Effective Ways to improve your Customer Retention Rate

Posted on by Kaylyn Perry

Are you looking for ways to improve your customer retention rate to help your business succeed?

We’ll share some tips that can help you keep your customers happy and engaged. 

Read on to learn more.

What is a customer retention rate?

A customer retention rate is a measure of how successful a company is at retaining its existing customers over time. 

This can be determined by comparing the number of customers a company has at the start of a given period, such as a month or year, with the number that it has at the end of that same period.

Factors that can influence customer retention rates include the quality and value of the products or services being offered, as well as the effectiveness of marketing campaigns and other promotions. 

However, in general, businesses that are able to keep their customers happy and engaged over time tend to have higher customer retention rates than those that struggle to do so. 

Ultimately, a high customer retention rate can help businesses increase profits and thrive in their market over time.

Why customer retention rate is important

Customer retention is one of the most important aspects of any business.

A high customer retention rate indicates that a company is providing quality products or services that meet or exceed its customers’ expectations, leading to strong brand loyalty and positive word-of-mouth among consumers. 

Moreover, a high customer retention rate allows a company to reduce costs associated with acquiring new customers, such as marketing expenses and incentives for sales leads. Ultimately, having a strong focus on customer retention is crucial for ensuring long-term success and profitability in any industry.

How is a customer retention rate calculated?

Want to know how to calculate customer retention rate? The customer retention rate is a key metric for any business, as it measures the percentage of customers who continue to use a product or service over a given period of time. 

To calculate the customer retention rate, simply divide the number of customers at the end of the period by the number of customers at the beginning of the period. For example, if a business has 100 customers at the start of the month and 90 customers at the end of the month, its customer retention rate would be 90%. 

The customer retention rate is an important metric because it can help businesses to identify trends and patterns in customer behavior. It can also help businesses to assess the effectiveness of their retention strategies.

What is a good customer retention rate? Ideally, in most industries, you should shoot for a rate over 20%. 

What is a customer retention strategy?

A customer retention strategy is a plan for how a business will keep its customers coming back. The goal is to create long-term relationships with customers instead of one-time transactions. 

To do this, businesses need to focus on creating value for customers and providing an excellent customer experience. They also need to stay ahead of the competition by understanding what customers want and need. 

Additionally, businesses need to continually communicate with customers to ensure that they are satisfied. By following these steps, businesses can develop a strong customer base that will keep coming back.

Best tips to improving customer retention rate

What are the best ways to improve customer retention rates? Here are a few general tips that all businesses can follow in order to boost their retention rates.

Reward loyalty

One way to improve customer retention rates is to reward loyalty. By offering perks, discounts, or other rewards to customers who stick with your business, you can encourage them to keep coming back. This can be an effective strategy for both small businesses and large companies. 

It’s important to focus on providing excellent customer service. If your customers are happy with the service they receive, they’re more likely to stay with your business. By providing excellent customer service and rewarding loyalty, you can improve your customer retention rates and keep your business thriving.

Avoid inventory shortages and meet buyer demand

In order to avoid inventory shortages, businesses should focus on forecasting future buyer demand and stocking their shelves accordingly. This can be done through a number of methods, such as analyzing past sales patterns, conducting customer surveys, and monitoring industry trends. 

By doing so, businesses will be able to keep their shelves stocked with the products that their customers are looking for, which in turn will improve customer retention rates. In addition, by meeting buyer demand, businesses will be able to avoid the lost sales and added costs associated with inventory shortages. As a result, focusing on avoiding inventory shortages is a key way to improve customer retention rates.

Establish trust

When it comes to improving customer retention, one of the most important factors is building trust. Customers are more likely to stick with a company that they feel they can rely on and that they know will meet their needs. This is especially true in today’s competitive marketplace, where businesses are under increased pressure to offer high-quality products and services at a reasonable price.

To truly establish trust with customers, a business must focus on building meaningful relationships based on transparency and communication. Regularly engaging with customers through surveys and other feedback mechanisms allows companies to further understand their needs and work to meet those needs over time. 

