How does Inventory Financing Work?

Posted on by Kaylyn Perry

When you are starting a business, you may not have all the money you need to get it off the ground. A business loan may be necessary.

Most lenders want borrowers to have a good credit score and business history that shows a steady income and a few years in business. But if you are just starting out, or if you have had financial difficulties in the past, you may not be able to qualify.

Fortunately, there are options for people who are unable to meet the qualifications of a traditional loan. One of these is inventory financing. 

What is inventory financing?

Inventory Financing is a loan used specifically to buy inventory. The inventory is used as collateral and the money must be paid back with interest. Similarly, you may have heard of inventory funding. It too is used for purchasing inventory, but it’s provided by backers. Inventory funding may be cheaper and more flexible in terms of repayment.

How does inventory financing work?

Inventory financing may be provided as a lump sum or a revolving line of credit. Backers or lenders may also pay suppliers directly. 

A revolving line of credit is a certain amount of money made available to the company. The company can borrow any amount up to the limit at any time. Interest is charged right away, and the money can be paid back immediately or in installments.

The difference between inventory financing and other types of loans, is that the money must be used for inventory. The inventory is used as collateral so if the company defaults on the loan, they can lose their inventory.

While inventory financing may not look at credit scores, lenders can consider factors like resale value, theft, loss provisions, perishability and the state of the business and inventory. This can make it difficult for some businesses to qualify.

What kind of businesses can qualify for inventory financing?

Any type of company that sells inventory can qualify for inventory financing. However, they will be more likely to be approved if they sell a popular item that has a good resale value and is not perishable. If items are stored safely, that will also be beneficial in the approval process.

Where can I obtain inventory financing?

Conventional lenders like banks do not offer inventory financing. But there are private lenders, private investors, and lending companies that provide these loans.

What are the costs associated with inventory financing?

One of the biggest disadvantages of inventory financing is that it’s expensive. Set up fees and interest rates can be high. The interest charged will depend on how risky the lender feels the investment will be, but costs can go well into the double digits. Kickfurther is up to 30% cheaper than other inventory funding options.

How much can a business borrow for inventory funding needs?

Theoretically, a business can borrow any amount up to the total liquidation value of their inventory. However, most lenders will finance only 50% to 80% of that amount.

Common uses for inventory financing 

Inventory financing can be used for any of the following purposes.

Retail: A retail store can use inventory financing to buy products to sell to consumers. This includes anything from clothes to jewelry, to housewares to toys… and the list goes on.

Wholesale: Wholesale companies deal mostly in B2B sales. They buy and sell in bulk and may need funding to purchase the products they sell.

Seasonal: Seasonal businesses have products that are in demand during certain seasons. A pool supply store is the perfect example. They may need an infusion of cash to purchase the products they will be selling in the coming months.

Are there alternatives to inventory financing?

Companies that can’t qualify for traditional loans may turn to inventory financing. But that’s not the only loan option for businesses that can’t show a strong credit score to consider. Here are some other choices.

Alternative Loans: Alternative loans work like regular loans but they are shorter term and offer higher interest rates due to the bigger risk the lender is taking.

Merchant Cash Advances: A merchant cash advance works like a credit card. The money is paid back based on your daily credit card and debit card sales so you can make payments in accordance with your budget. However, fees for this type of funding can be high.

Equipment Financing: Equipment financing works just like inventory financing only equipment is used as collateral instead of inventory. It’s a good option if your company manufactures products rather than buying and selling them.

Invoice Financing: This involves selling your unpaid invoices to a lender. The lender will buy your invoices for the amount owed minus fees. They will then collect directly from the customers.

Purchase Order Financing: This is a type of inventory financing that allows you to finance inventory associated with a specific purchase order. It is a good option for wholesalers who have large purchase orders and cannot fulfill them for lack of funds. They are easier to get approval for than inventory financing because the inventory used as collateral is guaranteed to sell.

Who can obtain inventory financing? 

While any company that sells inventory may apply for an inventory financing loan, some qualifications will apply. Lenders will be more likely to offer loans to businesses that meet the following qualifications:

Have been in business at least a year: Lenders will want to see a comprehensive sales history before approving you for a loan.

Show a sales history: In addition to showing you have been in business for a year or more, you may also need to prepare a detailed report of your sales history including turnover, profits and sales projections. The lender will want to see that your business is profitable.

