Do you need a freelance or full-time marketer?

Posted on by Amanda Levine

From engaging with customers to help maintain a positive reputation, marketing is responsible for building relationships, growing your business and boosting sales. If you’re not making a strong investment in marketing your company, you neglect the opportunity to reach your business’s full potential. 

But when it comes time to hire marketing support, many business owners need help with the decision to hire a full-time marketing role or opt for a freelance position. While both positions have their benefits, they are also both costly investments to make in your marketing efforts. 

Here are some considerations when making the decision of whether to hire a freelance or full-time marketer. Plus, as an added bonus, we’ll give you a valuable tip on how to free up cash flow so you have more funds to invest in marketing. 

Why marketing is important for businesses

If you’re just starting out or haven’t yet ventured into the world of marketing, you might not realize how your business can benefit from consistent, high-quality marketing efforts. Consistent and regular marketing efforts can help you increase brand awareness and sales and gather information about your target customers to serve them better. As you consider increasing your marketing efforts, it can be helpful to differentiate between traditional and digital marketing efforts and how they play a role in your business. 

Traditional marketing includes anything that is non-digital, like direct mail, print advertisements, billboards or posters and events, to name a few. These tactics are crucial to connecting with your local customers, establishing credibility and improving your brand awareness. 

Digital marketing, on the other hand, can help you gather valuable insights into your customers and track your marketing’s effectiveness. Strategies like social media, blog posts, digital ads and search engine optimization allow you to target potential customers based on their online behavior, giving you a premium opportunity to introduce your brand to a new audience. Technology and AI has taken marketing to a whole new level. When ready, explore the crosswalks between digital marketing and things like omni-channel marketing. As you evaluate marketing options, consider long-term goals as ideally you can partner with a marketer that can get you where you want to go and beyond. The attitude of just hiring what you can afford at the time can be costly, especially with marketing. 

The secret to successful marketing is to tactfully combine traditional marketing efforts with digital marketing to both increase your brand awareness and better understand your target customer. When you start to invest in these strategies, you’ll notice your business grow, and you’ll increase engagement with customers. 

Pros and cons of hiring a full-time marketer

PROS

  • Brand expert: When you hire a full-time marketer, you’re adding a person to your team that will be solely dedicated to your marketing efforts. They’ll learn your company’s voice and become an expert in your brand. 
  • Consistency: The key to marketing is consistency. Having a full-time marketer gives you a consistent and stable person who can establish campaigns for days, weeks and months in advance. 
  • Valuable resource for marketing verticals: Most marketers have skills across several marketing areas like social media, email marketing, event planning and more. By hiring a dedicated marketing team member, you’ll have one team member that can handle it all. 

CONS

  • Full-time employees can be expensive: When you add a full-time employee to your team, you’ll likely have to offer benefits, provide equipment and offer a competitive salary. These costs are usually more than just hiring a freelance marketer. 
  • You will have to manage an employee on a daily basis: Some business owners have no desire to manage an employee or train them.
  • Finding a replacement can put you back at square one if they leave the company: While more stable than a freelancer, if your full-time marketer leaves the company, you’ll have to rehire and retrain a new employee, which can disrupt your ongoing marketing efforts. 

Pros and cons of hiring a freelance marketer

PROS

  • More flexibility: If your business is more seasonal, or you don’t want to make the commitment to hiring a full-time marketer, a freelance marketer can help you fill the gaps on an as-needed basis.
  • Less investment: Since you’ll only hire a freelance marketer for the work you need to complete, you’ll likely save money without offering benefits and equipment and can pay  by the hour or on retainer.
  • Hire for a specific need vs. a generalist: Hiring a freelance marketer gives you the option to pick a specific skill or area you need help in, like social media or email marketing.

CONS

  • You won’t get full-time dedicated support: A freelancer will only likely only work part-time or hourly for you, leaving you without full-time marketing support.
  • There is usually a ramp-up period to get a freelancer or agency onboarded and familiar with your company: Freelancers won’t have the same knowledge of your company as an internal hire. You’ll need to familiarize them with your business.
  • You will be sharing their time with other clients: Your freelance hire will likely be taking on other clients, which can limit the attention and focus they’re able to provide your business.

What to consider when making your decision

Adding marketing support to your team is a big decision! Before you choose between  a freelance marketer or a full-time marketing role, make sure you consider the following things:

#1. Budget

How much are you willing to spend to get marketing help? Both freelance and full-time marketing hires require an investment from your business, so it’s important to understand how much you have to spend before you start the hiring process. As you evaluate the budget, consider the projected return and future goals as you may have to shell out more than you want to get some momentum. Furthermore, you’ll want to pay the employee or freelancer a rate that makes them want to stay with you. Replacing an individual can cost time and money. 

#2. Marketing goals

What are you looking to achieve? Do you want to get more customers in your store? Or expand your customer database? Think about what type of goals you have set for your business and how marketing can help you get there. 

#3. Demand

A lot of business owners forget to ask themselves, “am I ready to grow my business?” If you grow too fast or at the wrong time, you could risk running out of inventory or failing to keep up with demand. Plus, with more money going toward marketing, cash flow may be tight. Inventory financing can help business owners have more cash to allocate toward marketing while allowing them to stock enough inventory. If you’re thinking of getting funding for your inventory, Kickfurther can help. Our funding platform allows business owners to be in control while accessing the funds they need with no immediate repayment. We can help you fund up to 100% of inventory, with no immediate repayments. Activate growth mode when you partner with Kickfurther. 