Building trust also requires a commitment to reliability, quality, and consistency in both the products and services you provide as well as the way you interact with your customers. By establishing this kind of trust, you can help improve customer retention rates and better position yourself for long-term success in your industry.

Utilize customer data 

Customer data is a valuable asset for any business. By understanding who your customers are and what they need, you can improve your chances of retaining them as loyal, long-term customers. There are a number of ways to gather customer data, including surveys, customer interviews, and transaction records. 

Once you have this information, you can start to look for patterns and trends. For example, if you notice that a particular group of customers is always Late in making payments, you can start to offer them discounts or other incentives to prompt them to pay on time – or if you see that a certain type of customer is more likely to churn, you can focus your retention efforts on that group. 

By using customer data to improve your retention rate, you can keep your business healthy and growing for years to come.

Customer lifetime value

Customer lifetime value (CLV) is a metric that measures the total value of a customer to a company over their lifetime. Improving customer retention rates is one way to increase CLV, as it ensures that customers stick around longer and continue doing business with a company. There are a number of ways to improve customer retention rates, such as providing excellent customer service, offering loyalty rewards, and regularly communicating with customers. 

By utilizing CLV to improve customer retention rates, companies can not only increase the amount of business they do with each individual customer, but also improve their overall profitability.

Improve customer retention rate with Kickfurther 

Customers need to know that they count on you. This means being able to supply the products they need, when they need them. It also means providing great customer service, establishing a well-loved brand, and so much more. In order to be a stellar business while improving customer retention rate, you may need inventory funding. Inventory funding can help you keep products on your shelves so that your customers aren’t forced to look elsewhere for the products they need. Kickfurther is easy to use and perfect for businesses of all types and sizes. It can also improve cash flow so that you can invest in other areas of your company. 

With over 1000+ opportunities funded, Kickfurther has helped businesses all over the world elevate sales. Kickfurther has an average funding of $78,000, but can fund up to $1MM. As the world’s first online inventory funding platform, Kickfurther enables companies to access funds that they are unable to acquire through traditional sources.

If you’re interested in getting funded on Kickfurther, start by creating a free business account. Once you complete the online application you can review deals with potential account reps. Once a deal is made, you could get funded within minutes. Kickfurther is up to 30% lower than other options. 

The advantages don’t stop there. Enjoy the freedom to pay back backers, only when you start making sales. At the end of each of your sales periods, you’ll submit sales reports to Kickfurther. You only pay for what you’ve sold during that specific sales period.

Conclusion

Failing to capitalize on the opportunity to serve a customer and turn them into a repeat customer is a disservice to you and the customer. Customer retention will require several variables such as having plenty of inventory, showing customer appreciation, offering great customer service, showing customers they can trust you, and so much more. Inventory funding can help you stock your shelves with inventory while improving cash flow. As a result you can work on improving customer retention rates. 

Inventory shortages? Create a free business account and get funding for inventory in minutes!

How to set up business operations in the UK

Posted on by Kaylyn Perry

The United Kingdom has over 660,000 new businesses registered every year, making it a booming place for startups to thrive. 

If you’re considering expanding to the UK, you’re probably aware of the various benefits that operating overseas brings to your business. But how do you take the right steps to set up business operations in the UK? 

Follow our guide and watch your business grow.

Get a business license

Depending on your business type, you may need to obtain a number of permits or licenses in order to legally operate in the UK. 

Business categories that require specific licenses include the following:

  • Alcohol and tobacco retail 
  • Restaurants and food prep retail
  • Athletic coaching
  • Childcare services
  • Farming and agriculture
  • Hairdressing and salon technician
  • Hospitality
  • Waste management

Check out GOV.UK’s License Finder online tool if you’re unsure of which licenses/permits you need. They’ll direct you to the right support contact. 

Register your business

Next, you will want to designate a legal form and register your business with HM Revenue and Customs (HMRC). This identifies the classification or legal status of your business.

Sole trader

Registering as a sole trader means that a single individual is responsible for the business and its liabilities, losses, and accounting. A sole trader is typically a self-employed person running their own business and receiving post-tax profits.

Partnership

A partnership is run by at least two individuals who share the same amount of responsibility in terms of business debt, overall finances, and accounting. Each partner is also responsible for any losses. 