Provide a detailed inventory system: Lenders will be especially particular about inventory control and product movement. You may need to provide them with updated reports on shipping, returns, accounts receivables, sales order receipts and anything that shows you are monitoring merchandise and keeping it safe.

Requirements to qualify for inventory financing 

Requirements to qualify for inventory financing can vary depending on the lender or backer. In most cases, you will need a minimum of 6-12 months in business. Unlike traditional business loans, qualifying for inventory financing is much more laxed. At Kickfurther you should sell a physical product with sales over $400,000 in the last 12 months to qualify.

How fast can I get funded?

Inventory financing tends to get funded quickly because it has a simpler application process and requires less paperwork than traditional loans. Borrowers may get financing in as little as 24 hours. At Kickfurther most deals are funded within a day, but some are funded in minutes to hours.

Inventory financing: pros and cons

Inventory financing comes with its share of pros and cons.

It’s advantageous because it gives you the money you need to buy products and start selling inventory. It does not require you to show a high credit score or provide personal collateral and funds are provided quickly.

On the downside, it can be hard to get approval depending on the nature of the goods you are selling and your credit history. It also comes with high interest rates.

How Kickfurther can help

Kickfurther can help brands that sell physical products with revenue between $400k to $15mm over the last 12 months. We connect brands to a community of eager buyers who help fund inventory on consignment. Brands can benefit from the flexibility to pay that back as they receive cash from their sales. Kickfurther is the world’s first online inventory financing platform that enables companies to access funds they are unable to acquire through traditional sources. Kickfurther has 800+ opportunities funded totaling $100mm+ and a 99% funding success rate. 

How to apply for inventory financing

At Kickfurther, you can apply for inventory funding in 4 easy steps:

#1. Create your online account

Input business information and upload documentation to get started.

#2. Get funded within minutes to hours

Once approved, our community can fund you within minutes to hours. 

#3. Control your payment schedule

Kickfurther buyers  pay your manufacturer for inventory. You payback the buyers  as inventory sells. 

#4. Complete and repeat

Once you’ve reached your goal, you can repeat the funding process to raise more money.

Conclusion

If you need funding to stock inventory, inventory funding is a viable option. It’s easier to qualify for and typically more cost effective than traditional business loans. While inventory financing may cost money, it can help grow sales while making sure your company never misses out on a sale.

Discover affordable inventory funding. . . create an online account at Kickfurther today!

Understanding Proposition-65 & What It Means for Your Business

Posted on by Kaylyn Perry

What is Prop 65?

Proposition 65 is a law that was enacted in 1986 that requires businesses to provide warnings to the residents in the state of California about potential significant exposures to certain chemicals that have been known to cause certain types of cancers, birth defects, or cause reproductive harm. The full name of the law is the Safe Drinking Water and Toxic Enforcement Act of 1986. It is often called Proposition 65, or Prop 65 for short. The idea of the law is to make sure Californians can make informed decisions about the products they purchase and if the product could potentially contain one of the 900 or more chemicals identified in the published list of chemicals that have been connected to cancer, birth defects, and reproductive harm. The law not only requires businesses to inform consumers about products that contain these chemicals, but it requires businesses to inform employees about these chemicals being present in the workplace, and for homebuilders to inform homeowners about where these chemicals exist in their homes. 

Another component of Proposition 65 is that it strictly prohibits any business in California from knowingly discharging substantial amounts of chemicals labeled on the published list into sources of drinking water. 

The types of chemicals covered under Proposition 65 include several synthetic, as well as naturally occurring chemicals, that are used in some everyday household products. Products like pesticides, foods, drugs, dyes, solvents, and many household cleaners and detergents. Also, some of the chemicals listed may not exist directly within the product, but instead, the chemicals may be used in the manufacturing or the construction of the product. They could also be a byproduct of a chemical process that takes place during the production of the product. 

At any time, you can go online to the California Office of Environmental Health Hazard Assessment website to view an up-to-date published list of all the chemicals covered under Proposition 65. Just a few examples of these chemicals include Acetochlor, Acetohydroxamic Acid, Benzotrichloride, and Polychlorinated Biphenyls. All four of these chemicals have been linked to containing some sort of cancer-causing properties. 

When a warning is issued about a product that may contain one of these harmful chemicals, a label may be printed and placed on the product packaging, or a sign may be posted and distributed at a workplace, a business, or an apartment. The warning is notifying individuals that by using a certain product or by occupying a particular space, the business is acknowledging that they may be exposing that individual to one or more of these chemicals. It is the law that the business is solely responsible to create these warnings if they believe that exposure to these chemicals is high enough to pose some sort of negative health consequence. 

