Why do Amazon sellers need financing?
Many sellers start their Amazon business using a general investment model, where they sell one product and then use the proceeds from that batch of sales to fund the next round. This may be a good concept to start with, but it will slow growth and may force you to pass up some good business opportunities.
Even if you already have a best-selling “winning” product, you may not be able to ensure that there is enough inventory to deliver to buyers because working capital does not flow quickly enough to replenish and ship new inventory from suppliers in a timely manner. As your online sales business grows, overall costs will increase, so ensuring you have sufficient liquidity becomes increasingly important.
How can Amazon financing be obtained?
1. Bank Loans
It is usually not easy to obtain and depends more on your credit history. Additionally, many banks don’t want to lend to Amazon sellers because financing online sales is not at the top of banks’ lending lists. Additionally, the repayment terms and conditions of bank loans are in many cases not applicable to online sales.
2. Credit Card
An easier and more common (although often inadequate and expensive) funding option for many small businesses and entrepreneurs. The higher your credit rating, the higher your credit card limit. Additionally, you may qualify for additional rewards and perks associated with select credit card programs, which can help you grow your business funds even further.
3. Supplier credit
Some suppliers and service providers offer credit terms to their customers. The most typical credit period is 30 days or 60 days. However, in many cases, supplier credit is only available to sellers with a long sales record. Additionally, while supplier credit may apply, suppliers still prefer to be paid earlier and may offer better prices and preferential treatment to sellers who can pay early.
4. Amazon Lending
Amazon does have a lending program, but it’s available on an invitation-only basis and limited to active merchants in the U.S., U.K., and Japan. Since loans are offered on an invitation-only basis, you cannot actually apply for a loan, but instead need to wait until Amazon decides that your sales activity is “satisfactory” and worthy of a loan.
Amazon also decides on its own what the loan terms are. Sellers have no power to negotiate a better deal and can only accept or reject the terms offered by Amazon. Amazon Lending does not have any flexibility, which makes it less attractive.
5. Professional Lenders for Amazon Sellers
The lending industry is beginning to offer customized financing solutions to Amazon sellers. Specialized lenders tend to have a better understanding of online business models, ensuring their financing solutions meet the specific needs of Amazon sellers.
This is the end of the introduction to Amazon financing in this issue. If you want to get more information about Amazon financing, please continue to pay attention~
