In just a couple of years, the world of e-commerce has evolved beyond recognition. While online sales are undeniably here to stay, margin-crippling shipping delays, lengthening lead times, and rising costs have also become the norm.
In 2021 alone, there were 11,642 supply chain disruptions globally.
For marketplace sellers and high-growth brands, the struggle to get ahead of inventory has never been more real. The good news is, that there have also never been more ways to optimize your supply chain for increased sales and profits.
Today, we’ll get into some of the proven ways e-commerce owners can secure the right inventory at the right time while bolstering cash flow and protecting the business from unnecessary stockouts and losses.
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There’s nothing like the feeling of waking up to a slew of notifications alerting you to new sales that came in while you were sleeping. But now that you’ve reached that next revenue level, it’s time to aim even higher.
But there’s just one problem.
Your inventory and supply chain is anything but predictable. Late shipments, supplier politics, stockouts. It’s a lot to keep up with.
Then there’s the simple fact that managing your supply chain, well…it’s just not as sexy as other areas of the business.
Thankfully, there are some very real benefits to help sweeten the deal. Here are just some of the perks you stand to gain by boosting your supply ops and cash flow.
Supply chain disruptions can and will happen.
As much as we wish it weren’t true, global supply chain chaos is here for the foreseeable future. It’s bound to impact your inventory, sales, and cash availability at some point.
The only way to really manage that fact is to face it head-on.
With adequate working capital, sellers can secure inventory in advance, get ahead of long lead times, and ensure that each stakeholder in your supply chain is equipped to handle the inevitable delays and extra costs thrown its way.
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As you break the stockout cycle and develop strong internal capital, you can invest in your supply chain as you scale, without needing to incur bad debt.
“Since we get paid every 14 days, our cash was tied up, especially considering the amount we hold in reserve,” says the founding team at the premium online wedding gift store, Deluxy. “It put stress on our cash flow. We’ve also been getting used to the inventory limits and restrictions that Amazon has imposed on sellers.”
Fewer disruptions in the supply chain means fewer stockouts and more sales. With extra capital to invest in your supply chain infrastructure, you’ll be prepared to generate stable revenue long-term.
For steady sales in your e-commerce business, you need both capital and inventory efficiency. In the current supply chain climate, one simply cannot thrive without the other.
With stronger cash flow, you can negotiate better deals with suppliers and freight forwarders, or even invest in your own storage facilities.
Depending on your vertical and niche, you may want to:
In Deluxy’s case, once the team was able to secure the cash flow it needed, they started working with a 3PL and opened up their own warehouse to reduce shipping fees and storage costs.
No matter what happens next, the brand will be in a great position to keep supply chain costs down, while driving sales forward.
Now that we’re clear on why the supply chain is so fundamental to growth, let’s get into some of the practical steps you can take to keep your inventory and sales on track.
As you might’ve guessed, step one is all about getting a clear reading on your cash flow.
One of the best things about e-commerce is that there are multiple ways to scale.
Rather than chase all of them at once, make sure you’re clear on your top three to five business goals this year.
Then, break them down into short-term and long-term objectives with action points, deadlines, and costs for each. This information will form the foundation for how you optimize your cash flow and determine which inventory-related tasks you will prioritize along the way.
Here’s what that could look like for the goal of launching a new product:
Don’t forget to budget a little extra in each area to account for unexpected expenses.
Once you have your business targets in place, it’s time to align your initiatives with your store’s existing working capital.
Review your store’s current capital levels, including:
Next, align your cash to the priority projects you have planned, so you can time your investments when liquid cash is high in your store.
For example, say you have an influx of cash in January and February when disbursements from Q4 hit your business account. You can schedule some of your more capital-intensive tasks, such as large stock purchases or key equipment upgrades during this period.
When your inventory and supply chain are fully synced with your cash flow, the result is more revenue. But with things changing as fast as they are, it’s best to think of this as an active strategy — not a one-off play.
Once you’ve clarified your key business and supply chain objectives, you’ll need to check in regularly and gauge what other areas of your business may require additional tweaks.
Here are a few quick checklists for potential areas you may want to continue optimizing as you scale.
For example, if your goal is to improve customer satisfaction through expedited shipping and returns, it may make sense to invest in a better fulfillment solution and cut costs in other areas that aren’t moving the needle on your business goals.
For healthy margins, keep a close eye on these three areas:
Last, but not least, aim to stay agile in both your cash flow and your supply chain with a robust supplier and fulfillment network including built-in buffers and backup plans to avoid expensive mistakes.
An optimized supply chain and healthy cash flow go together like two peas in a pod, breeding long-term success, high margins, and healthy profits for your growing store.
But keep in mind, it’s a never-ending journey. Stay on top of the latest supply chain trends and dedicate time to learning tactics that will help you align your inventory and cash flow.
As you make strides in your supply chain, unexpected events will inevitably crop up. To stay ready for any twists and turns, you may want to seek out flexible working capital to act as a safety net so you can continue to scale, come rain or shine.
When you’re ready to put the right partner in your corner, SellersFi can help. Our team is experienced in e-commerce and here to help you hit the next level. Want to learn more? Check out our quick, two-minute demo and find out how we can help you grow your store.