Proposition 65 is administered by the Office of Environmental Health Hazard Assessment under the supervision of the California Environmental Protection Agency. The law is then enforced by the California Attorney General’s Office, and any district attorney or city attorney can enforce the law. Individuals who are acting in the best interest of the public are also allowed to enforce Proposition 65 by filing a lawsuit. If a concerned citizen becomes aware that a business is in violation of Proposition 65, they then can file a lawsuit with the office of the California Attorney’s General, a district attorney, a consumer advocacy group, or with a private law firm 

If a business is in violation of Proposition 65, the maximum penalty is a fine of up to $2,500 per violation, per day they violate the law. 

What is the impact of Prop 65 on business owners?

The most recent regulations are designed to help shift the burden of providing exposure warnings away from retail sellers and to the manufacturers and distributors of products. A manufacturer and distributor of a product that falls under Proposition 65 must either label the product themselves or must provide a written notice to the retail seller containing all the exact product information and a listing of the Prop 65 chemicals included with the product.

Existing and Updated Regulations

The existing regulations address basic exposure scenarios. There are three main exposure scenarios that the regulations address. They are consumer product exposures, environmental exposures, and occupational exposures.

  • Consumer product exposures: exposures associated with the intended use of a consumer product.
  • Environmental exposures:  exposures that are community-wide and from an industrial source, or limited exposures in a confined space. 
  • Occupational exposures: exposures to Prop 65 chemicals that exist in the workplace.

Previously the regulations only required a general warning to be placed on the package or in the affected area, however, new regulations require the warning to contain more specific information. The new warnings must now contain the identification of at least one of the listed chemicals and its risk area, cancer, birth defects, etc, and it must also say how the exposure can occur as well as provide a link to a State webpage containing additional Proposition 65 information. In addition, the warning must include the State-regulated Warning Symbol at the start of the warning sign. 

In addition to the previous three exposure scenarios, additional exposure scenarios have been added that need to comply with Proposition 65. Those exposure scenarios include alcoholic beverage exposures warnings, food and non-alcoholic beverage exposures, enclosed parking facility and engine exhaust exposures, petroleum product exposures, service station, and repair center exposures, designated smoking area exposures, and hotel exposures. 

Who should comply with Prop 65?

All entities who are responsible for creating any of the exposure scenarios outlined in the latest regulations of Proposition 65 need to comply with law or face penalties enforced by the California Attorney General’s Office. 

What happens if a business does not comply with Prop 65?

If any business is in violation of Proposition 65, the maximum penalty is a fine of up to $2,500 per violation, per day they are in violation of the law. 

Does Prop 65 apply to business-to-business sales?

Yes, Prop 65 applies to any business that contains 10 or more employees that are involved in the supply chain of any product sold in the State of California. This includes manufacturers, distributors, and retailers. 

Is Prop 65 only for California business owners?

No, Prop 65 is not only for California business owners. It is for any business that wishes to sell a product in the state of California. Meaning, if your business manufactures a product in Florida, but you want to ship the product to California for retail sale, you must then make sure you comply with all the laws and regulations covered under Proposition 65. 

Conclusion

If you sell products in the state of California, you should be aware of Prop 65. Consumers must be warned about chemicals that could cause cancer, birth defects, or other reproductive harm. If a business fails to comply, there could be legal repercussions. When you are in the business of selling products and services, you assume a fair amount of liability. It’s critical that you abide by laws and stay compliant. While this may cost more money, failing to do so may eventually cost a lot more money. If you need inventory financing to produce higher quality or more compliant products, visit Kickfurther.

Dropshipping vs Owning Inventory: Which Option Is Best for You?

Posted on by Kaylyn Perry

Online retail is an ever-changing industry. In addition to being extremely competitive, retail entails a lot of tedious work to maintain the high level of product quality that you want your customers to enjoy. Fortunately, today’s business landscape offers a myriad of opportunities for buyers to source new products. Regardless of the product sourcing strategy you choose, it should ultimately lead you to find great products at reasonable prices.

If you’re working towards being a successful online retailer, one of the best product sourcing methods for you is dropshipping. In this article, we will discuss everything there is to know about dropshipping and compare it to the traditional method of owning your inventory. 

What is dropshipping?

