How to Nail Customer Service in 2021

Posted on by Kaylyn Perry

Today, consumers and brands have a radically different relationship than they did just twenty years ago. This is mainly due to the increased emphasis on customer experience.

Although the pandemic had a negative effect on a number of industries, from the look of things, ecommerce is doing just fine. In fact, since the outbreak has started, the number of online retail stores has actually increased.

Depending on how you look at it, this is both a good and bad thing.

With so many competitors, keeping your customers around should be a top priority. The best way to keep your customers satisfied and loyal? Through good customer service.

In this article, we’re going to discuss:

  • What customer experience really is and why you need to pay it so much attention
  • Things that cause bad customer experiences and how to stop doing them 
  • How to keep the people 100% satisfied with 10 easy-to-follow tips

By the end of this guide, you’ll know just how important your customers are, why you need to keep them, and how to actually keep them.

What’s Customer Experience and Why Is It So Important?

A few years ago, Econsultancy polled over 2,000 marketers across several industries. They said that customer service is their main tool for differentiating their business from the competition.

Your services, products, and offerings undoubtedly play a large role in your success. However, your relationship with your customers may play an even bigger role.

Customer service – also known as CX among marketers – is the customers’ perspective of their experience with your business. If you manage to improve the experience consumers have with your ecommerce business, you can also improve your bottom line.

Positive customer experiences will be reflected in your…

  • Retention rates
  • Satisfaction rates
  • Sales numbers
  • Overall revenue

Strong customer service skills are especially important for businesses that have a financial incentive to retain their customers and keep them happy. This incentive has risen across many industries and niches.

Customer experience is now a strong revenue driver when you consider that…

  • 3 out of 10 customers would look for another business after a single bad experience
  • 5 out of 10 will not make a purchase again after a bad customer experience
  • 7 out of 10 consumers will spend more on a business with good customer service

Despite all of these numbers, things don’t always go according to plan. Even with good intentions, some businesses end up leaving their customers with a bad taste in their mouths.

What Causes Bad Customer Experiences?

Bad customer experience comes in many shapes and sizes. But there are some recurring elements that leave customers feeling completely frustrated. Research from Hotjar revealed that the five things that have the most damaging effect on customer experience.

Here they are:

  • Long waits and slow response times: If your customers are left waiting for your response for too long, they’ll probably go to another online store.
  • Falling to understand customer needs: A lack of understanding of your customers’ questions will result in poor customer experience.
  • Unresolved issues and unanswered questions: Failing to answer an inquiry won’t help you leave a good impression and will leave your customer dissatisfied.
  • Too much automation and a lack of human touch: Although AI can help you with many tasks, it can’t possibly answer all of the questions your customers have.
  • Lack of customer service personalization: Sending out generic responses to customer inquiries only shows that you don’t really care about your customers.

10 Customer Service Tips That’ll Help Your Business

While we do recognize the fact that every business is different, there are certain mistakes most ecommerce businesses make. Here are 10 things you can do to avoid making those mistakes and your customers satisfied…

1. Set the Right KPIs for Your Agents Representatives

Statistics Dashboard

Companies that are not measuring the success of their customer service don’t have an idea of how good or bad their reps are. If you want to get serious about customer service, you need to set clear KPIs and track them.

Here are a few KPIs that should be in your next CX report:

  • Tickets created, replied, closed
  • Messages received, sent
  • Resolution time
  • Conversion rate
  • Total sales from support

Besides the KPIs above, you should also measure your employee engagement to make sure that your employees are satisfied with their job. That will help you lessen the workload of some employees or give them different tasks to keep them motivated.

2. Build a User-Friendly Customer Help Center

When customers come across a problem, they won’t reach out to you right away. In fact, 81% of customers will try to solve the problem all on their own, before talking to a customer service rep.

How can you help your customers? You need to build a good help center that will help your customers find what they’re looking for.

Here’s what you can do:

  • Keep your visitors’ navigation options at a minimum
  • Have a clearly-visible search bar at the top of every page
  • Prominent CTA to contact your CX or Sales team
  • An FAQ section that answers all of their questions

3. Always Remember Customer’s First Name

screenshot of an automated customer support email

Every customer you have wants to feel important. They want to know that they’re a priority for your business. One of the best ways to make customers feel important is through personalization. Unfortunately, many companies fail at this.

Let’s take live customer service reps for example. Most of them don’t do as much as remember customers’ names. Only one in five customer service agents will remember a customer’s name, which is unacceptable.

Addressing your customer by name in every message you send can make them feel special. Using a help-desk integrated with your store can also help you by avoiding asking your customer for the information you already have in your database.

4. Try to Respond to Complaints Immediately 

First Response Time – or FRT for short – is a metric that refers to the time your customers spend waiting with a question or a problem before being attended to. As you’d expect, having low FRT results in better customer satisfaction rates.

That means you should answer customer inquiries right away.

No matter what they have a question about – your products, stock, or website – try to answer it in a timely manner. How much time you have to respond?

That depends on the channel:

5. Only Use Positive/Professional Language 

Sometimes, it’s not about what you have to say, it’s about how you’re saying it. This rings especially true for customer service. You need to make sure that you sound levelheaded, calm, and calculated whenever you’re in contact with a customer.

If you’re delivering bad news, there’s no way to sugarcoat it. You need to be direct and professional about it. At the same time, you should also try to find a way to solve the problem.

For instance, if a customer has ordered something that was out-of-stock, an automated email telling them that you don’t have the product right now won’t cut it. You should tell the customer when you expect it to be available or perhaps offer some other products instead.

