Ecommerce businesses typically must purchase or manufacture inventory weeks or months before it sells, particularly ahead of seasonal peaks such as the holiday shopping period. Marketing spend to drive traffic and conversions also often needs to be funded before the resulting sales are realized.
As an online store scales, it may need financing to place larger inventory orders, expand into new sales channels, or invest in fulfillment infrastructure, often on a timeline that outpaces available cash from operations.
Common cash-flow challenges
Inventory prepayment, seasonal demand spikes, and the lag between marketing spend and realized sales are common cash-flow challenges for ecommerce operators.
Typical operating expenses
- Inventory and manufacturing costs
- Digital advertising and marketing
- Fulfillment, shipping, and warehousing
- Platform and software fees
- Customer service and returns handling
Growth and inventory needs
Scaling into new product lines, seasonal inventory builds, or expanding into new marketplaces are common growth moments that may call for additional working capital.
Seasonality and working capital
Some ecommerce businesses use a line of credit to help fund inventory purchases ahead of peak selling seasons, repaying as sales come in.
Financing options that may fit
- Business lines of credit for inventory and marketing spend
- Business financing for general working capital
- Equipment financing for fulfillment or production equipment
- SBA financing for larger scaling initiatives