Dropshipping is a fulfillment method where businesses, like retailers, are not required to keep the products that it sells in-house. Similar to inventory consignment, this type of product sourcing method allows businesses to list products that they want to sell without having to manage the inventory themselves.

Instead of purchasing inventory from a third-party supplier and then storing them in a storage facility, businesses can use dropshipping to sell products and pay their suppliers only after a customer confirms a purchase. Let’s take a closer look at how dropshipping works.

How does dropshipping work?

Perhaps the main thing that differentiates dropshipping from other inventory sourcing models is that it eliminates the need to implement costly inventory management measures. A dropshipping arrangement usually involves three main parties, you (the business), a third-party supplier, and a customer. The process can be summed up like this:

  • A customer purchases an item from your website
  • The order is automatically forwarded to your supplier
  • Once the order has been received, your supplier takes care of the logistics and ships the product directly to your customer under your brand

What is the difference between dropshipping and owning your own inventory?

Obviously, the biggest difference between dropshipping and owning your inventory is inventory costs. With dropshipping, you don’t have to think about all the costs associated with holding inventory such as holding costs, labor costs, as well as those associated with machinery and equipment. If you’re deciding which sourcing method to use for your business, here are a few things to consider:

  • What kind of products are you planning to sell?
    • At the end of the day, your sourcing method depends on the type of products that you are planning to sell. If you’re going to sell products with custom specifications that require the utmost attention to detail, carrying your own inventory might be the best option for you.
  • How much capital do you have?
    • It’s no secret that owning and storing your products requires a hefty amount of capital. With dropshipping, there is virtually no inventory to hold. It also reduces the amount of capital that a new business needs before opening up.

Pro tip: Whether you’re choosing dropshipping, owning your stock, or consignment inventory, you need the necessary capital to hit the ground running. If you need an alternative financing option to fund your business venture, create a business account today at kickfurther.com.

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. We connect brands to a community of eager buyers who help fund the inventory on consignment and give brands the flexibility to pay that back as they receive cash from their sales. This alleviates the cash-flow pinch that lenders can cause without customized repayment schedules, allowing your brand to scale quickly without impeding your ability to maintain inventory or financial flexibility. Here’s how it works:

  • Kickfurther pays your manufacturer in advance to produce inventory.
  • Once sales periods have been established, businesses will only pay back what they owe only after they start selling their inventory.
  • At the end of each sales period, businesses are required to submit sales reports to Kickfurther.
  • Businesses only pay for what they have sold during a specific sales period.

What are the pros and cons of dropshipping?

Like other types of sourcing methods, dropshipping presents a myriad of pros and cons for various businesses. If you’re seriously considering starting a dropshipping business, here’s a quick look at some of its advantages and disadvantages.

Dropshipping Pros

  • Easy setup process – Most notably, dropshipping allows just about anyone to establish an online business due to its lower capital investment and easy setup process. As a business owner, you won’t have to go through the painstaking task of finding a warehouse and employing staff to manage your products.
  • Inexpensive to start – Inventory is the lifeblood of all product-oriented businesses. However, it’s also the most expensive to procure and manage. When it comes to dropshipping, businesses do not need upfront inventory costs by only paying for the inventory that they have actually sold.
  • No warehousing costs – As previously mentioned, dropshipping enables businesses to meet customer demand without the burden of managing inventory and warehouse costs.
  • Improved cash flow – Since your cash isn’t tied up with all the costs associated with inventory, you can now focus on building your brand and expanding your customer base. After all, wouldn’t it be better to focus on scaling and growing your business without worrying about things like inventory levels and logistics?

Dropshipping Cons

  • Highly competitive – Due to the many benefits that dropshipping provides, it can’t be helped that more and more businesses are implementing the dropshipping model. This has resulted in a crowded industry – making it an increasingly competitive niche.
  • Low-profit margins – Since you’re competing with more businesses, chances are that you could face relatively low margins depending on the type of product that you’re selling as well as the industry that you’re in.
  • Logistics depend on your supplier’s capabilities – While keeping inventory management processes out of your hands can be a good thing, the tradeoff is that you are highly reliant on your supplier’s logistical capabilities. In the event that your supplier makes a mistake, customer complaints will be directed to your brand and not to your supplier.
  • Product quality can be difficult to monitor – Put simply, you don’t have control over your supply chain when using the dropshipping method. To avoid these issues, you may have to implement a clear communication method that lets your suppliers know whenever there’s an issue with a particular product.

Conclusion: Which option is right for your business?