It’s best to have a written procedure for these situations, so your customer support agents know how to deal with them, without having to worry too much.

6. Be Proactive Instead of Reactive 

By its nature, customer service is a reactive job. When your customers encounter a problem they come to your customer service reps for a solution.

However, that doesn’t mean that you can’t approach certain problems proactively.

Case in point: shipping delays. In the past couple of months, eCommerce shipments have increased drastically. According to some information, there have been 47% more shipments since the outbreak started.

With such an increase, shipment delays are bound to happen.

To keep your customers in the loop, you can send out daily emails about the weather, transport, and other factors that could potentially cause setbacks. That will set customer expectations right and prepare them for any possible delays.

7. Be as Clear as Possible About Your Policies 

More often than not, customers are worried about the fine print. As a matter of fact, nearly 7 out of 10 eCommerce customers want to review the company’s return policy before making a purchase.

Sloppily-written policies will turn off a lot of customers. Every policy on your website needs to be clearly written so your users can easily find the things they’re looking for.

Our policy generator can help you make things easy to read. You just need to enter your email and policy model, and you’ll have your policy written in a matter of seconds.

8. Use Automation (But Don’t Overuse It)

Automate answers to common questions like “Where is my order?”

It’s 2021 and everyone is using automation. Not only will it help you concentrate on aspects of work that really require your attention, automating certain tasks can help you lower FRT, churn rates, and increase customer satisfaction.

For example, you can automate your email response so that if a customer asks a question after business hours (such as, “where is my order?”), then you can still answer them.

However, you should make sure not to rely on automation too much.

Automation should work in alliance with customer service reps. No matter how good the system is, it simply can’t have answers to all of your customers’ questions.

9. Don’t Forget About Community Engagement

For some, a community engagement strategy consists of asking customers to like their page on Facebook, follow their business on Twitter, and not much else. Having thousands of followers and likes is a good look for your business, sure.

But you can’t let those followers go to waste.

Here’s what you need to do: engage your followers and get them talking about the experience with your brand. Then, ask them for some feedback about your business, operations, and employees. You can then use that information to tweak your business.

Here are a few questions you should ask yourself before building a community:

  • What do you plan on doing with the community? 
  • Are you doing everything you can to engage the members?
  • What type of information can you get from the members?

10. Actively Collect Customer Feedback 

Speaking of gathering feedback, let’s say a few words about customer surveys. Although they provide a great way to get feedback, they can be annoying for some customers. People simply don’t like to log into a portal to answer a few questions.

That’s why you should embed your surveys into emails and send them out directly to your customers.

Here’s how to use Gorgias to do just that…

Our “Customer Satisfaction Survey” feature can help you find out how well your customer support reps are doing their work.

These surveys can be automatically sent out every time a customer has an interaction with one of your service reps.

Start Providing Efficient Customer Service Today!

The bottom line is this: an eCommerce business that doesn’t pay too much attention to customer service will probably struggle in 2021.

Following the 10 tips above will allow you to improve your retention rates, get better customer reviews, and increase your bottom line.

This is a guest post from Gorgias. Gorgias is the top rated ecommerce help desk and they work with 7,000+ brands like Steve Madden, Timbuk2, and Dr. Squatch. They tightly integrate with Shopify, BigCommerce, & Magento2 (and 60+ other apps like Klaviyo, Yotpo and Attentive). They help merchants combine all their customer communication channels like email, social media, live chat & SMS in one platform, and automate 15-20% of their responses and Instagram DMs are now live. New customers will receive two months free at Gorgias exclusively through Kickfurther.

How Inventory Financing Can Help Grow Your Amazon Business

Posted on by Kaylyn Perry

Whether you’re a startup, a seasonal business, or an Amazon eCommerce store, leveraging your inventory is a great way to acquire additional funding. For product-oriented businesses, it’s important to make sure that you have access to extra capital to be able to ramp up production in case you experience a sudden surge in demand. But when cash flow is tight and tied up in inventory, how can you seize significant business opportunities?

The good news is that there are a plethora of financing options out there that enable businesses to secure enough funding and meet customer demand. One such financing option is inventory financing.

What is inventory financing?

As a business owner, inventory financing provides you with another channel to obtain additional cash for inventory purchases without having to reallocate funds from other aspects of your operation. From production to shipping and logistics, an extra injection of cash means businesses will be able to produce more goods without compromising the quality of their products. Through inventory financing, businesses can purchase the inventory that they need and scale their growth to accommodate new markets and explore new channels. The same goes for Amazon eCommerce businesses.

What are the different types of inventory financing?

As mentioned above, there are several financing options that businesses can use to ensure that their inventory is in tip-top shape. When it comes to inventory financing, there are two main types to consider: term loans and lines of credit.

  • Inventory loan – An inventory loan, or simply a term loan, is a financial product that is based on the appraised value of your inventory. Just like a regular loan, an inventory loan provides businesses with a set amount and is paid back over a fixed repayment term. However, it’s important to note that you will never get 100% of the appraised value of your inventory. Rather, expect to receive at least 50%.
  • Inventory line of credit – As opposed to an inventory loan, an inventory line of credit can provide your business with extra cash on an ongoing basis. Similar to a business credit card, an inventory line of credit is a revolving line of funding that you can access as you see fit to keep your shelves stocked. This form of short-term financing is a great way for businesses to purchase the inventory they need, when they need it.

At the end of the day, there’s no one-size-fits-all approach when choosing an inventory financing option. Regardless of the type of financing you choose, you need to maximize it through the use of an Amazon inventory management strategy.