Tips for making your hire

Whether you decide to hire a full-time employee or opt to go the freelance route, you want to find someone that fits your team and your vision. The right hire can make all the difference, so ensure you spend the time interviewing and searching for the perfect fit.  Take time to review their previous work projects and understand how their skills translate to the goals you have. 

Closing thoughts

If you’re worried about how increased marketing will affect your business, Kickfurther can help ease your stress and put you in control with inventory funding. You can get funding for up to 100% of your inventory without taking on debt or giving up equity. Take advantage of our platform to get funding for inventory and free up cash flow to invest in marketing and operations to maximize growth potential.

Maximize Your Profits: How to Collect Amazon FBA Refunds

Posted on by Amanda Levine

Get Back the FBA Refunds Owed to You

What are FBA refunds? Whenever Amazon makes mistakes handling inventory, order fulfillment, and customer returns on your behalf, you are owed FBA refunds for those mistakes.

The problem is that Amazon doesn’t automatically issue FBA refunds when it makes these mistakes. For the most part, it’s left up to FBA sellers to identify errors and file claims before certain deadlines expire to get FBA refunds.

How do you do this? Let’s count the ways to get your FBA refunds:

  • How to Claim FBA refunds on your own
  • Use a service company to get you FBA refunds
  • The no-risk, low-cost solution: GETIDA

How to Claim FBA Refunds on Your Own

Whenever your FBA products are lost, damaged, improperly returned, destroyed, or disposed of, or if the handling fees are overcharged, you are owed FBA refunds. However, it’s up to you to keep track of your FBA refunds in order to file claims.  And there’s a lot to keep track of.

Review your inventory reconciliation to identify any lost products. The Damaged Inventory Report in your Seller Central account contains details about lost, damaged, or missing inventory for the past 30 days.

Customer returns and refunds represent a significant portion of discrepancies that qualify for FBA refunds, which is not surprising considering Amazon’s generous customer return policy. Regularly audit your Amazon Seller Central account for the following instances where you are owed FBA refunds:

  • A returns reimbursement isn’t  paid out
  • The customer received a refund but did not return the product
  • The customer refunded more than charged
  • Incorrect item accepted for return
  • Returned product received damaged
  • Customer returns are accepted and credited after the standard policy window closed

FBA refunds are also due to you whenever Amazon destroys and disposes of any inventory it deems unsaleable, which it can do without your prior permission or even notification that it happened.

So how can you know when this has happened? The only way is to continually review your Amazon Seller Central account.

You can also be overcharged for products in your inventory if Amazon’s weight and size dimensions — which form the basis for FBA storage and shipping fees — are larger than the actual manufacturer specifications. The only way to check is to compare Amazon’s dimensions for each of your products to the manufacturer’s dimensions.

To sum up, the whole process of identifying FBA refunds is highly labor- and manual-intensive. And just because you’ve identified FBA refunds doesn’t mean you are going to receive them. You have to file a claim to the appropriate Amazon department. And within specific deadlines for each occurrence, ranging anywhere from 9 to 18 months. Incorrectly submitted claims are rejected; you have to fix the errors and resubmit.

Whew! Most business owners don’t have the time to do this. While you could hire someone for this task, that adds to your overhead expense — and there’s a possibility you won’t have sufficient FBA refunds to justify the expense of hiring someone to look for them. If you have employees, you could assign this task to one of them, but then you are taking time away from their original tasks.

Use a Service Company to Get Your FBA Refunds

There are companies that specialize in recovering Amazon FBA refunds for you. Some service companies only identify possible instances of FBA refunds, still leaving it to you to file claims. Even those that do file claims as well often only perform the first claim process; if Amazon rejects a claim they don’t try to follow up and possibly appeal the decision.

Make sure the service company follows all Amazon policies and procedures and can assure you they stay on top of all updates. If the service agency files inaccurate or incomplete claims, Amazon can opt not only to close those claims but any other open claims submitted by that company.

Fees also vary. Some companies charge as much as a third of all FBA refunds recovered, others may charge you for identifying possible FBA refunds even if they don’t actually recover them.

No Risk, Low-Cost Solution: GEETIDA

GETIDA (GET Intelligent Data Analytics), a company founded by Amazon sellers to recover their own FBA refunds, combines two powerful resources:

  • Software that examines the last 18 months of your Amazon Seller Central account transactions to flag potential FBA refunds
  • A team of former Amazon employees experienced in handling FBA refunds claims who know how and where to submit claims properly and follow up to ensure you get back the money owed to you

There is no charge to use the software or for GETIDA to file claims. If you decide to proceed, the only fees are a commission on claims that successfully recover your FBA fees. A commission that more than pays for itself in terms of monies recovered and time saved. What’s more, the Kickfurther community has access to a special offer where GETIDA doesn’t charge a commission on the first $400 in FBA refunds! 

It’s the easiest and simplest no-risk solution to get your FBA refunds. Click the “Activate Offer” button and provide the requested information. There’s no obligation. And the potential to maximize your profits by collecting your FBA refunds is significant.

 

purple CTA button for activating an offer

Small Business Grants: A guide for new business owners

Posted on by Amanda Levine

Grants for small businesses can provide funding to help cover a variety of your businesses needs, such as equipment purchases, marketing, training, and expansion. However, grants can be competitive and not all businesses may be eligible to receive them. If you’re seeking information about how to get a small business grant, you’re in the right place. Grants can help small businesses grow, but more funding may be necessary for a business to maximize opportunity. In such cases, inventory financing can be a helpful alternative funding option. 