There is no definitive way to choose a sourcing method for your business. While it’s true that dropshipping can be a lucrative undertaking, business owners would still need to weigh different factors before taking the plunge.

Similar to other business models, dropshipping presents a host of challenges that business owners have to be ready for. It is incredibly important that those seriously considering dropshipping as their main sourcing method need to conduct an ample amount of research to make sure that their order fulfillment method works well with their business model. Remember, every business is different, there is no all-encompassing sourcing method out there that will always keep you ahead of the competition.

Import Tax and Duty Mistakes to Avoid: What You Need to Know

Posted on by Kaylyn Perry

If you are considering international business, import tax and duty tax may be unavoidable. You will want to make sure you fully understand the terms and regulations to avoid any penalties. Keep reading to learn more about import duties and taxes.

Top Import Tax and Duty Mistakes to Avoid

The global supply chain can be complex and difficult to navigate at times. The world may be a smaller place due to the power of the internet and the capabilities of the world’s shipping and logistics industries, but it doesn’t mean there is any less paperwork or regulations to adhere to. On top of it, each country can have its own rules and regulations for exporting to other countries, and the US can have different rules and regulations for importing from certain countries. 

Depending on the country of origin that you are receiving your inventory shipments from, you may have additional requirements to fulfill for one country when compared to importing from a different country. For example, importing a bulk shipment from Australia may be a completely different process than receiving the same bulk shipment from Kazakhstan. It is a mistake to assume that import requirements are uniform for every country.  That is not the only mistake you can commit when it comes to imports. Here is a breakdown of some of the most common import mistakes that small businesses make when receiving shipments from abroad. 

Lack of commercial invoices: Every shipment that enters the United States and that passes through US Customs and Border Protection must contain commercial invoices and all related billing paperwork. It is the responsibility of the importer, not the exporter, to ensure all the proper documentation is included with the shipment and that all the paperwork is filled out completely and accurately. If the commercial invoices are missing, or something is incomplete on the form itself, your shipment could be rejected and returned to the country of origin. At the very least, it could cause unnecessary delays and cause you a headache to try to retrieve your shipment that is held up at customs. 

The purpose of the commercial invoice is to help the CBP determine the shipment’s admissibility, classification, and valuation of the merchandise. If these three characteristics cannot be easily determined by the CPB, then your shipment will most likely be held until further information is received. This is the type of information that every commercial invoice should contain.

  • Full names of both the buyer and the seller.
  • Full names of shippers and receivers for consigned items. 
  • A detailed description of the contents of the shipment and include the country of origin.
  • Quantities, weights, and measurements of all merchandise. 
  • Purchase and sell prices for all items.
  • Include any rebate, drawback, or bounty information, if applicable. 
  • Define the currency being used for the purchase price.
  • If the original invoice is in a different language, make sure to include a copy that is in English. 

There may be some additional information that a commercial invoice may require, depending on the country of origin. However, above is the absolute minimum necessities that every commercial invoice prepared for international shipping must include. 

  • Missing country of origin: Make sure you do not forget to label the country of origin for the merchandise you are importing. You will need the address and country of origin of where the items came from along with where the imports were purchased from if the country of origin is different.
  • Forgetting to include proper incoterms: The internationally accepted definitions and rules of interpretation for most commercial transactions are called the incoterms. They must be included with your shipment to ensure proper commercial definitions for your imports. 
  • Using incorrect duty rate: The type of merchandise you are importing determines the duty rate. Make sure you use the correct duty rate or your shipment will be held up until it can be correctly classified and the proper duty rate can be calculated. to determine which tariff duty you are required to pay for your merchandise type, you should review the Harmonized Tariff Schedule and find the section that most closely describes your product type.
  • Incomplete merchandise details: An incredibly common mistake is leaving out merchandise details that the CPB needs to know in order to accept your shipment in the US. These details may contain the quantity, the merchandise type, materials, country of origin, etc. 
  • Using dated tax information: Not only will you want to ensure that you use the correct duty rate, but you will also want to make sure your information is the most up-to-date information available. 
  • Missing paperwork: There are four main items of paperwork that must accompany all import shipments into the United States. You must have a commercial invoice with all the proper information, a packing list detailing everything in the shipment, a bill of lading that shows the goods in the form of a receipt, and an arrival notice from a US agent. If any of these four documents are missing from your shipment, there is a solid chance that your shipment will be delayed. 
  • Doing it on your own: Using a customs broker and paying their fee may be well worth the money to ensure that your shipment is allowed to enter the country, and that you are allowed to receive the shipment without delay. A customs broker will act on your behalf to ensure that the import process is completed as smoothly as possible. They will also be the point of contact if the CPB should have any questions or issues with your shipment. Custom brokers are professionals who can take care of the entire import process so you can focus on different aspects of running your business. 