Inventory Financing Loans: Here’s How to Grow Your Amazon Business

Growing your business is an overwhelming task – more so without the right amount of capital. When paired with a great inventory management strategy, inventory financing can help your business reach new heights. More often than not, inventory financing is used by small to medium-sized businesses that have exhausted other efforts to secure traditional financing products.

Retailers, wholesalers, seasonal businesses, and eCommerce businesses (such as Amazon businesses) apply for inventory financing loans to purchase a significant amount of goods for resale. This cash injection also gives businesses an opportunity to save money by taking advantage of bulk discounts.

This kind of financing is beneficial for companies that need to pay their supplier right away without waiting for their products to sell. It can also help businesses expand their product lines and keep their bestsellers on hand – increasing customer satisfaction.

How can inventory financing help grow your Amazon business?

Growing an Amazon business involves driving traffic to your online store, expanding your reach, and securing enough financing to sustain your business operations. With inventory financing, you can purchase the inventory you need without sacrificing growth opportunities that would lead to more sales. If you’re wondering about the other ways that inventory financing can help grow your business, we compiled some of them below. Read on to find out more!

  • Meet demand during busy sales seasons
    • If your business is running low on inventory during busy sales seasons, then it’s important to have accessible financing options to make sure you meet customer demand. Inventory financing can help you break out of your cash flow woes by equipping you with enough cash to purchase additional inventory for your Amazon store.
  • Leverage inventory to acquire additional financing
    • Compared to other traditional loans, one of the greatest things about inventory financing is that it doesn’t require personal and business assets to be pledged as collateral. This means that you won’t have to put up expensive assets to secure an inventory financing loan. Most Amazon businesses would benefit from this type of financing as their sourcing methods differ from one business to another.
  • Allows businesses to invest in other growth area
    • Perhaps the most obvious advantage of inventory financing is that it unlocks the much-needed cash that’s usually tied up to inventory. Since you don’t have to reallocate funds from other aspects of your business, you now have extra working capital to reinvest in other growth areas as well as expand your product lines.
  • Improves cash flow during slower seasons
    • While it’s true that inventory financing products can help you prepare for peak shopping seasons, a lot of businesses also use inventory financing as a lifeline during slower sales periods. Seasonal businesses benefit from inventory financing as they are more prone to experience cash flow issues during slow shopping seasons. With inventory financing, seasonal businesses can have the funding they need to be able to meet recurring financial obligations.

What are the alternatives to inventory financing?

If you’re wondering how to grow your Amazon business through alternative inventory financing methods, then we’ve got you covered! Here are some of the alternatives to inventory financing that you should know about:

  • Business Credit Cards – Like an inventory line of credit, business credit cards enable businesses to access a revolving line of funding with a set limit. You can use them to cover recurring expenses while also taking advantage of points and rewards. When looking for business credit cards, make sure to shop around and look for financial institutions that offer interest-free financing and reasonable interest rates.
  • Merchant Cash Advances – A merchant cash advance provides businesses with an upfront lump sum in exchange for a slice of your business’s daily credit card sales. While it seems sensible for Amazon businesses to use merchant cash advances due to the platform’s use of credit card payments, it’s important to remember that merchant cash advances should be considered as a last resort due to its typically high interest rates.
  • Crowdfunding – Crowdfunding is a relatively new method of raising capital through a network of individual investors. These individuals serve as financial backers that are willing to provide businesses with the necessary funds to expand, finance a new venture, or keep their shelves stocked.

Instead of taking out a traditional bank loan, businesses can hold a crowdfunding campaign by asking a large group of people to donate small amounts of money in order to meet a specific monetary goal. If the monetary goal hasn’t been met, businesses won’t receive any of the funds that were pledged to their project.

If you’re interested in funding your inventory purchases through an alternative financing option, check out Kickfurther.

What is Kickfurther and how can it help your business?

Kickfurther is an online inventory financing platform that allows companies to access funds that they are unable to acquire through traditional sources. This innovative funding platform enables a business’ biggest supporters and fans to purchase inventory on consignment. In return, individual backers receive cash when a company successfully sells their inventory. To learn more, visit kickfurther.com.

Key Takeaway

For companies experiencing rapid growth, access to additional funding is a must. However, it’s important to understand that inventory financing should go hand in hand with an Amazon inventory management strategy. Without proper planning and inventory management, you risk missing out on significant growth opportunities for your business.

Inventory Financing vs. Purchase Order Financing: What is the Difference?

Posted on by Kaylyn Perry

Finding any type of small business financing can be a tedious and overwhelming experience. When it comes to financing a business activity – whether it be expanding or introducing a new product, you need extra cash to make it happen. Unfortunately, extra cash can be hard to come by for many small to medium-sized businesses.

On the flip side, businesses experiencing rapid growth and positive cash flow can go after various types of financing options that can address budget challenges that are common among businesses regardless of size. These financing options can help you maintain the quality of your business operations while also meeting your recurring financial obligations.

While there are many different funding solutions available for businesses, in this article we’ll focus on inventory financing and purchase order financing and discuss the main differences between the two.

What is inventory financing?

From the outside looking in, managing your cash flow is no easy feat. After all, good cash flow means your business can stay afloat. Without adequate cash coming through the door, it’ll be difficult for businesses to cover operational expenses and meet customer demand. When managing a business, it’s imperative for you to have a bit of know-how about the financing programs that your business may be able to qualify for.