Limited companies

Shareholders (also referred to as business owners) privately own this type of business and are responsible for business debts only up to the value of their shares. So in turn, limited companies are those that keep business finances separate from the owners’ finances. 

Limited companies also have more managerial and accounting responsibilities, such as paying Corporation Tax. 

Registering your business

You need to register your business with HMRC (based on the legal form you designate) when you set up business operations in the UK. 

For example, sole traders need to sign up for self-assessment so that HMRC can collect self-employment income tax. If you’re registering your business as a partnership, you need to designate a nominated partner who keeps records and oversees tax forms.

Registering for self-assessment and partnership is free, but other legal forms may charge a small fee.

Familiarize yourself with UK business laws

Familiarizing yourself with UK business laws is an essential step before setting up operations. Some important topic areas include:

  • Business tax
  • Employment regulations
  • Employee expenses and benefits
  • Copyright patents and trademarks
  • Data protection

 

Be sure you’re following the right rules for your specific business, especially if you sell goods online, buy or sell goods abroad, or store/use personal information. The GOV.UK business section is a great resource for additional information. 

Insure your business

To ensure your business has protection against potential threats, you’ll need to apply for business insurance. The type of insurance you need depends on the industry your company is in. 

Here are some of the most common types of insurance:

  • Contents
  • Building
  • Commercial property 
  • Professional indemnity
  • Public liability
  • Employers’ liability 
  • Vehicle 

Fund your business

Once you’ve registered your business, gotten the correct permits, licenses, and more, you need to make sure that your business has the funds to expand. Capital matters for international expansion. However, not all companies have the funds to support this type of growth.

Kickfurther can help you secure the inventory funding that you need to grow. We’ll provide you with capital to help you sell more, and you won’t have to make any payments until after you’ve sold and received payments from your customers. 

Kickfurther gives you the support you need early on, and we’ll continue to fund your inventory on a different, larger scale as your business grows. With over 99.5% of deals funded, our marketplace is a great way to get your business operating in full swing.

Carry out administrative duties

Once all of the legal prep is out of the way, you’ll need to take care of some administrative responsibilities before starting up operations in the UK. 

Hiring employees

Consider whether you’re transferring workers from your home country to your location in the UK. If that’s the case, you may need to apply for a permit or worker’s visa to legally work.

If you don’t plan to transfer any of your home-based workers, you’ll need to hire freelancers, contractors, or permanent employees in your new location. Then you need to figure out payroll, employee insurance, workplace pensions, and more. 

It’s better to have a specialized business or professional help you lay these things out. Failure to comply with employment regulations such as minimum wage, providing legal contracts within two months of employment, and making pension and social security contributions can lead to consequences such as hefty fines.

Accounting

Accounting is a crucial part of running any business, whether it’s in your home country or abroad. In addition to being a legal requirement, it’s essential to gain insight into your finances and make strategic plans for your business.

Businesses often feel forced to decide between handling their accounting internally, which can be time-consuming and error-prone, or outsourcing the work to an accountant. 

When you’re looking to hire an accounting firm, it’s important to consider whether you’re better off working with a team of generalists or a team that focuses on your specific business niche. 

Generalist accounting firms provide the standard range of services that are often required with accounting. This may include VAT filing, income tax returns, reconciling payouts, virtual CFO advice, and so on. 

Alternatively, niche firms have a narrow focus on who they serve, but they bring deep expertise to the table. As a result, they provide a more streamlined service and are better equipped to stay on top of changes in the industry. You’ll likely get more value from partnering with an accountant that focuses on your niche.

Business accounts

To start making transactions, you need to first go through the process of opening a UK bank account. 

You’ll need the following in order to set up your UK bank account from overseas:

  • Official proof of identity for all business partners
  • Proof of address on an official mail item or bank statement
  • Contact details and full business address
  • Estimated annual turnover
  • Your Companies House Registration Number
  • Certificate of incorporation, memorandum, and articles of association (for limited companies)

Think ahead to avoid delays when setting up your UK bank account. For example, if your business uses a specific bank, check if they operate in the UK to speed up the process.

