Stock Finance for Ecommerce Businesses

Whether you run an online business, bricks and mortar store, or a combination of the two, then you will know the importance of keeping your inventory stocked. With over 90% of people making purchases online in 2020, competitiveness is at an all-time high. That means if the product your customer wants isn't available now, they probably won't wait for you to re-stock. Instead, you may lose the customer to a competitor who has better stock management.

So, how do you ensure your inventory is stocked all while maintaining the vital cash flow you need to keep your business both operational and growing? Stock financing, or inventory finance, is a popular option for businesses that require additional support to buy stock. There's no set type of stock finance, as it is often dependent on the type of business you run and the assets you already have. As a result, it's vital you work with an independent broker like Rangewell who can help match you with the best lender for your circumstances, both now and in the future.

Stock finance can support you in both the acquisition of ready-to-sell inventory as well as the raw materials you may need if you make your own products. What suits a small Etsy seller might not be right for a large automotive parts supplier, so by working with Rangewell, we'll be able to help find the best funding option for you on the right terms to suit your plans.

Ecommerce stock finance

The world of ecommerce is fast-moving, so it's no wonder that many of the traditional lenders, such as banks, are yet to provide suitable and bespoke finance options for businesses that primarily shop online. Ecommerce businesses operate differently from traditional sellers as they may not have their own premises, instead opting for renting space in a shared warehouse. 

In addition, there are many operational costs that online retailers have to account for every year, such as warehousing, fulfilment, staff wages, product postage and returns, website domain and hosting costs, among many others. So, once all these payments are settled, you may not have the cash flow you need to invest in new inventory.

This is a particular concern for ecommerce businesses that rely on seasonal sales periods, such as those selling Christmas or Halloween stock. The majority of your sales may come at one point in the year, but you need to funds to buy the stock six months earlier. 

In addition, many retailers are still feeling the pinch from the supply chain shortages in 2020 and 2021 brought on by the coronavirus pandemic and Brexit. Raw materials such as timber, cement and insulation resulted in shortages affecting both product and service-based businesses. For example, garden furniture was hard to come by in summer 2021, causing prices to skyrocket across Amazon, eBay and other online retailers.

So, whether you sell on Amazon or eBay, you have your own Shopify website - or even combine multiple selling platforms, then you will need to make sure any stock finance takes into account your full earnings, so you can get the best possible terms. 

Types of stock finance

As we've already discussed, stock finance can be tailored to your business. Therefore, there is no set type of stock finance. From short term loans for one-off purchases through to credit facilities and Merchant Cash Advance, which allows you to better manage cash flow over a long period of time, your inventory finance has to be designed with your business in mind.

There is a wide range of stock finance options that may be available to help your business keep your inventory filled and available for your customers; these include:

Working capital finance

A working capital loan helps with the day-to-day running of your business and provides the necessary cash flow you need to pay business costs, which may include the purchase of stock for your inventory.

Typically a short term solution, working capital finance is expected to be paid back quickly. It is a good option if you need funding quickly and you have fallen into cash flow troubles.

Mezzanine finance

Since ecommerce businesses don't tend to own significant assets like property, traditional lenders may not be able to offer their usual secured business loans. This is where mezzanine finance comes in.

 

This product sits between common debt solutions and equity funding.  A lender will provide the funds you need, secured on the future of your business rather than your assets.

If you are unable to repay this finance, the lender may take an agreed portion of equity interest in the business and this may affect your credit score and other personal financial liabilities. 

Secured loans

If you need a large chunk of funding and you have strong assets then a secured loan might be an option for you. As the name suggests, this type of loan is secured against the value of a fixed asset like property. You can use this finance for any business cost you like, but it is commonly spent on inventory for new and growing businesses.

Growth capital funding

If you are setting your sights on growth and you need funding to get your ideas off the ground, then you might want to consider growth capital funding. 

With this finance produce, you can secure a large sum of money without sacrificing equity or control over your existing business assets. To find out if you qualify for this or any other finance, get in touch with Rangewell directly.

Ecommerce stock finance from Rangewell

So, you've decided you need finance to invest in your inventory but you aren't sure which solution is right for you and how to ensure you get the best terms? It's time to talk to Rangewell.

By working with an independent broker, you can rest easy knowing we are searching the whole of market to find the right stock finance facility for you. When you choose Rangewell, you benefit from:

• Specialised knowledge of your sector, including access to ecommerce specialist lenders
• Large scale funding
• Support with the application process and help identify any risks or problems that may impact your finance application
• Competitive interest rates

At Rangewell, we can work with you to look at all of your finance options and help you decide if stock finance is definitely what you need to continue and grow your business operations. 

We can also support you with Supply Chain Finance, Trade Finance and even solutions such as Whole Ledger Finance.

To see if Stock Finance can provide the solution that you need, please call us now.