One funding option that can help you better manage your cash flow is inventory financing. Inventory financing is a method of financing in which a business leverages its inventory to acquire a loan or a revolving line of credit. This is a great source of short-term financing that allows businesses to purchase additional inventory without tying up an exorbitant amount of cash in inventory.

How does inventory financing work?

Keep in mind that poor cash flow can stem from a plethora of different issues such as unsold stock, late payments, and, at times, unmanageable growth. If you ever find yourself unable to restock your inventory, then it might be time to consider applying for an inventory financing loan. As mentioned above, inventory financing is an asset-based loan that can come in the form of a term loan or a line of credit. For those unfamiliar with these terms, here’s a quick breakdown:

  • Term loan – A term loan is a financing product that provides businesses with a specific amount of money with a specific repayment schedule. Like most loans, term loans may have a fixed or variable interest rate that needs to be paid along with the lump sum provided by the lender.
  • Line of credit – On the other hand, a line of credit is a flexible loan that allows businesses to access a preset amount of money as needed. It can be used to fund recurring inventory purchases to make sure that businesses will be able to meet customer demand. As long as the revolving line remains open, businesses can repay the amount borrowed and borrow again in increments.

The great thing about inventory financing is that businesses don’t have to put up personal or business assets as collateral. The purchased inventory serves as the collateral for the loan and can be seized by the lender in the event that a business becomes unable to pay back the loan. Inventory financing is a useful financing product that allows businesses to better manage their cash flow by advancing funds that can be used to purchase additional goods.

What is purchase order financing?

Purchase order financing, also known as PO financing, is a type of funding solution that covers the upfront costs associated with the production of goods. This type of commercial financing is an excellent option for businesses that are experiencing poor cash flow. Typically, a purchase order financing arrangement involves three main parties: the customer, the third-party lender, and the business. But how does it work exactly?

How does PO financing work?

The way PO financing works is a bit trickier as opposed to other more traditional types of loans. Essentially, purchase order financing companies allow businesses to receive funding that leverages a confirmed purchase order as collateral. Here’s a more in-depth look at how PO financing works:

  • Customer A places a purchase order agreeing to buy goods from company Z
  • Both parties negotiate a deal and once an agreement has been finalized, company Z sends a copy of the confirmed purchase order to a third-party financing institution
  • A third-party lender then reviews the purchase order and once approved, the ender pays company Z’s supplier directly to kickstart the production of goods
  • Once the production process is finished, goods will then be shipped out to company Z’s customers directly
  • Company Z then sends an invoice to customer A for the pre-sold goods
  • Customer A then pays the PO financing lender directly
  • The PO financing company will then take out its fees and send over the remaining balance to company Z

What are the key differences between inventory financing and purchase order financing?

While it seems that both inventory financing and purchase order financing addresses a business’ cash flow issues, there are key differences between the two. Check out some of the most common differences between inventory financing and purchase order financing below:

  • Flexibility – When it comes to flexibility of use, both financing options can be described as restrictive. However, inventory financing edges purchase order financing out by just a hair for the sole reason that it can be used to pay for various types of inventory purchases. Conversely, purchase order financing is associated only with a specific purchase order. With purchase order financing, you won’t be able to build your inventory and introduce new product offerings.
  • Total cost – Fee structures will vary depending on the lender or financier that you’re working with. However, both financing options tend to be on the pricier side. For those considering purchase order financing, one thing to keep in mind is that rates may range anywhere from 1.5% to 6% per month which is substantially higher compared to other types of small business funding. In the same vein, inventory financing is an expensive option for businesses mainly because of the extensive due diligence process. Some of the most common inventory financing costs are appraisal fees, origination fees, late fees, and a prepayment penalty if you pay your loan early.
  • Qualifications – Purchase order financing may be one of the easiest loans to qualify for as lenders tend to have fewer and less restrictive requirements when reviewing a loan application. Although it is important to note that business owners should expect a lengthy and often expensive due diligence process when applying for an inventory financing loan.

Which financing option is best for your business?

Choosing from a plethora of business financing products can be a taxing ordeal. If we could leave you with one piece of advice, it’s this: the best financing option for your business is one that would help you meet your business objectives. It doesn’t matter if you’re getting a loan from inventory financing or purchase order financing companies, the most important thing to keep in mind is to shop around and compare interest rates, loan amounts, and repayment terms to determine which type of business loan will give you the best bang for your buck.

Are there other alternative financing options for businesses?

If you’re open to considering alternative financing opportunities for small businesses, visit Kickfurther.com. We’re  an inventory funding platform that provides businesses with the necessary funding that they need, when they need it. It is the world’s first online inventory financing platform that enables companies to access funds that they are unable to acquire through traditional sources. Here’s how it works:

  • Brands have to go through an extensive vetting process before they can tap into the Kickfurther community.
  • Once a company has proven that they have strong sales records, it can now tap into the Kickfurther community and invite backers to purchase inventory on consignment.
  • As mentioned above, individual backers purchase a company’s inventory primarily through a consignment opportunity or Co-Op. They can also freely choose which company to support based on a company’s payout terms. These individual backers then earn payments as soon as inventory is sold.

Final Thoughts

One important thing to remember when shopping for loans is to get quotes from more than one lender. Whether you’re thinking of getting purchase order financing or an inventory financing loan, it’s important to get quotes from several financial institutions to make sure that you are getting the best rates possible. It also enables you to determine which loan type would best meet your business’s financial needs.