Cards

One way to streamline your business payments is to use virtual payment cards. Virtual payment cards are debit or credit cards that facilitate online transactions. 

These cards are generated entirely online and accepted almost anywhere that traditional Visas and Mastercards are accepted. With virtual payment cards, you can designate spending limits as well as choose certain currencies to pay for things internationally, hassle-free. 

Virtual payment cards from Airwallex also have zero international transaction fees.

Value-added tax (VAT)

Don’t forget about value-added tax (VAT). 

VAT applies to most goods and services bought and sold for use in the EU, and is charged as a percentage of the price. It’s collected from businesses via partial payments and paid to revenue authorities. 

VAT is a type of tax that doesn’t exist in the US, so familiarizing yourself with its process before you expand is crucial.

Inventory and shipping management

When it comes to listing and managing your inventory, you should aim to automate as much as you can. This will help you stay organized and generally keep track of your inventory to know what’s selling and what’s not.  

Additionally, automated processes will quickly fulfill your inventory on multiple eCommerce sites by creating lists, cataloging on numerous platforms, syncing inventory, and fulfilling FBA orders.

Contact Airwallex to assist your overseas expansion

Expanding your business to the UK isn’t hard if you take the proper steps — and Kickfurther is here to help. We’ll get you on your way with reliable, consistent funding and help you sustain your success as you grow. 

For further help with your expansion, check out our partner Airwallex. They offer Global Business Accounts in multiple currencies, so you can spend less on foreign transaction fees and more on your business growth. 

Fill out our inquiry form and one of our specialists will get back to you on your funding potential!

Featured image via Pixabay

 

Inventory Turnover Ratio: How to Calculate It

Posted on by Kaylyn Perry

What is the inventory turnover ratio? In summary, an inventory turnover ratio is a figure that calculates how quickly you’ll sell through your inventory during a specific timeframe. This calculation is essential for all businesses because it measures how efficiently a company is using its assets. 

In other words, it shows how often a company sells or uses its products or inventory.  

So what is a good inventory turnover ratio and how do you calculate inventory turnover ratio? 

Keep reading to learn more!

What is an inventory turnover ratio?

Inventory turnover ratio is a figure that calculates how quickly you’ll sell through your inventory during a specific timeframe. 

If you have a high inventory turnover rate, that indicates that you are selling your products quickly and efficiently. If it’s low, that means you’re overstocked or that sales are down. 

You might hear other terms used for inventory turnover ratio, including stock turnover, stock turn, and inventory turns.

How an inventory turnover ratio is calculated

There is a simple formula you can use to calculate inventory ratio. It includes timeframe (such as a year), average inventory (the dollar value of the beginning inventory plus the ending inventory, divided by two), and the cost of goods sold (which is the final number on your annual income statement).

Why knowing your inventory turnover ratio is important

There are a few reasons why you should prioritize your inventory turnover ratio. Let’s take a closer look at two reasons.

Boost profitability

Having an idea of your inventory turnover ratio can increase your profitability. You’re increasing your product turn-around by reducing your storage costs, which increases your net income and boosts your overall profitability. Plus, when inventory turns quickly, that increases your responsiveness to customer demands.

Measure business performance and efficiency

An accurate inventory turnover measurement can help you measure how efficient and high-performing your business is. The higher the inventory turnover, the better performance. You’re not buying too much and you’re getting rid of the inventory you do buy. 

Formula to calculate inventory turnover

Want to know how to calculate inventory turnover ratio? As mentioned earlier, you’ll need to know the period of time, usually a year, the average inventory, and the cost of goods sold.

Once you have those variables, you can use the formula to calculate your inventory turnover rate.

The formula is:

Cost of goods sold/average inventory = inventory turnover rate

Inventory turnover ratio example

Say you own a sporting goods store and you’re trying to figure out the turnover rate for one of your best selling products. If your cost of goods is $10,000 and your starting inventory is $3,000 with an ending inventory is $1,000, your average inventory is $1,000 (since it’s $3,000-$1,000 divided by two).