The bottom line for small businesses is critical, therefore, financing needs to be affordable to make sense. As you may know, financing options are not always designed for CPG small businesses. From strict requirements to high costs you may be wondering how to reach the next level as a small business owner. While grants can help, Kickfurther can too. At Kickfurther, you can access funding up to 100% of your inventory costs at flexible payment terms that YOU control. Plus, we’d never ask you to give up equity or take on debt in exchange for help. To our fellow entrepreneurs we see you and relate. At Kickfurther take advantage of the following benefits:

  • No immediate repayments
  • Non-dilutive
  • Not a debt
  • Upfront capital 

Consider the possibility of accessing a small business grant combined with funding for inventory – thus allowing you to free up cash flow for other activities. New business owners, keep reading to learn more about how to access grants and funding to grow your business.

What is a small business grant?

Grants are available for small businesses, and are generally offered exclusively for certain types of businesses. For example, a grant may be exclusive for small businesses in the sports, specifically baseball industry. Grants are offered by government agencies, non-profit organizations, and some private entities. In summary, they are a financial award that does not require repayment, separating it from a loan. Some grants may be funded as a lump sum for any business related activities while others may specify uses. 

Small business grants are usually competitive, and the application process may require detailed information about the business and its operations. Who can apply for grants can get pretty specific as well so make sure it’s worth your time before applying. Funding amounts can vary depending on the program, but typically ranges from a few thousand dollars to tens of thousands of dollars.

Small business grants are intended to support the growth and development of small businesses, particularly those that are underrepresented or facing significant challenges. If you can qualify for a grant, it can be a valuable resource, but it’s likely not the only funding solution your business will need. Getting a grant can require patience, so breathe and enjoy the process. 

How small business grants work

Small business grants work by providing financial support to small businesses that meet certain criteria, such as being a certain size, belonging to a particular industry, or serving a specific community. The specific requirements and application process for small business grants can vary depending on the organization offering the grant.

Typically, a small business grant application will require detailed information about the business, its operations, and its financial needs. The application may also require the submission of a business plan or other documentation to demonstrate the feasibility and impact of the business.

Common uses of small business grants

Small business grants can be used for a variety of purposes depending on the specific requirements of the grant and the needs of the business. Here are some common uses of small business grants:

  • Funding business operations: Small business grants can be used to cover general business expenses, such as rent, utilities, and payroll.
  • Purchasing equipment: Grants can be used to purchase equipment or technology that is necessary for the business operations, such as machinery, computers, or software.
  • Inventory or supplies: Small business grants can help finance the purchase of inventory or supplies needed to produce or sell products or services.
  • Marketing and advertising: Grants can be used to finance marketing and advertising campaigns to promote the business, its products or services.
  • Research and development: Small business grants can be used to fund research and development activities, such as new product or service development, market research, or prototyping.
  • Hiring and training Employees: Grants can be used to fund employee training programs or to hire new employees to support business growth.
  • Business expansion: Small business grants can help finance expansion efforts, such as opening a new location or expanding the current space.

It’s important to note that the specific use of small business grants can depend on the requirements and restrictions of the grant program. Before applying for a grant, business owners should carefully review the guidelines and ensure that they can meet the eligibility criteria and use the funding in accordance with the terms of the grant.

Types of government small business grants

There are various types of government small business grants available at the federal, state, and local levels, including:  

  • Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grants: Funded by the federal government, these grants are designed to support small businesses in conducting research and development activities. As with most grants, businesses will need to meet the requirements, such as having fewer than 500 employees and conducting research in specific areas.
  • Community Development Block Grant (CDBG) program: Funded by the Department of Housing and Urban Development (HUD), these grants are exclusively available to businesses located in low-to-moderate income areas. These grants aim to help businesses succeed while helping communities grow. Business owners can use funds for a  range of business activities, such as real estate development, infrastructure improvements, and job creation.
  • Rural Business Enterprise Grant (RBEG) program: Funded by the Department of Agriculture (USDA), these grants are designed to support small businesses located in rural areas. Funds can be used to support a range of business operations.
  • Economic Development Administration (EDA) grants: Funded by the federal government, these grants are designed to support economic development activities in distressed communities. Similar to CDBG grants, these grants aim to improve businesses and communities. Funds should be used for activities such as infrastructure improvements, workforce development, and business planning.
  • Small Business Administration (SBA) grants: The SBA offers several grant programs for small businesses, including the Small Business Innovation Research (SBIR) program and the Service Disabled Veteran-Owned Small Business Program. These programs have specific eligibility requirements and guidelines.

Types of corporate small business grants

Corporate small business grants are offered by private corporations and can vary widely in their focus areas and eligibility requirements. Here are some of the most common types of corporate small business grants:

  • Small Business Grants for Women and Minorities
  • Environmental and Sustainability Grants
  • Community Development Grants
  • Education and Workforce Development Grants:
  • Innovation and Technology Grants
  • Social Impact Grants
  • Grants that support diversity in small business

Some grants may require applicants to meet certain diversity criteria in order to be considered for funding. In a world that embraces diversity, there are a number of grants that support diversity in small businesses, such as: 

  • Minority Business Development Agency (MBDA) Grants: The MBDA offers grants to support minority-owned small businesses. These grants can be used for a range of activities, such as business development, marketing, and training.
  • National Association for the Self-Employed (NASE) Growth Grants: The NASE offers grants to support small businesses owned by women, minorities, and veterans. These grants can be used to support a range of business activities, such as marketing, hiring, and equipment purchases.
  • Small Business Administration (SBA) Small Business Development Centers (SBDCs): SBDCs provide resources and support for small businesses, including those owned by women and minorities. They offer training, counseling, and access to funding opportunities.
  • Business for All Grants: Business for All is a program that offers grants to small businesses owned by women, people of color, and members of the LGBTQ+ community. These grants can be used for a range of business activities, such as equipment purchases, marketing, and hiring.
  • Rise of the Rest Grants: The Rise of the Rest Seed Fund offers grants to small businesses located in cities outside of traditional startup hubs. They aim to support businesses that are owned by women, minorities, and veterans.