5 Tips on How to Source Inventory for Amazon

Posted on by Kaylyn Perry

Sourcing products for your Amazon store can be complicated. Not a lot of consumers understand the amount of time and effort that goes into finding a profitable product to sell on Amazon and developing a strategy to source a particular product reliably and sustainably. In this article, we will walk you through the ins and outs of finding profitable products and choosing the right suppliers. While we understand that each Amazon seller is different, the trick is finding a technique that best fits your business’s unique needs.

What is Amazon Product Sourcing?

Amazon product sourcing is the process of finding the items you would like to sell on Amazon. Sounds simple enough? Well, not exactly. Selling on Amazon usually involves researching the best products to sell, developing a strategy to source those products, and nurturing a relationship with your potential supplier(s) to keep your inventory in tip-top shape.

While it seems complicated, Amazon product sourcing is a pretty straightforward process. It’s just easy to get overwhelmed by the number of factors to consider. But before we get into detail, let us first give you some tips on finding the most profitable products for your Amazon store.

Finding the Most Profitable Products: Quick Tips

If you’re just starting out, one of the biggest decisions you will have to make is deciding on a product to sell. Many new sellers underestimate the difficulty of finding the “perfect product” to sell on Amazon. Fortunately for you, we did the heavy lifting and came up with five important questions to ask yourself before making a decision. Check them out below!

Have you done your market research?

The main purpose of market research is to give you an insight into new market opportunities for existing and new products. Many successful businesses conduct regular market research to better understand their customers and to keep ahead of the competition. When sourcing Amazon products, it’s important to take a look at the current most profitable products as well as keep tabs on market trends. Having a greater understanding of your business and your chosen industry allows you to create better sourcing strategies going forward.

Is there demand for your product?

Before opening your Amazon online store, you should first determine if there’s enough demand for your product. Figuring out product demand is one of the most challenging aspects of running a small business. It determines how much a customer is willing to pay for your product and dictates the amount of inventory you should hold at any given time.

Can you easily source your product?

Sourcing inventory for Amazon can be overwhelming, to say the least. Should you source locally? Should you source your products from overseas? Factors such as cost, supply chain stability, and logistics all play a role in running your online store. Make sure to find a supplier that has the capability to support your business as you grow.

What’s the competition like?

Analyzing your competition gives you a better understanding of the market as well as your business’ standing in the marketplace. This is a strategy that all businesses use to gather information about their competitors’ operations in comparison to their own. A thorough competitive analysis requires extensive planning, research, and an honest evaluation of your business. In doing so, you will be able to find gaps in the marketplace and pounce when an opportunity presents itself.

Is your product profitable?

As with any product-based business, good profit margins should be a must to keep your business afloat. Profit margins showcase a business’s long-term profitability and serve as an indicator of a company’s financial health and growth potential.

Now that you have decided on a product to sell, it’s time to familiarize yourself with the various factors to consider when sourcing inventory for Amazon.

Amazon Product Sourcing: What You Need to Know

As the business landscape becomes increasingly complex and congested, the need for reputable and reliable suppliers is important now more than ever. After all, sourcing is more than just finding a supplier, it’s about finding a partner that you could trust and build a long-term business relationship. Before sourcing inventory for Amazon, here are some key considerations:

  • Finding a reputable supplier. A key consideration when finding a supplier is reputability. Your supplier plays an important role at every stage of your business operation. From sourcing raw materials to the production of goods, a reliable supplier consistently delivers quality products at the required time.
  • Product testing. As a business owner, it is only imperative for you to ensure that your products meet the highest quality standards while adhering to the regulations set by Amazon. Before allowing any product to be listed on your Amazon store, Amazon sellers must test each product to avoid safety and quality issues.
  • Take note of Amazon regulations. As a seller, you must review Amazon’s seller policies including all applicable laws and regulations concerning your product. For reference, you can review Amazon’s general program policies here and restricted products here.
  • Costs and fees. Shipping costs, service fees, and other relevant taxes and duties all affect a product’s profitability. Take note of all the associated costs and fees and balance them against your product’s final selling price.
  • Consider Using Fulfillment by Amazon (FBA). According to the official Amazon website, FBA is the process of storing a business’s products in Amazon’s fulfillment centers. Amazon then picks, packs, ships, and provides customer service for your products. Amazon’s FBA program enables businesses to scale quickly without the need for new investments in capital or staffing.

Top Inventory Sourcing Options for Amazon

Retail Arbitrage

Retail arbitrage simply means purchasing discounted products from a brick-and-mortar retailer and reselling them at a higher price on Amazon. One of the main advantages of using retail arbitrage as your sourcing method is that it does not require an absurd amount of startup capital. You can start doing retail arbitrage for as low as $150. However, retail arbitrage involves a lot of hard work. This type of sourcing method involves an extremely hands-on approach to take advantage of the best discounts available at any given time.

Pros of retail arbitrage:

  • Low upfront costs
  • Source cheap products and sell them at a higher margin
  • Can serve as a gateway to private labeling

Cons of retail arbitrage:

  • You do not have ownership of the product you are selling
  • You are limited by discounted inventory and deals available at any given time
  • Profit margins can be quite slim

Private Labeling

Private labeling is the practice of sourcing a product from a third-party manufacturer and then selling it under an Amazon seller’s brand. What sets private labeling apart from other sourcing methods is that retailers have complete control of a product’s ingredients, design, and specifications. As a result, businesses have complete control over the branding, quality, and pricing of a product.