When you plug those numbers into the formula, you get a turnover rate of 10. You turned your inventory for that product  ten times throughout the year. With that number in hand, you can average out how many days it will take you to sell through your inventory once. To do this, take 365 days (the number in a year) and divide it by 10, or your inventory turnover rate.

That should result in 36.5 days, meaning it takes an average of 36.5 days to sell through your inventory. This number will give you an idea of how much stock you need in the future.

What causes inventory turnover ratios to vary significantly?

There are some limitations of inventory turnover ratios. For instance, it won’t give you the best insights as to how your business is performing if you’re not accounting for things like discounts, special campaigns, and markup. 

There are other factors that cause variation in inventory turnover ratios, too. For example, turnover rates tend to increase during the introduction and growth phase of a product, then peak as a product matures. As the market becomes more saturated, there are improvements to existing technologies, or customer preferences change over time, these can all cause inventory turnover to fluctuate or vary.

What is considered a good inventory turnover ratio? 

While what’s considered a good inventory turnover ratio will differ between industries, since the ideal ratio depends on what you sell and your specific industry, the higher your turnover rate is, the better. Shoot for an ideal turnover ratio between 5 and 10.

A high inventory turnover rate indicates that sales are strong but it can also indicate that your inventory is too low. It’s a tricky balance to follow. If your inventory turnover rate is too low, though, it is either because you’re overstocked or sales are weak (both of which are things you should be trying to avoid).

Tips to improve your inventory turnover ratio

Once you know your inventory turnover ratio, there are simple steps you can take to improve it for your business. 

Review purchase prices on regular basis

If you’ve had the same prices for many years and you’re concerned about your inventory turnover ratio, one of the easiest things you can do is adjust your prices. Compare them with similar products and businesses in your industry. If other companies are asking for prices that are much higher or lower than yours, it’s time to revamp your pricing.

Increase inventory demand

One easy way to increase your inventory demand? Change up your marketing strategy. Make sure your campaign is targeted toward your ideal customers. It should be clear that you have a product to solve their problems – get people excited about what you’re selling so there’s a higher demand for the inventory you have! 

Choose best selling products

Don’t keep products on the shelves that just aren’t selling. If the items you have in your store have a high turnover rate, that’s great – but if they don’t, get rid of them.

Another simple strategy for increasing your inventory turnover is to group similar items together. You can then compare how well they do on the shelves so that you can recognize trends and be able to project how much you need to order in the future. 

How Kickfurther can help

Applying some of these inventory management basics should help you keep your stock under control, ensuring that you always have what your customers need on hand. 

Kickfurther is the world’s first online inventory financing platform that enables companies to access funds that they are unable to acquire through traditional sources. In just an hour, you can get the fund you need to purchase inventory. Drilling down on just how much inventory you need to stock is an important step to take before connecting to our community of backers. Our backers will want to know a little bit about your company and see revenue between $150k to $15mm over the last 12 months. To get started, simply create a profile at Kickfurther to connect with backers. Kickfurther is up to 30% lower cost than other options and allows you the freedom to repay only when you start making sales. You’ll get to outline your expected sales periods for customized payment terms. 

Interested in getting funded on Kickfurther? Create a free business account online today to get started.

Inventory Management 101: 5 Tips for Small Business Owners

Posted on by Kaylyn Perry

Owning a small business is no easy task. There’s a lot to keep track of between marketing your business, dealing with customers, and handling finances. 

One important aspect of running a small business is inventory management. By executing effective inventory management techniques, you’ll be able to keep your business running smoothly and ensure that you always have the products your customers need. 

What is inventory management?

Inventory management is the part of supply chain management that makes it possible for you to have the exact products you need in the right amounts for sale – and at the right time.

When inventory management is done correctly, it can reduce your overall costs and overhead by having to keep a lot of excess inventory in stock. You’ll know exactly what your customers want, you can have it when you need it and maximize your sales. The best inventory management will make it possible for you to track inventory in real time. The process will be 100% streamlined. 

Why inventory management is important for small business owners

Here are a few benefits of inventory management for small business owners.

Reduces costs

The most obvious benefit of good inventory management is that it can help you reduce your costs. Sure, with larger orders you can negotiate better payment terms or shipping rates, but it’s important to remember that the cost of purchasing the stock itself isn’t the only expense involved in maintaining an inventory. The more inventory you have, the more space you need to hold it.

