If there’s anything e-commerce owners have learned during these rocky past two years of selling in the pandemic, it’s that your inventory and supply chain logistics can make or break your profitability.
Sellers of all shapes and sizes are reporting reduced margins and cash flow due to increasing pressure on the supply chain. Yet 43% of small businesses don’t track their inventory, and more than 32% of e-commerce businesses cite “running out of cash” as one of the main reasons their business closed.
If you’re ready to put a stop to the supply chain madness and reclaim your profits, you’re in the right place.
We’ll reveal why inventory and supply chain logistics are bona fide revenue levers for your brand, and share actionable tips to help get your profits back on track — no matter what the future of the supply chain holds.
The scoop on supply chain meets cash flow
- The impact of the supply chain crisis on seller cash flow
- Supply chain logistics done right: The cash flow edition
- Better cash flow means fewer supply chain headaches
Supply chain disruptions and long lead times can leave a big dent in your margins. Find out how SellersFi can help stabilize your cash flow and get your inventory back on track.
The impact of the supply chain crisis on seller cash flow
When you’re scaling a growing brand, your biggest concerns tend to be getting products through the door — and selling them.
Forecast. Order. Sell. Rinse and repeat.
But if recent history has shown us anything, it’s that the supply chain post-pandemic makes this process way more complicated than it used to be.
In today’s unpredictable e-commerce climate — marred by chronic delays, costly disruptions, and spiraling lead times — aligning your supply chain logistics to your cash availability is crucial.
Let’s dig into some of the ways cash flow affects your supply chain, and vice versa.
Stock and freight costs can dry up your cash flow
It’s no secret that once you pay for products and shipping services, not only does your available cash take a hit — the capital is trapped in these goods until you can sell them.
And with products stuck at ports all over the globe, the gap between purchasing inventory and selling it is getting bigger and more expensive by the second.
Considering most stores take 60 to 90 days to go from purchase order to stock on shelves, you could have a long wait before you see any return from these items.
And even if you’re in a niche where a 90-day wait seems doable, when you’ve got this scenario happening across multiple products simultaneously, it’s easy to find yourself in a cash flow crunch.
Fragmented supply chains + costly delays = waning margins
Whether your supply chain is disjointed due to a lack of product availability or additional safety restrictions, supply chain disruptions can only mean three things for your store — money, time, and brand cred down the drain.
Not only does your store incur a huge opportunity cost due to stockouts, but customers may also come to view your brand as unreliable and switch completely if you can’t consistently provide what they need.
Look no further than the countless brands that have lost an astounding $4 trillion due to issues like the US-China trade dispute, the Suez Canal incident, and the resulting sharp rise in freight costs.
No matter which way you cut it, these disruptions can wreak havoc on your sales and cash flow. Without the financial resources to overcome these issues and get inventory back on track, your revenues could soon unravel.
Make supply chain your competitive advantage
The good news? It’s not all doom and gloom.
With supply chain issues being so widespread, those retailers who manage to get ahead of these challenges can also get one giant leap ahead of the competition.
By improving your inventory forecasts, getting a better grip on long lead times, and synchronizing your sales with your inventory availability — you can reduce stockouts and boost both your cash flow and margins.
Plus, you’ll save time and money, which you can pass down to customers through discounts and offers that build increased loyalty for your store at a time when many other brands are dropping the ball.
We know how easy it is for inventory and cash flow to become misaligned. Find out how SellersFi can help you get back in sync.
Supply chain logistics done right: The cash flow edition
Once you understand why optimizing your supply chain ops is such an important sales issue, there’s no turning back.
The next step is to take a firm hold of your inventory to streamline your supply chain and increase cash availability.
Here are some of the steps you’ll need to take:
Drop the spreadsheets
Still using manual processes like spreadsheets and emails to track your inventory? We get it.
It can be tough to let go of the tools that helped you in the early days of your store’s growth journey. But once you hit the $1 to $2 million mark, your store’s inventory and supply chain operation will involve many more moving parts — adding complexity to your business that manual tools simply can’t keep up with.