Pros of private labeling:

  • Build a loyal customer base
  • Retain control of quality
  • Better adaptability based on market demand

Cons of private labeling:

  • High dependency on your manufacturer
  • Expect tough competition
  • Higher startup costs

Dropshipping

Dropshipping is a business model that allows businesses to fulfill customer demand without having to carry inventory or ship goods. Essentially, businesses act as a middleman by receiving customer orders and then passing those sales orders to a third-party supplier. The supplier then takes care of shipping the product to the customer, eliminating the need to store products in your own storage facility.

Pros of dropshipping:

  • Low startup costs
  • Offer more products with little risk
  • Inventory is easier to manage

Cons of dropshipping:

  • Dropshipping may present smaller profit margins
  • Delivery times can be slow
  • Zero quality control

Online Arbitrage

Another sourcing method you can use when sourcing Amazon products is online arbitrage. Online arbitrage, much like retail arbitrage, is a sourcing method that involves businesses buying products on online marketplaces and flipping them for a profit. The great thing about online arbitrage is that you can do it from just about anywhere as long as you have a stable internet connection.

Pros of online arbitrage:

  • Low startup costs
  • Order higher quantities of discounted products with little to no risk
  • Easier to scale (since you’re not limited to a retail store’s stock)

Cons of online arbitrage:

  • Profit margins can be quite slim
  • An overwhelming number of suppliers to check out
  • Online product listings may not be accurate

How to Finance Your Amazon Inventory Expenses

For your Amazon business to grow, you first need to raise enough capital to hit the ground running. Fortunately, sourcing inventory for Amazon, depending on the method you choose, doesn’t have to involve an absurd amount of startup capital. Some of the financing options you can consider are microloans, short-term loans, lines of credit, credit cards, and inventory crowdfunding.

  • Microloans – Microloans, such as those offered by the U.S. Small Business Administration, can help establish your Amazon business and help you with expansion projects. Microloans can be used as general working capital as well as for purchasing inventory, supplies, furniture, and machinery.
  • Short-term loans – Short-term loans are often offered by traditional financial institutions as well as online lenders. As the name suggests, short-term loans can be acquired with little to no collateral. However, the catch is that you would have to repay your loan in a year or less. Short-term loans may also have higher interest rates compared to other types of loans.
  • Lines of credit – A line of credit is a flexible loan provided by a financial institution that enables businesses to access a revolving line as needed. Businesses can either repay the amount they have borrowed immediately or over time.
  • Credit cards – Using credit cards is another way to source inventory for Amazon. Credit cards often have cashback rewards that businesses can take advantage of as long as they pay their balance in full and on time.
  • Marketplace – Amazon sellers can also make use of crowdfunding as a way to purchase their initial inventory. This method of raising capital involves the collective effort of family, friends, and individual backers online. If you’re looking for an inventory financing method that makes use of crowdfunding, explore Kickfurther.

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. 

Final Thoughts

At the end of the day, sourcing strategies are just that: strategies. The success of your Amazon business is entirely dependent on how well-prepared you are and how quick you are to adapt to changes in the modern world. After all, nothing good ever comes easy, right?

What Can You Do To Understand & Prevent Lost Sales?

Posted on by Kaylyn Perry

Lost sales happen. We know it sucks but it’s all part of running a business. Fortunately, there are strategies that businesses can use to reduce instances of lost sales. Sometimes, all it takes is a little perspective and the motivation to pick yourself back up! In this article, we will talk about why you should pay attention to lost sales and provide you with some tips on how to prevent it. Let’s dive right in!

But first, what is a lost sale?

A lost sale is simply a missed sales opportunity due to instances of stockouts, lack of product information, and poor customer service. It may be referred to as lost income due to orders that could not be fulfilled for whatever reason. Now that we got that out of the way, let’s talk about the importance of acknowledging lost sales.

Why should you pay attention to lost sales?

One way to look at lost sales is that it allows you to better understand your customers and the overall efficiency of your operations. After all, failing presents us with a unique opportunity to learn and grow. Here are some reasons why you need to pay attention to lost sales:

  • A lost sale allows you to step back and reevaluate your sales approach. Are you paying attention to your internal procedures? Are you training your staff to provide great customer service? Are your products reasonably priced? If you don’t pay attention to the key processes within your business, it would be much more difficult to come up with a sales process that works.
  • A lost sale says a lot about your marketing and promotions. Or lack thereof! Losing a sale is not only a sales problem, it can also be seen as a marketing problem. One significant aspect of sales that businesses need to pay attention to is the alignment of sales and marketing operations. Knowing who your ideal customers are and how to properly target them enables you to craft valuable marketing promotions instead of just offering them a one-size-fits-all approach.
  • A lost sale means you’re doing something wrong. Whether it’s not listening well enough to the needs of your customer or not having an idea about who your buyers are, a lost sale means you’re doing something wrong. The best course of action to take is to look at your internal processes and determine areas that need improvement.

What are the most common reasons that contribute to lost sales?

Fundamentally, paying attention to lost sales means you want your business to improve. As a business owner, it’s important to recognize that sales play a pivotal role in the success of your endeavors. Sluggish sales growth can force companies to apply cost-cutting measures or, in the worst-case scenario, file for bankruptcy. To avoid that, you must know the most common reasons that contribute to lost sales.