How to qualify for a small business grant

Qualifying for a small business grant can vary depending on the specific grant program and the funding organization’s requirements. However, here are some general steps that may help you qualify for a small business grant: 

  • Identify grant opportunities
  • Determine eligibility
  • Gather required documentation
  • Create a strong grant proposal
  • Submit your application

Competition for small business grants can be fierce, and not all applicants will be successful in receiving funding. As a business owner you should  also consider alternative funding options, such as small business inventory financing to support your immediate business needs. 

What to do when you can’t qualify for a grant

If your small business can’t qualify for a grant (or doesn’t have the time), there are other funding options you can explore. Here are some alternative funding options:

  • Small business loans
  • Crowdfunding
  • Small business credit cards
  • Angel investors and venture capitalists.
  • Community Development Financial Institutions (CDFIs).
  • Small business inventory financing

Each funding option has its own set pros and cons, and may not be suitable for every business. We encourage you to indulge in learning about all options available. The Kickfurther community has a series of blogs that can help educate small business owners on how to grow their business. 

Closing thoughts

Small business grants offer businesses funds that don’t need to be repaid. This is a dream for most business owners, and for some becomes a reality if selected for a grant. However, the reality is that grants can take time to apply for and more time to be selected for. Time is one of the most valuable resources for business owners so while you should explore small business grants, you may want to explore other options simultaneously. 

How Kickfurther can help

Offering inventory on consignment, Kickfurther can cover your largest expense – inventory. Kickfurther funds up to 100% of your inventory costs on flexible payment terms that you control. Kickfurther’s unique funding platform can fund your entire order(s) each time you need more inventory, so you can put your capital on hand to work growing your business without adding debt or giving up equity.

Interested in getting funded at Kickfurther? Here are 3 easy steps to get started:

#1. Create a free business account

#2. Complete the online application 

#3. Review a potential deal with one of our account reps & get funded in minutes

Guide to Negotiating Payment Terms with Your Vendor

Posted on by Amanda Levine

While negotiating with a vendor can intimidate even the most confident entrepreneur, going in with confidence and a clear plan can  ensure you secure the payment terms that work best for you. Plus, remember to be reasonable as you want to encourage the working relationship. When negotiating, have evidence that supports what you’re asking for is doable such as quotes from other suppliers. Here’s what you should know about negotiating payment terms. 

What are payment terms? 

Let’s start with the basics. Payment terms are the expectations set by your vendors about when and how you will repay them. These are set at the time of the sale or service and provided from the seller to the buyer. Payment terms are usually outlined on the invoice and include things like late fees, credit card fees and instructions on how to make the payment. 

The terms can range depending on the individual business owner and the industry. For example, many businesses will use “net 30” payment terms, which means you have 30 days from the time of service or sale to pay. Others can use terms like advance payment or monthly payments for your payment terms. 

Why negotiating payment terms with your vendor is important

As a business, the more cash you can keep on hand, the better prepared you are for any unexpected costs and the stronger your business will be. Therefore, negotiating payment terms can help you better manage cash flow. Rather than paying for inventory when you order it or soon after, set up payment terms that allow you to float the money until it sells. While this is one way to stock enough inventory while maintaining cash flow, you may need to combine this method with  inventory financing. 

When negotiating payment terms, get creative. Find a proposal that benefits you and your vendor. When negotiating remember that there are plenty of vendors out there but appreciate the one you like to work with. This does not mean overpaying them but showing respect and justify what you’re asking for.   

Top Factors to consider when negotiating payment terms

There’s an art to negotiating your payment terms to get what you want. But before you head into a conversation with your manufacturer about your payment terms, make sure you understand all the aspects and complexities of your financial situation that will drive your negotiations. 

#1. Cash flow

When you get a new shipment of inventory, the clock starts ticking on how quickly you need to sell the inventory so you can make a profit and pay back your manufacturer. Ideally, your payment terms would provide you enough time to sell the inventory and increase your cash flow. 

When you start negotiating with a vendor, go into the conversation with an understanding of your cash flow and how it fluctuates based on your sales cycle. The goal is to push the payment terms out so you have the time to increase your cash flow before paying your vendor. 

#2. Vendor relationships

Running a business is all about relationships. If you have a long-term and trusted relationship with your vendors, the negotiation can go smoothly, knowing you have already proven yourself as a reliable business owner. However, keep in mind that vendors also need to get paid, and asking for unreasonable payment terms won’t benefit anyone. 

#3. Cost of capital

Make sure you consider the cost of capital your vendor will need to take on to extend or change your payment terms. If you can find a middle-ground that ensures your vendor gets paid for their services while giving you the time you need, the cost of capital can benefit both of you. 

#4. Competition

One way to negotiate payment terms is to leverage the competition against the manufacturer. If you know you can get the same product from another vendor that offers more flexible payment terms, you can use this in your negotiating tactic. Using the competition to your advantage can encourage your current vendor to meet some of your requests so they can keep your business. 