Therefore, effective inventory management will give you a better idea of what you actually need – allowing you to reduce costs while also freeing up space. 

Frees up cash

Inventory management also frees up cash. If you buy smaller quantities of your products more often, you’ll have more cash on hand rather than tying it up in stock. This is vital for small businesses that are dealing with a more unpredictable or fluctuating cash flow.

Improves customer satisfaction

Finally, inventory management can improve customer satisfaction. It’s frustrating for customers to find out that an item they need or want is out of stock. You might not only lose the sale, if that’s the case, but also the customer for life. You’ve left a bad taste in their mouth! 

What do small business owners use for inventory management?

There’s no one-size-fits-all solution when it comes to inventory management. However, popular software tools include Brightpearl, Zoho Inventory, and Veeqo. 

You can always manage your inventory manually, without any kind of tech, if you’re on a budget. Tools include things like ledger books, spreadsheets, and stock cards. However, paying for inventory management software is actually a good way to save money since it will streamline your processes. 

Tips to effectively manage your inventory for small business

Follow these tips for effective small business inventory management.

Use Inventory management software

Inventory management software is integral to small business owners. You might think your business is too small to need inventory management software – but this is a common misconception. This kind of software is vital regardless of the size of your business. 

It can help you keep track of all of your inventory in real time, something that can reduce your costs and improve your cash flow (read – a healthier bottom line). You can predict demand and prevent shortages while also preventing having too much stock on hand. It allows for multi location management and the best warehouse organization. Most importantly, a good inventory management software will help you save time and money.

Accurate forecasting

Do your best to fine-tune your forecasting. Your projected sales calculations should be based on a variety of factors (and these should be as precise as possible) such as your historical sales figures, predicted growth, the economy, market trends, marketing efforts, and so on.

FIFO approach

Consider using the FIFO approach to inventory management. It’s kind of like the concept of rotating old milk to the front of your refrigerator and putting the new milk in the back so you use up the old stuff first! 

Good inventory management will require you to sell goods in the same chronological order as the ones they were made or purchased in. It’s especially important for perishable products but it’s also a good idea for non perishable items. The longer an item sits, the more likely it is that it will become damaged or otherwise unfit for sale. 

Audit your stock

Take the time to audit your stock. Count your inventory to make sure what you have actually matches your numbers of what you think you have. Yes, this needs to be done from time to time even if you have quality inventory management software! 

Quality control

No matter what kind of industry you work in, make sure all of your products look fantastic and work well. This can be done at the same time as when your employees audit the stock. You might use checklists that include boxes for signs of damage and even tips for correct product labeling.

Tips of small business retailers

As a small business owner, do your best to understand your stock, including what you have, when you have it, and who is buying it (and of course, how much). A thorough understanding of your sales trends is key to give you the insights you need to make sure you have the right kind of inventory.

Next, make sure you have the inventory management system for small business owners in place to handle those insights. Use an all-in-one retail management system that combines inventory management with sales and ordering systems so you can monitor stock levels in real-time and place orders as soon as possible.

Tips for small business product manufacturers

And if you make your own products? Some businesses are responsible for the entire supply chain, like a producer and retailer of handmade purses. You source your own raw materials and then turn them into items to sell.

Therefore, your inventory will consist of those raw materials, the work-in-progress pieces, and the finished products. You’ll want to have a clear idea of each of these categories at all times. The tips above can help!

How Kickfurther can help

Have you ever struggled with inventory management? You’re not alone. Inventory is one of the biggest challenges facing small businesses today. But don’t worry, we’ve got your back. Check out our top tips for how to manage small business inventory above to see how you can apply them to your own business.

With Kickfurther you can fund millions of dollars worth of inventory at costs of up to 30% lower than the competition. You’ll have the money you need to pay your suppliers without having to create a purchase order or accounts receivable. With more than $100 million in inventory funded to date, Kickfurther is the world’s first online inventory financing platform that enables companies to access funds that they are unable to acquire through traditional sources. 

