There are very few people that have seen an upside to 2020 and the pandemic. Even those who have escaped the virus have suffered lockdowns, quarantines, restrictions on where you can go, what you can do, and who you can do it with. Most of the places you wanted to go to are closed, and the ones that are open look a little too full for you to be comfortable with.
The toll taken on the population of the world physically, mentally, and financially has been devastating. Despite all this, a small sector of the business world has seen an unprecedented boom in sales as demand for their products has gone through the roof.
Or, to put it another way, in 2020, anybody owning or operating almost any sort of eCommerce business will have seen it get much, much busier.
Online businesses are watching sales increase daily
It would be wrong to suggest that eCommerce business owners are deliriously happy about the situation because they are not. They are, however, one of the few groups seeing even the smallest silver lining to what is a very big, gray storm cloud.
With the massive rise in demand, many online businesses will have seen their supply chain stretched and their stock rooms gradually empty. The bottom line is that nearly all of them could sell so much more if they only had the extra stock, bigger premises, more money, or usually all three.
Businesses benefit from cross-platform selling
A business that purely sells online is more than just a website displaying goods for sale. There is so much going on behind the scenes once a customer hits the buy button. In addition to their own website (usually on the Shopify platform), they will also have a major presence on Amazon, eBay, and possibly Etsy.
The reason for this is that, principally Amazon and also eBay will generate more website traffic for their items than their own website. The downside to this is that when their product is shown on those platforms, it is shown side by side with its closest competition. There is a way to possibly turn this to their advantage and benefit the business as a whole, but more on that later.
Upgrading the supply chain
When upgrading, however, rather than just renting a larger warehouse and employing more staff (or taking somebody on for the first time) the business will need to ensure you are going to have enough stock to sell to justify all that space and manpower. So the first thing they need to look at will be their supply chain.
Most small and medium eCommerce businesses function reasonably well and profitably by sourcing their stock from a wholesaler, from whom they buy small or medium amounts of stock. This wholesaler might be in the same country as them or a major Chinese website like Alibaba.
Economies of scale
When a business increases in size, the economies of scale mean that there are other possibilities available. This includes importing stock direct from the factory itself (usually in China), which may entail visiting the site and employing an agent to look after their interests there.
Once the deal has been made with the factory itself, it is possible to have some say in the production of the item and the labeling. A business can have their own designs and logos printed on the labels creating their own brand. This will also set that product apart from others on platforms like eBay and Amazon, so customers do not think they are simply comparing like for like.
Financing that business expansion
All of this, though profitable in the medium to long term, is going to take a certain amount of investment, typically more ‘cash’ than many businesses have flowing through their accounts currently, even with the recent upturn in sales.
For obvious reasons, seeking outside funding is problematic at the moment. Most conventional lenders, especially banks, will not have the same knowledge of online businesses as they do high street stores. The majority of what they are seeing are retailers struggling, and it is making them much more risk-averse.
Companies have emerged with the specialist knowledge needed to secure the financing necessary for expansion to combat this. They can plug straight into sales reports from Amazon and Shopify to get an accurate picture for lenders, most importantly, one that shows that a business is booming.
There are other concerns with expanding a business, but the first one is usually regarding the financing. Even with the economy (in other sectors, at least) floundering, the opportunity to expand is not closed off entirely if a business can find a funding solution like the e-commerce loans from Become.
Utilizing Amazon FBA
Once the supply and funding issues have been solved, but upgrading the operation may not be the logistical nightmare, many might think. For companies or individuals currently dealing with their own distribution, and the thought of doing five or even ten times that is giving them a headache, then there may be a solution that decreases the size of the premises instead of making it bigger.
Using an Amazon service called FBA (fulfilled by Amazon), they can literally just make it all Amazon’s problem. The supplier in China ships not to the business but to an Amazon warehouse where they will store it and pick, pack and ship it every time somebody buys something.
They can also ship to customers that are sold to on other platforms, with the option for plain packaging to avoid any confusion from the customer. Yes, there are fees for this, but many businesses find this a more economical solution than having their own premises and staff.
Using FBA often makes the item eligible for ‘Prime’ status, which has proven to be a positive factor when buyers make a purchase. Utilizing all of these methods for expansion, not only can the business go beyond what it is already doing, it has all of the boxes ticked to grow even bigger still.