If you're running an Amazon FBA store, sales and profits weigh heavily on the mind. You're likely always looking for ways to increase sales and profits.
One often-overlooked strategy to increasing sales is funding.
Yes, getting a loan can actually help you grow your business and generate more revenue so read on as we explore five ways funding can benefit your Amazon FBA store and offer tips for making the most of your investment.
Introduction: Understanding the importance of funding for your Amazon FBA store
Before we dive into the specifics of how funding can help your Amazon FBA store, it's important to understand the broader context of why funding is important for FBA sellers?
Simply put, the more money you have, the more you can invest in your business. Whether it's hiring employees, buying inventory, or running targeted ads, having access to capital can help you take advantage of opportunities otherwise unachievable as well as navigate any challenges that may arise.
Additionally, having funding can also help FBA sellers expand their product offerings and enter new markets. With more resource, sellers can research and develop new products, or invest in marketing and advertising to reach a wider, previously untapped audience.
All of the above activities can subsequently lead to increased sales and revenue, as well as a stronger brand presence on Amazon.
1. Boosting your inventory with funding
If you're an FBA seller, you know that having a robust inventory is key to making sales. But buying products in bulk can be expensive, especially if you're just starting out.
This is where funding comes in. With funding, you can purchase more inventory upfront, which can lead to bigger profits down the line.
Take for example, NutriPaw the UK’s leading dog supplement brand, who has to date received over €1.4m in capital from Uncapped for inventory purposes alone. This enabled them to scale their business by 5x and dominate the UK market.
With smart financial management and a solid plan, NutriPaw were able to turn an Uncapped loan into exponential growth. And you can too. Just make sure you have a solid plan for how you'll sell the extra inventory before you take on debt.
2. Marketing strategies to increase sales with funding
Once you have a solid inventory, the next step is to get the word out about your products which is where marketing comes in.
As you will be all too aware, marketing can be an expensive and time consuming endeavour so funding can really help you unlock additional support or access to certain channels.
Want to bring in an amazing agency to manage your PPC? Want to double down on paid advertising but worried about cash flow? Want to experiment with influencers or events/pop-ups?
Funding can alleviate any cash flow concerns and get you on the road to turbocharging your marketing function.
Just make sure you have a clear idea of your target audience, and track your results carefully to ensure you're getting a good return on investment to give yourself the biggest chance of seeing an increase in sales and profits.
3. Investing in advanced tools and software to streamline operations
Starting out with an FBA store, many people choose to take a very manual approach. But as you grow, this quickly becomes unsustainable and so investing in advanced tools and software can be a smart move.
Advanced tools like Inventory management software, logistics and data tools, or even custom-built software can help to optimise efficiency while also helping you improve the overall customer experience.
For example, you can use customer relationship management (CRM) software to keep track of customer interactions and preferences, which can help you personalise your marketing efforts and provide better customer service. Happy customers are repeat customers.
Additionally, you can use analytics tools to track customer behaviour and identify areas for improvement in your product offerings or website design.
The above benefits speak for themselves but all this automation and assistance from your new tools also give you the gift of time.
No longer constrained by manually doing the above, you are freed up to focus on higher-level strategic work, like expanding into new markets or developing new product lines.
These tools don’t come cheap however, so to take the brunt of the financial hit, funding can play a part in being able to access these tools without impacting margins with repayment happening when the positive effects have already been felt.
4. Hiring more employees with funding to expand your business
There comes a time when you can no longer manage that ever lengthening to-do list all by yourself while trying to grow your brand. You find yourself stretched too thin and not able to move at the speed you would like to.
There comes a time when you need help in the form of employees to take on the tasks crucial to the everyday running of the business.
However, hiring new employees can be expensive, which is where funding can help. From the search, to the payroll, having access to capital can help you bring on and retain the additional help you need to succeed.
Things to consider when hiring:
- Whether you need full-time staff or part-time contractors
- Do they have Amazon FBA experience
- What is the role that is going to impact sales and profits most? Marketing, sales, customer service?
- How will you ensure their development? Will you offer training?
All the above will determine and impact the cost of the new hire, all of which funding can help to support.
5. Taking advantage of seasonal opportunities through access to capital
Seasonal trends can have a big impact on FBA sales.
For example, if you sell Halloween costumes, you'll likely see a sales boost in the lead-up to October 31. And of course we cannot forget about the likes of Black Friday, Cyber Monday or Prime Day.
But capitalising on these seasonal opportunities requires planning and investment.
Stocking up on inventory specific to can take a lot of cash up front. Running an increased number of highly targeted ads or other marketing strategies also requires a lump sum.
Funding can enable you to be best prepared for these large calendar or seasonal moments. It can help you purchase extra inventory, run a highly targeted ad campaign, or invest in other marketing strategies to take full advantage of the uptick in demand.
Repaying your funding: Tips for managing cash flow
Of course, taking on funding is not without risk. One consideration is how you'll repay your funding.
Before you take on any loans or credit lines, make sure you have a solid plan for cash flow management. This includes projecting your revenue over the coming months, tracking your expenses closely, and ensuring you have reserves to cover unexpected expenses or dips in sales.
It's also important to avoid taking on more debt than you can handle. Be realistic about your ability to repay, and don't be afraid to seek outside help or advice if needed.
Case Study: How a disruptive food brand realised their growth potential
To illustrate the power of funding for FBA sellers, let's look at the case study of Hunter & Gather, a disruptive food brand selling on Amazon.
Hunter & Gather quickly gained a loyal customer base upon launching in 2017 but fast growth and seasonality put a strain on the business' inventory levels and after years of bootstrapping, they wanted to explore funding options that could enable them to grow their sales opportunities.
They turned to Uncapped for funding in order to purchase additional inventory. This in turn freed up cash to scale marketing efforts which rocketed their ketchup product to #2 best seller on Amazon UK and increased web traffic by 106% in just a month.
They saw their sales increase and were able to comfortably cater for this increased demand through capital from Uncapped.
Conclusion: The benefits of investing in your Amazon FBA store with funding
It's clear that there are significant benefits to having access to capital. Whether you're looking to purchase more inventory, invest in marketing, or expand your operations, funding can help you achieve your goals and grow your revenue.
Just be sure to do your due diligence, manage your cash flow carefully, and prioritise sustainability over short-term gains.
interested to know how to calculate your potential profits? Check out Uncapped's FBA Profit Calculator to see the impact certain purchases and decisions can have on margins.
To find out more and ask any questions, please get in touch with Uncapped’s specialist Amazon team and we will gladly walk you through the available options.