Types of payment terms

As you head into your negotiating conversations with vendors, make sure you have a specific idea in mind that you’re asking for. Some examples of payment terms you could ask for include:

  • Advance payment: With this type of payment term, you’ll make a payment before you receive the goods or services. 
  • Net terms: Net payment terms outline how long you have to pay the invoice and usually are established as 30, 60 or 90 days. 
  • Installment payments: This allows you to establish a regular payment schedule to repay your purchase in smaller amounts over a period of time. 
  • Milestone payments: When you pay a vendor when certain benchmarks are met, like halfway through the project or work.

Tips for negotiating payment terms with your vendor

While negotiating can be stressful, it doesn’t have to be. By being considerate and respectful and following some general guidelines, you can reach an agreement that works best for both parties. Here are some tips to having a positive experience negotiating terms:

  • Be honest: When you’re speaking with your vendor, make sure you’re honest and transparent with them. Outline how you appreciate your relationship with them, but financially you need different payment terms to fully benefit from your partnership. Being honest will help your vendor feel confident this is something that’s important to you.
  • Ask far in advance for a change: Your vendors and manufacturers are just as reliant on your business as you are on selling their inventory. If you want to change your payment terms, the more notice or flexibility you have around when those changes take effect, the more likely they are to agree. This gives both of you time to prepare and make the necessary arrangements.
  • Come prepared with your research: Before you begin to negotiate payment terms, do some research to understand what is standard in your industry and among other competitors. This can help convince your supplier or vendor to adjust their terms to be more in line with the norm.
  • Be willing to compromise:  As with any negotiation, it’s important to manage your expectations. If you go in asking for a net 90-day payment term, be prepared to compromise somewhere in the middle of what you’re seeking. This is why you should also go into negotiations asking for more than you actually are okay receiving. 

Closing thoughts

Successfully renegotiating your payment terms with a vendor can have drastic improvements in the cash flow of your business. While it may seem daunting, with the right preparation and knowledge, you can confidently and respectfully discuss with your vendors how to better work together and find terms that are a win-win for you both. Negotiating payment terms is important, but so is having enough cash flow on hand to pay when you need to pay. To improve cash flow consider small business inventory financing. 

How Kickfurther can help

Favorable payment terms are important, as is maintaining cash flow and accounts. Kickfurther funds up to 100% of your inventory costs on flexible payment terms that you customize and control. With Kickfurther, you can fund your entire order(s) each time you need more inventory and put your existing capital to work growing your business without adding debt or giving up equity.

Why Kickfurther?

  • No immediate repayments: You don’t pay back until your new inventory order begins selling. You set your repayment schedule based on what works best for your cash flow.
  • Non-dilutive: Kickfurther doesn’t take equity in exchange for funding.
  • Not a debt: Kickfurther is not a loan, so it does not put debt on your books. Debt financing options can sometimes further constrain your working capital and access to capital, or even lower your business’s valuation if you are looking at venture capital or a sale.
  • Quick access: You need capital when your supplier payments are due. Kickfurther can fund your entire order(s) each time you need more inventory.
  • Kickfurther puts you in control of your business while delivering the costliest asset for most CPG brands. And by funding your largest expense (inventory), you can free up existing capital to grow your business wherever you need it – product development, advertising, adding headcount, etc.

Interested in getting funded at Kickfurther? Here are 3 easy steps to get started:

#1. Create a free business account

#2. Complete the online application 

#3. Review a potential deal with one of our account reps & get funded in minutes

How to calculate and boost your eCommerce profit margin

Posted on by Amanda Levine

Understanding the financial health, including profit margins, of your eCommerce business is an essential precursor to making informed financial decisions. It’s easy to get consumed by a daily sales number or overwhelmed with expenses, but analyzing profit margins is one of the most accurate ways to get the financial “big picture.” Plus, when making business decisions you’ll want to consider their impact to the bottom line. One of those business decisions could include inventory financing, so that you can fast track growth, keep cash flow healthy, and keep pace with demand. 

Understanding what type of profit margin you need to measure

In order to understand which profit margins you need to be measuring, it’s helpful to have a clear idea of what they mean and why you’re analyzing them. Here’s an overview to get us started:

  • Gross profit margin: To determine your business’s gross profit margin, you subtract the cost of goods sold (COGS) from your total revenue. The COGS will include any costs relative to the production or purchasing of your product and may include material, labor, and production overhead. When to use and why it matters: Analyze your gross profit margin to determine how easily you can convert your inventory into cash. With a low gross profit margin, you may not have the cash to put back into other costs of running your business. You can also use it as a benchmark to understand where profits are getting consumed the most. Additionally, when making production (i.e. purchasing materials, upgrading equipment, etc.) decisions, you should consider the gross profit margin.
  • Operating profit margin: An operating profit margin represents how much revenue is left over after deducting expenses related to running your business such as rent, utilities, and salaries. When to use and why it matters: Looking at your operating profit margin will help determine if your revenue is enough to cover not only your cost of production but all expenses related to operating as well. Small businesses place a lot of weight on the operating profit margin, as they should. As you grow though, pay attention to where money is going to find ways to grow margins.
  • Net profit margin: A net profit margin determines how much profit your company is making after all expenses – including bulk and irregular expenses such as taxes, interest, and other costs not directly incurred by business operations. When to use and why it matters: For an accurate assessment of overall profitability use the net profit margin. This is useful in determining your company’s ability to effectively manage expenses. 

Calculating eCommerce Profit Margin

By understanding and assessing these profit margins, you have the power of making informed decisions in regards to the health of your eCommerce business. 

