Struggling to fund holiday inventory? Revenue-based financing might be your solution.
For eCommerce businesses, the holiday season means high stakes: you need enough stock to meet demand without draining your cash flow. Traditional bank loans often fall short due to rigid terms and slow approvals. Revenue-based funding offers a flexible alternative, letting you repay as a percentage of sales, so payments match your cash flow.
Key Takeaways:
- Problem: High upfront inventory costs, cash flow issues, and unpredictable sales.
- Solution: Revenue-based financing adjusts payments to your sales volume, ensuring flexibility during seasonal ups and downs.
- Benefits: Quick access to funds, no equity loss, and tailored support for eCommerce platforms like Amazon, Shopify, and more.
This funding model helps you stock up, cover shipping, and invest in marketing without risking your business's liquidity.
Money Problems When Buying Holiday Stock
Large Upfront Costs
Holiday inventory often requires a hefty cash outlay upfront, which can stretch the finances of eCommerce businesses. Suppliers generally insist on full payment before they begin production or ship goods. Since orders need to be placed 3–4 months ahead of the holiday season, businesses must allocate significant funds during slower sales periods. This can be particularly tough for growing businesses that need to stock more inventory than usual.
And it's not just about the initial payment - managing inventory levels adds another layer of complexity.
Challenges of Stock Management
Getting holiday inventory levels right is a balancing act. Order too little, and you risk missing out on sales during the busiest time of the year. Order too much, and you tie up cash in unsold stock, which may eventually need to be sold at a discount.
Some of the financial consequences include:
- Lost sales and unhappy customers due to stock shortages
- Increased storage costs and reduced profit margins from excess inventory
- Cash flow constraints, leaving less money for marketing and other operations
Why Bank Loans Fall Short
Traditional bank loans often fail to meet the needs of eCommerce businesses preparing for the holiday rush. Their rigid structures are not designed for the seasonal highs and lows of online retail.
Here’s why they can be problematic:
- Fixed monthly payments don’t account for fluctuating sales
- Lengthy approval processes can delay access to funds, missing critical ordering windows
- Collateral requirements often don’t align with the asset-light nature of online businesses
- Banks may lack a deep understanding of how eCommerce operates
To better address these challenges, newer financing solutions tailored to the cash flow patterns of eCommerce businesses are becoming more popular. These options are designed to provide the flexibility that traditional bank loans typically lack.
Revenue-Based Funding Options
Revenue-Based Funding Explained
Revenue-based financing (RBF) is a practical way to fund holiday inventory, especially when cash flow fluctuates during peak shopping seasons. With RBF, payments are made as a percentage of daily or weekly sales. This means payments automatically adjust to match your revenue, making it easier to manage cash flow during seasonal ups and downs. For online retailers, this approach is particularly helpful when dealing with busy holiday periods.
Benefits for Online Sellers
RBF offers several key advantages for eCommerce businesses getting ready for the holiday rush:
- Fast Access to Funds: Unlike traditional loans that can take time to process, RBF providers often deliver funding within 24 hours of approval. This speed allows sellers to act quickly on inventory needs.
- Flexible Payment Terms: Payments adjust based on your sales volume, so you’re not stuck with fixed monthly payments during slower periods. This is especially helpful when managing pre-holiday expenses.
- No Equity Sacrifice: You retain full ownership of your business while securing the funds needed for inventory. This means you can solve immediate cash flow challenges without giving up long-term value.
This funding model is ideal for businesses looking for tailored solutions, such as those offered by Onramp Funds.
Onramp Funds: Tailored Solutions for eCommerce
Onramp Funds focuses on providing revenue-based financing specifically designed for eCommerce businesses. Their platform supports top marketplaces like Amazon, Shopify, Walmart Marketplace, BigCommerce, WooCommerce, Squarespace, and TikTok Shop.
The effectiveness of their solution is clear from customer feedback. Nick James, CEO of Rockless Table, shared his experience:
"Applied, got our offer, and had cash in our bank account within 24 hours. Their Austin, TX based team was very professional and helped me deploy the cash to effectively grow our business."
To qualify for Onramp Funds, businesses need to meet these criteria:
- Average monthly sales of at least $3,000
- Legal business entity status in the U.S.
- Active seller account on supported eCommerce platforms
Onramp’s impact is reflected in real results. Customers report an average revenue growth of 60% within 180 days of receiving funding. This growth is particularly beneficial when gearing up for the holiday season.
Torrie V., founder of Torrie's Natural, highlighted how Onramp simplifies operations:
"Onramp has simplified cash flow by automating everything: easy to request, set it and forget it payments - quick and fast!"
Funds from Onramp can be used for a variety of business needs, including:
| Purpose | Application |
|---|---|
| Inventory Investment | Stock up to meet holiday demand |
| Shipping & Logistics | Handle the surge in holiday orders |
| Marketing Campaigns | Boost holiday sales with promotions |
| Operational Costs | Cover additional seasonal expenses |
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Planning Holiday Stock Funding
Using Sales Data for Stock Planning
Effective inventory planning begins with a close look at your past sales data. By linking your eCommerce platform with Onramp Funds, you can use this data to predict your holiday inventory needs. This analysis helps pinpoint:
- High-demand periods across various marketplaces
- Top-selling products during the holiday season
- Stock levels required based on past trends
- Cash flow patterns during seasonal shifts
Examining performance across different marketplaces allows you to fine-tune your inventory forecasts.
Working with Suppliers
Strong supplier relationships are essential for managing holiday inventory. When working with suppliers, aim to align payment terms with your sales cycle. Key areas to focus on include:
| Negotiation Focus | Benefit |
|---|---|
| Bulk Order Timing | Lower unit costs for larger holiday orders |
| Payment Schedule | Terms aligned with your revenue flow |
| Delivery Windows | Staggered shipments to reduce storage costs |
| Minimum Orders | Flexibility to handle changing seasonal needs |
Coordinate supplier agreements with a funding strategy that supports your seasonal goals.
Matching Funding to Business Needs
Plan your holiday funding to cover essential areas like inventory, shipping, and marketing. Onramp Funds highlights the importance of flexibility:
"As the owner of your business, you know your business best. Use your funds on inventory, shipping and logistics, marketing spend, or anything else that would help grow your business and drive sales. We are always happy to strategize with you!"
Flexible financing options, such as revenue-based funding, allow you to align repayments with your sales performance. This approach helps maintain cash flow during both busy and slower periods.
Funding your eCommerce Marketing: Revenue-based finance ...
Next Steps for Holiday Readiness
Securing funding for the holiday season means acting quickly and effectively. Start by using Onramp Funds' funding calculator to estimate how much funding you could qualify for based on your monthly revenue. This will give you a clear idea of the capital you'll need to prepare for the busiest time of the year.
Many businesses have shared how quick and adaptable financing has made a big difference in their holiday planning.
Here’s how to get started:
- Connect your platform: Safely link your eCommerce platform to receive a personalized funding offer.
- Explore your options: Compare the funding packages available to find the best match for your seasonal needs.
- Plan your spending: Use the funds wisely for inventory, shipping, and marketing, keeping your holiday sales goals in mind.
Customers have highlighted how automated repayments simplify their processes, making it easier to focus on growing their business.
Make sure your funding choices align with your sales forecasts and payment timelines with suppliers. These steps will help you set up for a strong holiday season.