Although other mistakes can be made that result in your shipment being held by customs, these are the most common mistakes that businesses make when importing their merchandise from overseas. 

How much do import taxes cost?

Import duty and taxes are owed whenever you are importing something into the United States, whether you are a business or an individual. The import duty and taxes are calculated based on the value of the imported goods. In addition to duty and tax, you may be required to pay merchandise processing fees, harbor maintenance fees, and sometimes a sales tax or federal excise tax. 

Duty rates can be expressed as a percentage of the overall value of a shipment or by a specific cost per unit.  The average duty rate is 5.63%, with some duty rates being free and some reaching as high as 37.5%, depending on the type of merchandise. 

Preferential duty rates apply to a number of countries to whom the United States has Free Trade Agreements with. If this is the case for your shipment, a separate preferential duty will then be calculated and paid to receive your merchandise. 

If the value of the merchandise is below $800, then often a duty will not be charged on the shipment.  

How Kickfurther can help

There are several reasons you may import products. One of these reasons may be to secure inventory at a lesser cost. Inventory can be expensive, regardless of how it is obtained. As a result, most businesses need some form of inventory financing. If you have applied or shopped from inventory financing, you may know that it can be hard to qualify for and expensive. This is where Kickfurther can help. 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. We connect brands to a community of eager buyers who help fund the inventory on consignment and give brands the flexibility to pay that back as they receive cash from their sales. This alleviates the cash-flow pinch that lenders can cause without customized repayment schedules, allowing your brand to scale quickly without impeding your ability to maintain inventory or financial flexibility.

How to Manage Your Amazon Inventory Health

Posted on by Kaylyn Perry

Amazon recently introduced the Manage Inventory Health page to help sellers manage excess and aged inventory. You’ll need to be logged into your Seller Central account to access this feature.

Optimizing your FBA inventory can help you reduce costs and maximize your profitability. Let’s explore the benefits of using recommendations from Manage Inventory Health alongside FBA inventory management best practices.

Manage Inventory Health

You can customize the metrics you see on your Manage Inventory Health page with Table preferences. The available metrics are sales, fees, pricing, and excess and aged inventory. There are several filters that can be used to group products that have similar inventory characteristics. The search feature makes it easy to find products with similarities, such as “blue” or “small.” You can sort, filter, and take recommended actions on products directly from Manage Inventory Health.

Amazon recommends several possible actions depending on your inventory. You might be advised to improve keywords, create a Sponsored Products ad, lower the price, create a removal order, or take another action to improve your FBA inventory health.

screenshot of the FBA inventory management dashboard

The purpose of this feature is to help you avoid aged inventory. Aging inventory increases your FBA storage fees and can affect how much new inventory you’re able to send to the fulfillment centers.

How to Use Manage Inventory Health

Keeping your inventory in stock without overstocking is essential to running your Amazon business effectively. Storing inventory costs money, especially if you’re racking up long-term storage fees at FBA. You may also find yourself subject to restock limits, particularly during busy seasons.

One way to prevent storage limits from impacting your business is to sell or remove excess inventory. You can use the Storage volume metric on the Manage Inventory Health page to sort your largest-volume products, then filter by Storage type to identify the items with the most excess units and/or lowest sell-through rate. After finding these products, you can optimize your inventory by changing the price, adjusting your promotional strategy, or removing the items from FBA.

Amazon recommends having enough inventory at FBA for 30 to 60 days of anticipated sales. Your goal is to have at least a 2.0 or higher sell-through rate on your products. Amazon includes sell-through rate when calculating your Inventory Performance Index (IPI) score. If your IPI is below the current threshold, you may be subject to future storage limitations.

You can create a removal or FBA Liquidations order by checking the box next to the product you’d like to remove. Open the drop-down menu and choose Create removal order to enter your inventory into the workflow for removal or liquidation. You may remove or liquidate up to 50 items at a time.