Let’s demonstrate how that looks with a fictional business’s revenue and costs by subtracting relevant expenses from the total revenue, then dividing by total revenue and multiplying by 100 to get each percentage. For the purpose of ease, these hypothetical numbers will be nice and round. 

Numbers used in example calculations below:

Revenue $50,000
Cost of goods sold (COGS) $15,000
Rent, utilities, payroll, etc. $10,000
Interest, taxes, etc. $2,000

 

#1. Gross Profit Margin = (Total Revenue – COGS) / Total Revenue x 100% 

Example: (50,000 – 15,000) / 50,000 x 100 = 70%

#2. Operating Profit Margin = (Total Revenue – COGS – operating costs) / Total Revenue x 100%

Example: (50,000 – 15,000 – 10,000)  / 50,000 x 100 = 50%

#3. Net Profit Margin = (Total Revenue – COGS – operating costs – additional costs) / Total Revenue x 100%

Example: (50,000 – 15,000 – 10,000 – 2,000) / 50,000 = 46%

Compare to industry benchmarks

By calculating your current profit margins, you can compare them to industry benchmarks to stay competitive and set goals for your business. For reference, NYU states that online retail averages gross margins of 41.54% and net margins of 7.26%. Understand the industry you operate within to set realistic goals. Plus, don’t underestimate the importance of efficient operations as they can impact profit margins more than you think.

Tips for boosting eCommerce profit margins

All of that may feel like information overload. What’s really important to know is how to boost your eCommerce profit margins. Larger profit margins are the key to success both online and in store. 

Here’s a few tips to boosting eCommerce profit margins:

Increase the price of your product (without decreasing sales)

The simplest solution, raise your prices. This may be nerve wracking for some industries as the fear of customers not returning due to price hikes is real. For businesses with in-demand products, this is less of a concern. Keep in mind that even if you lose a small percentage of customers, you still have a chance to make up that revenue and then some – even with just a small price increase.

Customer loyalty programs (a mutually beneficial approach)

A loyalty program is often a points system that builds up with each purchase and can be applied as value towards a future purchase – increasing your revenue, without cheapening your product. Showing your customers that you appreciate their business is a sure fire way to get them to return. Plus, it’s easier to track their behavior with their consent and access to data that allows you to understand customer base better. In the future you can use this information to tailor marketing.

Increase the average order value (cha-ching)

This can be done in a few ways. Some common methods are offering a minimum order amount incentive such as free shipping, product recommendations during your customers checkout experience, upsell complementary products on product listings, offering bundle deals, and running promotions. 

With increased sales, you’ll need to boost product inventory. Keep reading to find out how to support the growth. 

Use inventory funding to meet inventory demands

Inventory funding can be astronomically beneficial for your business as it allows for production of more products than on-hand cash would allow. Plus, it keeps cash flow healthy. This means that your capital can go where you need it so that your business can grow. 

Benefits of using inventory financing for eCommerce businesses

Besides increased cash flow, there are a number of benefits to using inventory financing for small businesses. These can include: 

  • Faster growth
  • A chance to expand product lines 
  • Take advantage of bulk discounts from your supplier

Inventory funding can be the difference between excitedly riding the wave of eCommerce success and being overwhelmed by it. 

How to apply for inventory financing

There are many sources to turn to when you need inventory financing. With our focus being on profit margins here, it’s appropriate to call out that inventory funding can cut into profit margins. So, how do you get affordable inventory funding? Kickfurther can help. 

Kickfurther funds up to 100% of your inventory costs on flexible payment terms that you customize and control. With Kickfurther, you can fund your entire order(s) each time you need more inventory and put your existing capital to work growing your business without adding debt or giving up equity.

Why Kickfurther?

  • No immediate repayments: You don’t pay back until your new inventory order begins selling. You set your repayment schedule based on what works best for your cash flow.
  • Non-dilutive: Kickfurther doesn’t take equity in exchange for funding.
  • Not a debt: Kickfurther is not a loan, so it does not put debt on your books. Debt financing options can sometimes further constrain your working capital and access to capital, or even lower your business’s valuation if you are looking at venture capital or a sale.
  • Quick access: You need capital when your supplier payments are due. Kickfurther can fund your entire order(s) each time you need more inventory.

Kickfurther puts you in control of your business while delivering the costliest asset for most CPG brands. And by funding your largest expense (inventory), you can free up existing capital to grow your business wherever you need it – product development, advertising, adding headcount, etc. 

Interested in getting funded at Kickfurther? Here are 3 easy steps to get started:

#1. Create a free business account

#2. Complete the online application 

#3. Review a potential deal with one of our account reps and get funded in minutes.

Closing thoughts

Understanding your profit margins is crucial to the success of your eCommerce business. By calculating your profit margins, you can set goals for your business and move into growth mode. Inventory funding can be a game changer for eCommerce businesses, allowing for even faster growth. 

Why & How To Outsource Fulfillment For Your Brand

Posted on by Amanda Levine

As the owner of a growing eCommerce brand, you know just how important it is to ship orders promptly and efficiently. In fact, 42% of online shoppers now expect 2-day shipping as an option for every online purchase. The only trouble is that managing shipping processes in-house can quickly become time-consuming and expensive, especially when your company is growing.

If shipping issues go unchecked, they could seriously hinder your growth potential. This is where outsourcing to a third-party logistics (3PL) provider comes into play.

In this comprehensive blog post, we’ll explore the benefits of outsourcing your fulfillment. Then we’ll provide a step-by-step guide on how to find and work with a 3PL to streamline your operations and ultimately grow your brand.