  • Not Differentiating Your Product
    • Just what exactly sets your product apart? Now that more and more people are paying attention to the products that they are consuming, proper product differentiation makes you stand out in a crowded market while also establishing brand loyalty. To successfully set your brand and your product apart from your competition, make sure to promote the value that you offer by highlighting a problem that your product solves.
  • No Concrete Knowledge of Your Ideal Customers
    • Who are your ideal customers? By knowing who your ideal customers are, you will be able to gauge how you could provide value by solving a problem that they have. In addition, understanding your customers would give you an idea about improvements you can make to be able to meet customer expectations.
  • Lack of Customer Engagement
    • Are you building and nurturing a relationship with your customers? After researching who your ideal customers are, it’s now time to pay attention to customer engagement. Keeping customers engaged throughout the buyer’s journey lets you collect valuable customer information that ultimately influences buying behavior.
  • Lack of Staff Training
    • Do you properly train your employees? Businesses should recognize that employees can be amazing brand ambassadors. Well-trained staff will be able to showcase what sets your products apart and what value it provides to your customers.
  • Sales Forecast Inefficiency
    • Do you have a system in place to accurately predict sales fluctuations? As one of the most common business pain points, stockouts can lead to lost sales and customer dissatisfaction. Sales forecasting, if done properly, helps your business secure enough stock to satisfy customer demand even in the busiest shopping seasons.

Tips to Prevent Lost Sales

Sometimes, the greatest sales lesson can be learned from a sale that you weren’t able to close. After all, picking yourself up and moving on is an attribute of a great entrepreneur. However, you must learn from your mistakes and use them as an opportunity to improve your operations going forward. If you’re unsure where to start, we got you covered! Here are some tips to prevent lost sales:

  • Keep track of lost sales
    • Tracking lost sales gives you a better understanding of why you lost a particular sale. It’ll help you avoid practices that are causing a leak in your sales funnel and focus your energy on key areas that increase customer satisfaction. (Pro tip: Consider purchasing a robust customer relationship management (CRM) tool to easily track lost sales data.)
  • Improve your forecasts
    • Forecasting gives you an idea about the amount of inventory to secure to satisfy customer demand. Not only will you greatly reduce instances of overstocking and stockouts but you will also improve how you manage your cash flow. However, note that forecasts are not foolproof. Unforeseen external factors can always invalidate your predictions no matter how accurate you think they may be.
  • Calibrate your inventory management strategy
    • Proper inventory management gives you an overview of what goes in and out of your inventory. Are you storing too many products? Is your inventory turnover ratio helping or damaging your cash flow? Do you have enough products during peak shopping seasons? Having an efficient inventory management strategy enables you to better prepare for seasons with stronger demand and place orders ahead of time to prevent stockouts.
  • Build a relationship with your suppliers
    • The human factor plays a vital role in the success of a business. As an entrepreneur, your supplier will be your most important business partner. The approach you take with your suppliers impacts the way they service your business. One mistake many businesses make is putting too much focus on price. It’s only natural that you want the best margins but it’s equally beneficial to put quality and a trustworthy reputation first. In addition to proper inventory management, you should also consider building a relationship with a handful of suppliers to ensure that you are not relying on just one supplier’s capability.
  • Offer discounts and promotions
    • Offers and discounts are a great way to quickly attract potential customers and even those sales opportunities that you lost. It’s no secret that people prefer buying things on sale. Why not use it to your advantage and increase sales across the board?
  • Ensure you have enough financing
    • Owning a product-based business means inventory is your lifeline. Without it, you would not be able to sell products to meet the demands of your customers. If you’re unable to sell products, how will you earn money? Not having enough cash on hand to purchase additional inventory can hurt any business. While it pays to keep a close eye on your financing, it also helps to be knowledgeable about the different financing methods you can use to be able to acquire the inventory that you need. For your inventory needs, check out inventory financing.

What is inventory financing?

As the name implies, inventory financing is a financial product that lets businesses pledge purchased inventory as collateral to obtain a term loan or a line of credit. Typically, inventory financing serves as a last resort for small to medium-sized businesses that have exhausted other efforts to secure financing. One great inventory financing tool that businesses can check out is Kickfurther.

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. 

Key Takeaway

It’s always advisable to dig deeper and understand why you’re losing sales rather than just accepting it. By identifying the various reasons behind lost sales, you are already taking a huge step forward in reevaluating your approach and implementing a strategic plan that enables you to see growth in your sales funnel. 

Tips on How To Price Your Early Stage Startup Product

Posted on by Kaylyn Perry

While setting the right prices for your products sounds like a simple process, it’s not as straightforward as it seems. As a business owner, you must consider key factors such as researching pricing strategies, tracking how much competitors are charging, and understanding who your potential customers are. After all, determining your startup product price is one of the most essential elements in ensuring the profitability and long-term sustainability of your business.

Keep in mind that introducing your product at the price point means successfully satisfying your customer and laying the foundation for your business to succeed. In this article, we will talk about everything there is to know about pricing your early-stage startup product and identify various strategies you can employ to find the sweet spot between overpricing versus underpricing.

What is startup product pricing?

An ideal startup product price enables your business to be favorably positioned against your competitors. But before anything else, it’s important to note that the price of your product is determined by a myriad of different factors. For instance, having a deep understanding of your potential and existing customers allows you to price your prices depending on how much your customers are willing to pay. It will also allow you to personalize your sales and marketing efforts to be able to reach the right audience.

However, that’s just one piece of the puzzle. When coming up with a price for your startup product, it also helps to look at what your competitors are doing as well as the current economic conditions that may affect your customers’ purchasing power. Startup product pricing aims to find the right pricing structure for a particular product or service. While often overlooked, product pricing is an important process that businesses need to pay attention to to ensure that a business remains competitive.

What is the main goal of startup product pricing?