Interested in getting funded on Kickfurther? Create a free business account online today to get started.

How To Convert More Sales With Better Creative

Posted on by Kaylyn Perry

ENGAGING MARKETING 101

These days, everyone has a short attention span. People are only going to react to ads that directly relate to them. So, if your ad isn’t clear & directly related to your audience, then why would they waste their time watching it… They won’t. 

The best way to create something engaging is to ask yourself the following questions: 

  • Who is buying my product? (Or who do I want to sell it to?) 
  • What is the problem my product provides a solution for ?
  • What real life scenario would the person be in, to necessitate owning this product?

 

Once you have these answers, you can create dozens of hooks & stories around your target audience that will get them immediately engaged in the ad.

A.P.P.

  1. Agree
    1. Give them a statement the viewer is going to agree with:
      1. EX. “There’s nothing worse than flaky skin”
  2. Promise
    1. Provide them a solution to their problem:
      1. EX. “Cerave Hydration twice a day reduces flaky skin by 75%”
  3. Preview
    1. Plan for how your product can solve their problem:
      1. EX. “Order Cerave for results in just 3 weeks”

This is a guest post from Lab29. Lab29, specializes in creating performance driven ads for Facebook/IG and other platforms, with a unique expertise in Direct Response, which is extremely effective for DTC brands. Their team of in-house content creators & editors can produce new assets, or take existing assets, to create a multitude of ad variants for testing. Their goal is to lower your acquisition cost and increase your ROAS.

All Kickfurther members will receive one FREE month of creative work, when they sign up for a trial with Lab29. Contact Lab29 today and schedule a free creative consultation.

 

The Basics of Amazon Seller Insurance

Posted on by Kaylyn Perry

As an Amazon seller, you need insurance to meet Amazon’s guidelines as well as protect your growing business.  The right insurance policies can not only help to satisfy the requirements by Amazon, but also help give you much-needed peace of mind as you continue to sell and scale your Amazon business. Which insurance policies do you actually need?

It’s important to remember that every Amazon business is different. Insurance policies that may work for a retail arbitrage seller may not work for a private label seller. Amazon businesses with multiple employees may need additional policies that sellers who run their businesses themselves don’t yet need.  To help you choose the right policy for your business, you need an experienced eCommerce insurance agent to help recommend which policies are best for your business.   

Professional Seller Account      

In order to have this type of account, you must have a one million dollar general liability policy in place that lists “Amazon.com, Inc., and its affiliates and assignees” as additional insureds. You’ll also need to provide Amazon with a certificate of insurance for your policy.

Insurance Basics to protect your ecommerce business

General Liability Insurance – Including Products Liability Coverage

General Liability Insurance is the most basic form of business insurance and is designed to protect a company’s assets and pay for financial obligations due to losses from injuries, negligence, and accidents that could occur. A General Liability and Products Liability policy can protect the business from bodily injury, property damage, legal fees, judgments and any settlements that could be awarded should you be successfully sued.  

Who needs a General Liability policy?

Easy answer is every business needs a general liability policy.  We live in a sue crazy society, and even if you think your business is low risk is it really worth not paying the small premiums associated with a policy?  Typically these annual premiums start out at less than $500 annually depending on the type of business, gross sales, and risk associated with it specifically.  That’s a lot less than the cost of a potential lawsuit, in the hundreds of thousands if not into the millions, plus the cost of hiring legal counsel, which is typically included in a general liability policy.

Products Liability is generally included along with a General Liability policy.  This coverage provides the manufacturer or seller liability in the event that one of their products was to cause bodily injury or property damage to a third party due to a defect or malfunction of the product.  This could be a product of any type, food, machine, toy, or any other good sold by the business to the public. Types of typical products liability claims include: Manufacturing or Production Flaw, Design Defect, Defective Warning or Instructions.

Not All Insurance Brokers Are Created Equal           

When insuring your livelihood, you need to work with an agent who truly understands your business. It’s also helpful to have a basic understanding of the two main types of insurance agents: independent versus captive.

An independent agent (such as WELL Insurance) is able to quote your policy with multiple companies to find the best coverage at the best price for that specific seller and risk. Captive agents only work with their own company, which limits your policy options to what is available from that insurance agency.