Tips for Managing FBA Inventory

In addition to managing aging and excess inventory, you’ll want to follow other best practices to manage your inventory effectively and maintain your profits. Happily, these same practices can help you maintain a good IPI score and avoid storage limitations. Here’s what Amazon looks for when determining your IPI:

  • excess inventory rate
  • sell-through rate
  • stranded inventory rate
  • in-stock inventory

In other words, Amazon wants to see that you are selling inventory quickly (or at least steadily) and not stocking excess inventory at the fulfillment centers. Since stranded inventory cannot be sold on Amazon, it’s in your best interest as well as Amazon’s for you to resolve any stranded inventory issues as soon as you can. You also need to keep enough inventory in stock at FBA to fulfill orders without the risk of running out of stock.

Finding the right inventory balance is challenging. It also changes frequently depending on seasonal trends, holidays, supply chain delays for similar products (which could drive up demand for your item), and much more.

Using a dedicated FBA inventory management tool like RestockPro by eComEngine can help you keep your business running smoothly. You can manage suppliers, create purchase orders, track inbound shipments, build kits, and much more. Not only that, but you’ll also get customized recommendations for what to restock and when based on your inventory and business goals.

Sellers who use RestockPro for FBA inventory management along with Kickfurther’s inventory funding grow faster. We’ve partnered to make it easier than ever for you to request inventory funding. See how RestockPro simplifies Amazon inventory management.

a casual headshot of Becky Trowbridge from eComEngineBecky Trowbridge is the Digital Marketing Manager at eComEngine. Her mission is to empower Amazon sellers with the information they need to be successful in a competitive market. When she’s not creating content, she enjoys spending time outdoors, trying new recipes, and reading.

 

How to host an Instagram giveaway for your ecommerce business

Posted on by Kaylyn Perry

Instagram is an effective way to connect and reach existing and new customers. However, marketing on Instagram is not as simple as creating content and posting it. Giveaways, influencers, and paid Instagram ads are just a few ways to market on Instagram. Instagram giveaways can help companies reach customers, accumulate followers, and make sales, all while giving back to their fan base. So what are Instagram giveaway rules? Are there Instagram giveaway templates? Keep reading to learn how to do a giveaway on Instagram. 

Top reasons hosting a giveaway on Instagram can help your eCommerce business

Hosting an Instagram giveaway for your eCommerce business and your followers may be a surefire way to achieve some rapid growth for your business without spending a fortune. Traditional methods of marketing and advertising sometimes require larger budgets, a sizable staff, and lots of time spent planning and implementing a traditional campaign. A well-executed and simple Instagram giveaway can reach a much wider audience than a traditional marketing campaign and at a fraction of the cost.  Additionally, an Instagram giveaway can increase the number of followers your business page has simply by making it a requirement to enter the giveaway. Other requirements to be part of the Instagram contest may include liking a post, commenting on a post, and/or sharing a post. For Instagram users who are genuinely interested in participating in the giveaway, a simple like or share, or becoming a follower of the brand page is an easy trade-off to gain entry into the contest. It is through this trade-off that a business can increase its followers, increase its brand awareness, and potentially increase sales. People love free stuff, and if the giveaway is enticing enough, a business could attract some unprecedented attention. 

Here is a quick list of some of the reasons you may want to consider running an Instagram giveaway for your eCommerce business.

  • Increase the number of Instagram followers your business has.
  • Increase the number of likes a post accumulates and improve engagement with your followers.
  • Generate more traffic to your business website.
  • Grow your email subscriber list.
  • Promote a specific product or service.
  • Reward your most loyal followers and brand advocates. 

These are just some of the benefits that an Instagram giveaway can bring to your eCommerce business. If you are looking for something else, then you can shape the requirements of your content to fit those goals. The main idea is to have some predefined goals you are hoping to achieve before creating the giveaway. 

Examples of Instagram giveaways

However you would like to run your Instagram giveaway is up to you and your content creator. Aside from deciding what the prize of the giveaway is going to be and what the goals are that you are hoping to achieve with the contest, you need to decide how you are going to frame the giveaway to make it relevant. Relevant Instagram giveaways tend to have much more success than random ones. Here are a few examples of how some companies were able to make a giveaway successful and effective by making it relevant. 