To unlock capital from your supply chain, let technology help. Look for an inventory and supply chain management system that can:
- Produce accurate inventory forecasts
- Unify your supply chain from end-to-end
- Track stock levels and sales performance
- Automate updating inventory levels, reordering, and alerts
- Let you know in real time when there’s an issue with your supply chain
Audit your inventory for cash-killing products
Deadstock and overstocks hold your capital hostage and create additional losses through things like long-term storage fees.
To lighten your store’s cost load and improve your overall margins, sift through your data to uncover poor-performing or slow-moving products. Then look for ways to liquidate them.
For example, you could:
- Offer the product as a free or low-ticket add-on when shoppers spend a certain amount in-store.
- Open an outlet store on a high-traffic channel like Amazon or eBay.
- Sell the slow-moving items in pallet loads to other stores or liquidators.
- Host a mega sale with giveaways to attract attention.
If after all your selling efforts you still can’t shift the goods, consider writing off a portion of those products.
Zoom in on your costs 🕵️
As your business grows, it’s easy for redundant or unsuitable goods and services to become hidden in plain sight.
But these charges can add up.
Make sure you’re getting the best value possible from each of your suppliers, 3PLs, and other supply chain stakeholders — and don’t be afraid to shop around for better deals. Look for any overlapping areas where you may have already paid for solutions that solve the same problem or task.
Some common areas where you may be able to reduce expenses include:
- Manufacturing and suppliers
- Product testing
- Freight (sea, land, air)
- Carriers and 3PLs
- Packaging supplies
- Admin tools
Stagger production and launches to preserve more cash
Sometimes it’s not your supply chain, it’s how you’re managing your launches and restocks that affects your capital levels. Too many product drops could dwindle your cash flow, but so could too few replenishments.
To balance out supply and demand in your online shop:
- Figure out what sells fast in your store.
- Work out how often you get cash disbursements.
- Align these disbursements with your stock ordering dates.
- Negotiate with your suppliers and freight forwarder to have smaller orders sent out to you after your initial stockpile is shipped.
- Use discounted presales to launch new products, raise capital, and buy time to fit the order into your production cycle — without creating cash flow problems.
With the right approach to your production and launch schedule, you may be able to organically generate the cash you need to keep goods in transit while maintaining optimal cash on hand.
Actively look for ways to futureproof your store’s inventory
If there’s anything we’ve learned from the great supply chain crisis, it’s that the more productive and efficient your business is, the more money it’ll make and keep.
Because like it or not, your inventory has a massive impact on your cash flow. And the opposite is also true.
To get ahead of the game with your store’s inventory and supply chain operations, ask yourself these questions:
- What KPIs will help us stay on top of our inventory ROI?
- How can we use our supply chain to improve profitability? (For example, sending top-sellers to key in-territory warehouses for faster shipping.)
- How can we shorten the time it takes to learn crucial supply chain tasks in our business? (E.g., manufacturing, packing for Amazon warehouse, etc.)
- How can we improve the connection between all the points in our supply chain?
- How can we increase ROI at every stage of our supply chain?
- What actions can we take to make continuous improvements to our inventory and supply chain operations?
Better cash flow means fewer supply chain headaches
If you’re one of the thousands of sellers impacted by the truly historical supply chain disruptions brought on by the pandemic, know that you’re not alone.
Trying to solve the Rubik’s cube of staying in stock year-round in the face of these unprecedented challenges can feel like a full-time job, in addition to all the other work you’re doing to grow your brand.
Luckily, flexible funding can help bridge the gap between your next stock order and your next payout, so you can continue to scale without the supply chain and cash flow headaches.
With the SellersFi Daily Advance, you can get up to 90% of your daily marketplace payouts, starting at just 0.5% of the advanced amount. Or, if a more long-term solution is what’s needed, Working Capital funding gives sellers access to up to $5 million with flexible withdrawals and terms of up to 12 months.
Because your inventory and cash flow both play a crucial role in your success, aligning the two can be a challenging task. And unfortunately, this is one issue that probably isn’t going away anytime soon.
Don’t let supply chain issues take the wheel. Get started on your inventory and cash flow strategy today and watch your e-commerce store thrive.
Cash levels not where they should be? Learn more about how SellersFi can help.