Different sellers have diverse needs. Depending on what products are being sold, the policy may need to be written in a very specific way. For example, if a merchant is selling a private-label item that is manufactured in China, that seller is now a manufacturer, not simply an online seller. Many Amazon merchants are unaware of this distinction and have their policy written incorrectly.  This means that the company may not have to pay the loss when a claim occurs.

Take the time to ask your agent the right questions and make sure that you are properly insured from the start.

Don’t rely on “maybe” insurance. Instead, take the time to ask your agent the right questions and make sure that you are properly insured from the start.  Ask if your insurance agent has any experience with eCommerce businesses and how long they have been writing these types of policies.  While eCommerce is fairly new in the insurance world, you should find an agent who is familiar with the industry in order to get the best possible protection for your business.

Additional Liability Policies to Consider

To protect your business from more specific types of exposures, you may need to purchase additional liability policies.  Since searching for policies can be overwhelming for many business owners, here is a breakdown of the additional policies sellers may need to consider regardless of the size or structure of your Amazon business.  It is important that sellers understand where and when additional insurance policies are necessary.  While you may not currently need a workers compensation or ocean marine policy, for example, you may need them down the road as your business continues to grow.

Ocean Marine Cargo                   

Ocean Marine Cargo is a great policy for sellers who may be importing products from overseas. Most sellers probably already purchase this coverage on a load-by-load basis directly from their shipping company. The difference in those policies and an ocean marine cargo policy is that the latter covers the inventory from the time it is loaded in the shipping container until it is on the way to the customer and everywhere in between. 

Coverage begins when the inventory is loaded into the shipping container as it makes its way to the US via air or ocean transport. This is where a typical shipping policy coverage runs out. However, the ocean marine policy will continue coverage while the products are at port, as they are being domestically transported in the US, and while they are stored in a 3PL or privately owned named warehouse. The policy also provides coverage for unnamed warehouse(s) or FBA warehouses.

Does Amazon cover your products while they are in the FBA warehouse locations? Some say they do, but we have yet to see that in writing. It might be very difficult to get a payment from Amazon should anything happen to those items.

From a premium standpoint, this coverage can also save you money. You no longer need to purchase per shipment insurance or a separate policy for inventory that is being stored in a warehouse. When you consider the costs for both of these policies, in many instances the ocean marine cargo coverage provides better protection for less money.

Business Auto

Even if a business does not own an automobile they need auto liability coverage. Ask these questions – Do you drive to the post office or UPS Store on company time?  How about the bank?  If the answer to these basic questions is yes, then that business needs to have, at minimum, coverage for Hired & Non-Owned Auto Liability, which would protect the business in the event that an accident occurred on company time.

Workers Compensation Insurance

Workers Comp is state regulated coverage that is required to help pay for any work related injury that may occur to an employee.  These policies are rated based on actual payroll figures for the business.

Umbrella/Excess Liability

A separate liability policy that provides excess liability should the business be brought into a lawsuit or facing a judgment in excess of what the general liability limits offer. Ex: If a business is facing a $1.8 million judgment because one of something they were legally liable for the General Liability policy would pay the first $1,000,000 and then the umbrella would respond to pay the additional $800,000.  If the business did not have an Umbrella over the General Liability they could be held responsible for the excess $800,000.

Cyber Liability Insurance

This policy is important for any business that uses, collects or stores any electronic information. That business could potentially be sued for data breach and other cyber-crimes.  This could include paying legal fees, judgments or settlements.  Your general liability policy may not cover these properly.  Cyber liability policies continue to evolve due to the ever changing nature of the threats. Not only do these policies pay for judgments and fees, they also help to repair the reputation of the business and or brand.  

 

This is a guest post by Matt Lovell of WELL Insurance. Well Insurance provides the expertise necessary to protect your business assets so you can focus on growing your business. They partner with the most world renowned underwriters to provide you with the best possible coverage to fit your companies growing needs.If you are looking for Ecommerce Insurance or Amazon Sellers Insurance, they are your solution. They provide fast, reliable quotes to help get your business secured as soon as possible.