  • Seasonal/Holiday giveaway: One of the easiest ways to tie in an Instagram giveaway to make it relevant is to make it about a particular season. Christmas, Valentine’s Day, Thanksgiving, Saint Patrick’s Day, 4th of July, Memorial Day, etc. By centering a contest around a holiday or a particular season, you can easily make any contest relevant.
  • Pick one giveaway: By creating a post with multiple products or multiple versions of the same product, you can encourage followers to vote for their favorite. By commenting on their favorite product and sharing the post, for example, you can bring awareness to the different products while creating a buzz on Instagram. A winner then is selected and the prize can be the product they chose as their favorite. 
  • Pick your prize giveaway: A smart way to encourage people to go to your business website and view all the different products or versions of products that you offer is to create a “pick your prize” giveaway. By requiring people to follow your business Instagram account, like a post, repost, and/or tag a friend in the comment section, you can then offer a choice of any product as a prize. Doing so will drive traffic to your website as participants browse your entire selection to dream about which prize they would choose if they won. 
  • Instagram influencer giveaway: By creating a giveaway in tandem with an Instagram influencer you can reach a large audience. Even better is the fact that the audience that is being engaged already sees the influencer as an authority on the subject and an almost instant trust and bond can be made between the brand and the influencer’s followers. 
  • Milestone giveaway: Is your business Instagram page a mere 400 followers away from reaching a milestone like 10,000 followers? You can create a contest that encourages people to follow your business page to help reach a specific milestone. Once the milestone is reached, then 5 lucky winners could be picked to win an exclusive merchandise box or cash prize. 

There are hundreds if not thousands of ways that you could develop an Instagram giveaway to promote your brand, increase the number of followers your business page has, and drive traffic to your website. For the most part, you are only limited by your budget and your imagination. 

How to host an Instagram giveaway for your ecommerce business

Creating an Instagram giveaway is an excellent way to increase brand awareness, drive traffic to your business website, promote a product, generate new leads, increase engagement and the number of followers your business Instagram account has, and boost sales. This all can be achieved with a pretty small investment. However, before you launch your contest, there are a few things you may need to be aware of in order to run a smooth and successful Instagram contest. 

  • Set goals: Having clearly defined goals before you create an Instagram giveaway is critical. Do you want to increase the sales of a new product? Do you want to drive more traffic to your website? You can set any kind of goal that you would like, however, the main thing is that you have one.
  • Know your intended audience: The more that you know about your audience the better. By understanding which target demographics you are going after, you can better shape the content and choose the prize to cater to the interests and curiosities of your intended audience.
  • Choose a contest type: There is a magnitude of contest ideas out there that have proven successful for other brands and companies in the past. We discussed some contest ideas earlier including season/holiday giveaways, pick one or pick your prize giveaways, Instagram influencer giveaways, and milestone giveaways. Other contest types include hashtag contests, best photo contests, referral contests, and photo caption contests. Whatever you choose, make sure the contest type is relevant and that it is attractive to your target demographic.
  • Set the contest rules: Whatever contest type you choose, you will need to make sure the contest rules are specific and precise. Who is eligible for the contest? Which entries are allowed and which ones are not? How does someone enter the contest? How is and when will the winner be chosen? These are the details that are critical for a smooth and successful Instagram contest. Any ambiguity or confusion can have the contest backfire and leave followers with a bad taste in their mouths.
  • Choose the proper prize: Choosing the proper prize is essential. You want to choose a prize that incentivizes the goals that you have laid out before launching the contest. You want a prize that is large enough to attract attention, but nothing that puts a strain on your business finances. You also want to choose a prize that will entice your target audience and demographic the most.
  • Track and measure results: The last step is properly tracking and measuring the response to your Instagram giveaway. Doing so can help you learn what worked and what could be done better for a contest in the future. Also, you may want a way to quantify the contest’s impact to justify the expense of the chosen prize. 

These are the most basic steps to creating your very own Instagram giveaway for your eCommerce business. There are many other things you may want to consider before creating your ideal contest, however, the most important thing to remember is that you have clear and precise rules for the contest.

About Kickfurther

As you uncover ways to effectively market your business, you should see sales start to explode. In some cases, the sales demand may increase quicker than expected. Always be one step ahead. Securing inventory financing can ensure that you have plenty of inventory available, thus ensuring that you never miss a sale due to a lack of products. As an eCommerce or small business, you may struggle to find inventory financing. Especially inventory financing that is affordable. 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. We connect brands to a community of eager buyers who help fund the inventory on consignment and give brands the flexibility to pay that back as they receive cash from their sales. This alleviates the cash-flow pinch that lenders can cause without customized repayment schedules, allowing your brand to scale quickly without impeding your ability to maintain inventory or financial flexibility.

Boost inventory levels and grow sales. . . secure inventory financing today!