7 Reasons To Outsource Fulfillment

Outsourcing fulfillment can be a game-changer for growing eCommerce brands. So much so that it’s practically a rite of passage once you’re shipping about 100 orders per month or so.

But why is this the case? In this section, we’ll discuss why brand owners such as yourself so often rely on 3PLs for fulfillment.

1. You can focus on growing your business.

Imagine this – instead of being bogged down by the complexities of shipping, warehousing, and order management, you can free up your time and energy to focus on your strengths. You don’t have to spend your valuable time packing boxes yourself. Instead, you can entrust your fulfillment to experts and rest easy knowing that your orders will be handled efficiently and accurately.

Freeing up your time alone can be reason enough to outsource. So, if you’re looking to take your eCommerce brand to the next level but find yourself fighting an eternal fight to squeeze more work hours into an already long day, outsourcing fulfillment may be the smartest move you can make.

2. It may reduce shipping costs.

One of the most significant benefits of outsourcing fulfillment is lower shipping costs. As an eCommerce brand owner, you are probably familiar with the high costs associated with shipping, especially if you are shipping products internationally. However, when you partner with a 3PL, you can take advantage of their bulk shipping discounts.

In short, 3PLs ship a TON of packages every day. This allows them to negotiate better rates with shipping carriers than you could on your own. These savings can be so steep that they can offset the cost of labor, storage, and other fees when you’re shipping enough orders per month. 

The savings 3PLs make on postage are passed on to you, resulting in reduced shipping costs for your business. By outsourcing fulfillment, you can improve your bottom line, boost profitability, and invest your cost savings in other areas of your business.

3. Fulfillment will be more timely and accurate.

One of the most significant advantages of outsourcing fulfillment is the ability to provide more accurate and timely delivery for your customers. This is because 3PLs have extensive experience and expertise in logistics and order management. They are equipped with state-of-the-art infrastructure and technology and are managed by highly qualified personnel. This allows 3PLs to manage complex fulfillment operations and ensure that orders are processed accurately and shipped promptly.

This results in faster delivery times and increased customer satisfaction, leading to positive reviews and repeat business. 

4. Customer satisfaction is likely to increase.

One of the primary goals of any eCommerce brand is to keep its customers happy. When it comes to order fulfillment, accuracy and speed are critical components in ensuring customer satisfaction. These days, customers’ expectations are largely formed by their experiences with Amazon, and they expect your brand to be able to keep up!

It is entirely possible to run a Shopify store from your home, even with hundreds of orders per month. But that requires constant trips to the post office or constantly scheduling pick-ups with carriers. Every order and every label must be applied correctly, or the shipment might be wrong or go to the wrong place. The more orders that have to go out, the higher the odds of making mistakes, no matter how diligent you are!

By outsourcing your fulfillment operations to a 3PL, you can improve your order accuracy and processing times, resulting in happier customers. When customers receive their orders promptly and accurately, they are more likely to have a positive experience with your brand and become repeat buyers. 

5. You will be more easily able to scale your business.

As your eCommerce business grows, so does the complexity of your fulfillment operations. To accommodate this growth, you may need to expand your office or warehouse space, hire additional staff, and invest in new technology.

On the other hand, if you outsource to a 3PL, you don’t have to worry about this. If your order volume doubles or triples overnight, your 3PL can probably handle it. This can provide you with the flexibility you need to adapt to changing market conditions and stay ahead of the competition. 

6. A great 3PL can help you streamline your entire supply chain.

Outsourcing your fulfillment to a 3PL can do more than just save you time and money; it can also help you streamline your entire supply chain. By working with a 3PL, you can gain access to their expertise and technology to optimize your logistics operations. 

Most 3PLs offer order fulfillment and returns. Many also provide freight and customs brokerage, meaning that a single company can coordinate everything between manufacturing and fulfillment.

This streamlining of processes helps reduce errors and free up your time, and you can do so without getting multiple different companies involved.

7. Most 3PLs are well-equipped to handle seasonal demand fluctuations.

One of the key benefits of outsourcing fulfillment to a 3PL is the flexibility it offers in managing seasonal demand fluctuations. As an eCommerce brand owner, you may experience spikes in demand during certain times of the year, such as the holiday season. These fluctuations can be challenging to manage, especially if you’re doing your own fulfillment in-house.

For 3PLs, on the other hand, good ones are well-equipped to handle increased order volume during the holidays without a hitch. If you have spikes in demand at any other time, since your orders will be fulfilled by the same company handling hundreds of others, your order spikes will make a relatively small impact on your 3PL. In other words, what could be unimaginably complicated for you to manage can often be handled without a single hiccup by a dedicated 3PL.

10 Steps To Outsource Fulfillment

Understanding the need for a 3PL is one thing. Finding the right one to work with and then giving them what they need to get started is another, and it can be pretty intimidating if you’ve never done it before!

In this section, we’ll cover the ten steps you need to cover to outsource fulfillment.

1. Figure out your specific business needs.

When it comes to shipping, 3PLs have more expertise and experience than any other kind of business. They have extensive knowledge of logistics, order management, and shipping operations, allowing them to optimize your supply chain and improve your processes. But that doesn’t mean every single 3PL will be the right fit.

Ideally, you will want to find a 3PL that serves your niche in particular. If you sell apparel, you will want to find a 3PL with extensive experience shipping apparel. Likewise, if you ship board games, you will want to find a 3PL specializing in that.