The main goal of startup product pricing is to ensure that your business can maximize its profits. It helps businesses remain competitive, increase sales volume, and successfully pull ahead of the competition. Another vital part of product pricing is understanding the concept of willingness to pay (WTP).

WTP refers to the maximum price that the consumer is willing to pay for a particular product or service.

We know what you’re thinking. Wouldn’t willingness to pay naturally vary from one customer to the other?

Yes, you’re absolutely right. However, the main incentive when establishing WTP is for you to make an informed decision when it comes to estimating your startup product’s price. It’s rare for businesses to use just one type of strategy to establish the price of a product. Usually, businesses use a combination of pricing strategies to calculate the best possible price for a product or service.

How do you price a startup product?

At its most basic, pricing a startup product involves adding up all the costs of production such as material costs, labor costs, and overhead costs. However, there are a few critical considerations to keep in mind to be able to complete your product pricing calculations.

  • Understand your buyers. Regardless of the type of product or service you are offering, it’s imperative for you to understand who your customers are. Having an understanding of your buyers will give you a better idea of how much your product is worth depending on the value that it’s providing your customers.
  • Evaluate your costs. The simplest way to determine the price of a certain product is to evaluate its production costs. How would you be able to determine the appropriate price for a product if you don’t know how much you are spending when making them?
  • Determine your desired profit. Now that you have evaluated your costs, it’s time to identify your markup percentage. Markup percentage refers to adding a certain percentage to the original cost to make a product in order to come up with a selling price.
  • Research your competitors. Researching how your competitors are pricing their products is a great way to better understand the market. Looking at what your competitors are doing can be especially effective if you belong in an industry with a lot of similar businesses as this strategy is mainly driven by direct and indirect competitors.
  • Choose a pricing strategy. Choosing a price strategy is important as it provides structure to the product pricing process. There are three main pricing strategies: value-based pricing, competitor-based pricing, and cost-plus pricing. In the next section, we’ll talk about some of the most common pricing strategies used by startups.

What pricing strategies are most common for startups?

It’s no secret that pricing strategy can be a complex process. Along with complicated calculations, pricing strategies also take into account market conditions, competitor pricing, raw material costs, labor costs, logistical costs, and other qualitative information. Fortunately, there are pricing strategies out there that can help you figure out how much you should charge for your startup product. Here are some of the most common pricing strategies for startups:

  • Value-based pricing – Value-based pricing is when products are priced based on how much customers are willing to pay for a product. As you may have guessed, this customer-focused pricing strategy heavily relies on WTP. Businesses that use value-based pricing often offer unique and valuable products to their target market. As a result, brands can use the customer’s perceived value to reflect the worth of a particular product.
  • Competitor-based pricing – Also known as competition-based pricing, competitor-based pricing is a pricing method that involves setting your prices based on the prices of your direct and indirect competitors. This type of pricing strategy uses the pricing structure of a business’s competitors while also paying attention to general trends in the market. However, the biggest disadvantage to competitor-based pricing is that it needs another business that offers a similar product to work. Without competition, it’ll be difficult for businesses to accurately gauge product pricing especially if they are new to the market.
  • Cost-plus pricing – Cost-plus pricing is a simple pricing strategy that adds all the variable costs associated with production such as labor, materials, and overhead. After evaluating all variable costs, a business then adds a markup percentage to determine a product’s final price. Cost-plus pricing is usually combined with another pricing strategy to make sure that companies are selling their products at a reasonable price. If you’re still unsure about how cost-plus pricing works, check out our example below:

Let’s say company X spends $10 to make product A and wants a 50% profit margin when selling it. Through the cost-plus pricing strategy, company X needs to sell its product for $20 to achieve its wanted profit margin.

Like most things in business, pricing shouldn’t be static. Businesses should have the capability to constantly monitor market trends, measure and monitor relevant data, pay attention to buyer personas, and keep an eye on raw material costs. Through the use of pricing strategies, you can get a better understanding of the optimum price that you should charge to maximize your profits and successfully differentiate yourself from your competitors.

Is there a pricing formula that can be applied to a startup?

If you’ve reached this part of the article, then you have probably figured out that pricing takes a lot of time and effort. Realistically, there will be times when you may have to experiment with your prices to be able to figure out the best pricing strategy to use for a particular product. Unfortunately, there is no one-size-fits-all approach when it comes to startup product pricing.

As with all important business decisions, product pricing needs an ample amount of time. While it’s true that there are a plethora of pricing formulas that can be applied to your startup product, it should still be up to you to determine which type of pricing formula would best meet your startup’s needs. Having a practical approach towards pricing enables you to set the appropriate price for your early-stage startup product. Remember, not paying attention to how your products are priced will likely lose you money.

How Kickfurther can help

Now that you have figured out how to properly price your early-stage startup product, it’s now time to determine how you will fund your inventory needs. Fortunately for you, one such financing option is Kickfurther.

In a nutshell, Kickfurther is an inventory financing platform that helps businesses raise money for their inventory needs. Instead of going to traditional financial institutions like banks and credit unions, businesses can tap into Kickfurther’s community of backers to fund their inventory through consignment. Supporters would then be offered a specified rate of return and get paid when a company successfully sells its inventory. If you want to learn more about Kickfurther, visit www.kickfurther.com.

Conclusion

The truth is that there is no all-encompassing approach when it comes to pricing your startup product. Not every pricing strategy will work for every kind of business as each business is unique. For business owners, the best course of action to take is to spend an ample amount of time researching the different types of pricing strategies and decide which strategy best meets their company’s needs.