a craze of their time, a fad that died out after sometime and many sellers fell victim to it. You need to work on products that have a history of sales, estimating total market size in terms of revenue. It needs to be high for a considerable time so that when your product reaches Amazon warehouse in USA in about 1 – 2 month’s time, their demand doesn’t diminish.

You need to check your product results on Keepa and Google trends regularly to get a clearer picture and see through the product fate.

7. Liability Insurance

This is a common falling point for new Amazon FBA sellers as well. They enter into categories with chemicals, oils or substances that are applied to the body without appropriate documentation and paperwork. Many times, Amazon FBA sellers are clueless on this subject as they do not have any business or retail background. modafinil online romania https://lustfel.com/ Substances that can cause an obvious accident risk or an allergic reaction by using them needs to get the required approvals. It takes a lot of time and will require some serious money to get the approvals from the right authority in each category.

If someone starts selling such products without approval then Amazon will eventually ban them and ask them to take away their inventories from the warehouse.

8. Calculating Amazon FBA Costs

People are often snared while inaccurately calculating the product cost after it reaches the warehouse and when it reaches the customer ultimately. The best way is to use Amazon’s calculator which will give you each and every cost in detail. You can easily estimate your projected cash outflows based on the results and be wise while investing.

9. Data Analysis

This is the biggest issue within the new seller communities. They get excited after looking at scores using different market intelligence tools like JungleScout, AMZ Wordspy, Keepa etc. One needs to sit and take an overview of these stats and then dive into different details to get the most accurate and holistic picture of the product performance.

People hastily select products just to throw them in the market and see how do they respond? Most often or so, poor homework results in disappointment. One of the most common mistake rookies commit is to type incorrect keywords, extracting and interpreting the results in their own favor. They do not understand that the same product can be searched with other names as well.

Earning profits and running a successful business on Amazon is tediously complex now and you might want to consider a mentor or an expert by your side to avoid the pitfalls mentioned above.

If you have fallen prey to some of these points, you don’t need to feel bad about it as even experts and seasoned Amazon FBA sellers also have battled on the same grounds. You just need to avoid these pitfalls and stay away from trouble right from day 1 by doing the right things.

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