Using Finance Made for Amazon Sellers? You Should Be.

eComEngine has partnered with Stenn to educate our community on the pros and cons of different forms of financing and introduce us to its inventory financing and operations financing solutions for Amazon sellers.

Have you ever applied for a loan to buy inventory for peak sales periods like Black Friday or Cyber Monday – but your bank turned you down?

Or did you have to max out your personal credit card or line of credit to pay payroll, increase ad buys, or a myriad of other business expenses because your cash was tied up in inventory?

It’s clear. eCommerce works differently than regular retail so it needs its own financing solutions.

Traditional Financing is Not Made for Today’s Amazon Sellers

Financing an Amazon business is a complex cycle – you need cash to place orders with suppliers well in advance of peak sales periods, but you also need the peak sales periods to generate the cash you need to buy inventory.

Add in your need for further funds to advertise the sale of those goods, and your cash-conversion cycle - the months your cash is tied up in inventory from order deposit through product sales - gets worse.

There are traditional financing options available, such as the four outlined below. Still, they all have downsides as none were made for eCommerce.

• Traditional loans offer predictable payment terms but often come with checks and balances that don’t allow for the peaks and troughs of eCommerce selling – meaning a lengthy application and credit check process that most often results in refusal.
• A line of credit like an overdraft can provide a temporary cash injection, but will generally fail to provide a financial buffer big enough to fund long-term growth.
• Asset-based lending can deliver a bigger cash boost but comes at a higher cost than just a monthly repayment. Your assets, such as your inventory and any equipment, are used as collateral – so defaulting on repayments can result in those assets being seized.
• Credit cards can also provide a temporary cash injection, but it’s often the most expensive form of finance, quickly eating up all your profits if you don’t pay off the full balance each month.

Amazon Seller Financing

Amazon sellers need financing solutions designed for their needs.

Flexible financing that enables you to place orders with your suppliers without tying up cash in inventory, and often with longer payment terms and supplier discounts. Or to invest in more ad buys to accelerate your sales and capitalize on opportunities around the busiest shopping periods, like Black Friday or Cyber Monday.

After interviewing hundreds of sellers, Stenn created inventory financing and operations financing solutions to meet the unique needs of Amazon sellers.

Invoice Financing: Stop Tying Your Cash Up in Inventory

Picture the scene.

You’ve had a great spring and you’re running low on stock. You’re fine for the summer, but you know Black Friday is your peak sales period and you need to get your order in with your supplier. They’re asking for a 30% deposit, but you need your cash for daily operations – and you won’t be able to generate more cash until late November.

Here’s where invoice financing can meet the unique needs of Amazon sellers.

• Invoice financing is a shared arrangement between you, as the buyer, and your suppliers, in which you can get extended payment terms while your suppliers get paid sooner.

Working with an alternative financing provider, like Stenn, your suppliers can sell their invoices to get paid early. You, meanwhile, can get extended payment terms from your suppliers – up to 120 days if necessary, to give you the financial breathing space to use your cash on other operating costs.

Revenue-Based Financing: Fast and Flexible Working Capital for Everyday Expenses

However predictable your selling cycles are, there are always unknowns.

You might be gearing up for a great holiday season and order 20% extra stock – but your sales just don’t materialize.

Or, on the flip side, you suddenly go viral on TikTok and find yourself working 24/7 to fulfill demand.

Having access to liquid cash to accelerate growth is vital – for ramping up your marketing efforts to get the shoppers you need, or to hire extra bodies and inventory when things go really well.

The key is flexibility.

While your Amazon business can expect a level of recurring revenue, traditional financing solutions are often too rigid – you must pay x amount, every month, until the end of your contract – regardless of your actual sales.

Thankfully, alternative funding options such as revenue-based financing were made to meet the unique needs of eCommerce businesses.

• Revenue-based financing is a short-term unsecured financing tied to your future Amazon sales. You receive a lump sum cash advance based on your projected sales over a fixed period, and repayments are directly deducted from your bank account – usually as a percentage of actual sales. Because they’re directly deducted, it’s an easy way to repay, removing the need for extra administration.

Why Amazon Sellers Prefer Stenn

Stenn provides eCommerce sellers with fast and flexible working capital so they can grow faster with no credit checks or collateral requirements.

With Stenn’s Invoice Financing, sellers can avoid tying up their cash in inventory and often enjoy longer payment terms, up to 120 days, from their suppliers.

And with Revenue Based Financing, sellers will get flexible finance from $10,000 to $2 million in as little as 24 hours that they can use for everyday expenses - buying more Google ads, paying payroll, paying for their eComEngine tools, and more.

“Honesty and transparency are huge for us, and that’s why we chose to work with Stenn once we needed financing. Ease of communication, access, and helping to map financing and cash flow are big aspects of the partnership. It leaves time for us to focus on other areas.”

- Paul Tran, Co-Founder & Amazon Seller
Love & Pebble

Stenn is the global leader in SMB finance and can provide eCommerce businesses with $10,000 to $100 million in working capital. It has financed over $20 billion since 2016, and has $1.3 billion for Amazon sellers and thousands of happy customers, like Love & Pebble.