By finding a 3PL within your niche, not only can you find one that can ship orders in a timely manner, but you can also find one that knows the unique challenges of your industry. This means they will have processes to support your business and will likely provide value-added services, such as kitting, assembly, refurbishment, and others, that you may need.

2. Look for 3PLs.

When you’re looking for a 3PL, contact other business owners in your industry. You can conduct an online search, and that can yield great results, but always try your network first. It’s very common for large 3PLs to spend a lot on advertising, which can skew the results you see when you’re searching.

If you can’t find a 3PL by contacting people in your network, use more specific search terms such as “apparel fulfillment” or “cosmetics fulfillment” and see what comes up.

3. Evaluate 3PLs based on your business needs first.

Pricing, online reviews, and integrations are important. But there are a lot of 3PLs in the world. First, you will want to narrow down your options based on your business needs. Look for 3PLs that have at least some experience in your niche first.

Then consider their location, shipping options, technology integrations, and any value-added services they may offer. For example, if you need to offer two-day shipping to your customers, make sure the 3PL you choose can meet that requirement. Or, if you need to integrate your eCommerce platform with their order management system, ensure they have the necessary technology in place.

Requesting and comparing quotes is time-consuming, so going through this step will help you focus on spending time with 3PLs that are likely to be a good fit.

4. Request quotes.

Once you have identified potential 3PLs that meet your business needs, the next step is to request quotes. Contact each 3PL on your shortlist and ask for detailed pricing information, including any fees or additional costs that may apply. This can help you compare costs and find a provider that offers the services you need at a price point that fits your budget.

Once you have quotes from your 3PLs of choice, make a spreadsheet and do your best to compare them apples-to-apples. This is difficult because every 3PL has a slightly different pricing model. There is no good way around this process, but it’s an important step nonetheless.

The key here is to select a 3PL with reasonable rates but not necessarily the cheapest. You should also consider factors such as the 3PL’s experience, reputation, and customer service.

Your 3PL will ultimately become one of your closest business partners, so this isn’t something you’ll want to go cheap on. Think in terms of total cost of ownership. Paying slightly more in the short run can pay off, if it reduces returns and damages in the long run.

5. Evaluate 3PLs based on online reviews and case studies.

When evaluating potential 3PLs for your eCommerce brand, it’s important to research their reputation and track record. One way to do this is by reading online reviews from other businesses they have worked with. It’s also a good idea to seek out case studies of businesses like yours that the 3PL has worked with to see how they were able to help those companies succeed.

Key factors to look out for include good communication and timely delivery. Negative reviews regarding communication or timeliness are both huge red flags.

Try contacting some of the businesses mentioned in the case studies and see if the references check out. This can help you ensure that the reviews and case studies you’re reading are reliable.

6. Book a warehouse tour – in person or online.

If you’re considering outsourcing fulfillment for your eCommerce brand, scheduling a warehouse tour with your top choices is important. This can be done in person or online, depending on your preferences and the location of the 3PL. It’s a good sign when a 3PL is willing to share what is going on behind the scenes.

A warehouse tour can give you a firsthand look at the 3PL’s facilities, operations, and technology, allowing you to better assess their capabilities and suitability for your business. During the tour, you can ask questions, observe their operations, and meet with key personnel to better understand how they can help your business. 

7. Choose a 3PL.

After researching, requesting quotes, and scheduling warehouse tours, it’s time to choose a 3PL for your eCommerce brand. Consider all the information you have gathered, including pricing, services, reputation, and your experience during the warehouse tour.

Take the time to weigh the pros and cons of each potential provider and choose the one that offers the best overall value for your business.

8. Integrate your systems.

Once you’ve chosen a 3PL for your eCommerce brand, the next step is to integrate your systems with theirs. This involves connecting your eCommerce platform, order management system, and any other relevant software to the 3PL’s system. Doing so can ensure a seamless flow of data between your systems, enabling accurate order processing and tracking.

Your chosen 3PL should have a team of experts who can help you with the integration process and ensure that everything runs smoothly. 

9. Send in inventory.

Once you’ve integrated your systems with your chosen 3PL, it’s time to send in your inventory. Arrange for your products to be shipped to the 3PL’s warehouse, making sure to communicate any special handling or storage requirements to ensure that your products are correctly cared for. This can include things like temperature control, fragile item handling, or specific packaging requirements. 

If you have any concerns about how to do this, ask your 3PL if they provide freight brokerage services. Many 3PLs do, and this can make it easier to ship inventory in bulk.

10. Test, launch, monitor, and optimize.

Once you’ve sent in your inventory and integrated your systems with your chosen 3PL, test your order processing and tracking systems to ensure everything works correctly. After doing this, you can comfortably launch your fulfillment operations, knowing they are likelier to work smoothly.

For the first couple of weeks, you will want to monitor orders and ensure they are processed accurately and delivered on time. Then over the next few months, you’ll see what needs improvement.

Remember to communicate regularly with your 3PL to ensure they understand your business goals and are working to help you achieve them.

Final Thoughts

Outsourcing fulfillment to a 3PL can be tremendously beneficial for your growing eCommerce brand. With the right 3PL partner, you can reap numerous benefits, such as reduced shipping costs, improved efficiency, and the ability to focus on your core business activities.

Finding the right 3PL is a daunting task, to be sure. However, once you know why outsourcing makes sense, you can follow the ten steps in this guide to find the right 3PL and get off to a great start.

Don’t hesitate to explore your options. The right 3PL partner is out there, and once you start working with them, it will be well worth the time put into finding them!