A month ago I wrote a blog post about the rise of FinTech (or Financial Technology) in ecommerce.
FinTech refers to cutting-edge software and emerging technology that can supercharge the way that you use financial services. It includes everything from online banking applications to money transfer apps like Venmo and Zelle.
FinTech is Already a Big Part of Our Lives
There’s a very good chance that you’ve already used some aspect of FinTech in your everyday life. FinTech is as easy (and ubiquitous) as flashing your Apple watch “wallet” or simply using a credit card issued by a traditional bank.
This form of FinTech is said to be “embedded” into the commerce ecosystem. Even though Shopify, Amazon, Visa, American Express, and Mastercard are not purely FinTech companies, it is a large part of how their businesses run (and make money).
Recently, FinTech companies specializing in supplementary funding for ecommerce sellers have become an important part of a rapidly changing business landscape. These companies are offering solutions for individual Amazon FBA (Fulfillment by Amazon) sellers, as well as the billion dollar companies “aggregating” Amazon businesses that are making news every day.
I recently had a (virtual) conversation with the founder and CEO of one of the most respected, and successful of these new FinTech companies.
FinTech Funding 101
SellersFunding is a global financial technology company on a mission to empower growth for ecommerce sellers by providing the most comprehensive suite of financial solutions. If you are one of the many users of Helium 10’s software tools, you might already know that SellersFunding is the company backstopping Helium 10’s Alta financial services.
As the founder and CEO of SellersFunding, Ricardo Pero is uniquely positioned to speak to the recent changes in the online-selling marketplace. More importantly, he can help give us an idea of how sellers of all sizes might take advantage of this influx of ecommerce-optimized funding that is often the difference between a failed product and rapid, exponential growth.
I asked Ricardo a series of questions that initially focused on the role that his company is playing in today’s business landscape. I then asked him to take out his crystal ball in order to make a (very) educated guess about where we might be headed in the next 12 months and how FinTech can help sellers to navigate that crucial period of time.
Here is our conversation:
6 Questions for SellersFunding’s Ricard Pero
1. Ecommerce has dramatically changed the retail landscape. What are the biggest challenges for (small and medium sized) businesses trying to adapt to the explosion of commerce?
Ricardo Pero: Timing and capital are two of the main components that bring small and medium sized businesses to success. 38% of small businesses fail due to lack of access to capital.
Appropriate deployment of that capital is also crucial. Many small businesses have to learn to navigate their debt and finances to achieve success. Learning about financing options and which options fit their business is a must.
Choosing partners that will help them scale is a big challenge but that’s where SellersFunding steps in. Above having a full suite of financial tools, SellersFunding is a growth partner on a mission to get small and medium sized ecommerce businesses to the next step.
2. One of the first things that ecommerce sellers are told to focus on is scaling up their business. Can a FinTech company such as SellersFunding help sellers know when they are ready to start scaling up?
Ricardo Pero: Scaling up a business starts with getting ahead and doing a lot of “homework.” Learning which products are moving the needle and which products are at the end of their lifecycle is a good start.
Using capital to buy more inventory is a must to reduce unit costs, maintain healthy inventory, and improve relationships with suppliers. Reducing unit costs and increasing product price by as little as 3% on each side is the key for unlocking exponential growth. Deploying capital properly is the first step to achieve this.
3. Once a business starts scaling up, in addition to access to capital, are there other ways that SellersFunding can help businesses to grow?
Ricardo Pero: Apart from capital, SellersFunding gives sellers access to low rates for FX (Foreign Exchange), a global collections account, cash management solutions, supplier pay tools, and a full data dashboard that helps ecommerce businesses see how they are performing and even what the valuation of their business is.
Combining these tools with the one-on-one, hands-on account management style is the perfect recipe for growth for our clients.
4. Everyone has seen the images of container ships offshore waiting to be unloaded. Is there a way that a company such as SellersFunding can help alleviate this crisis for an ecommerce business?
Ricardo Pero: Sellers have been forced to invest more in inventory to accommodate for the longer lead times and account for any unexpected delays on top of the surge in sales across categories.
Any lag in inventory can seriously harm the performance of their business and the increase in lead times only makes the prospect even more grim. Many sellers rely on outside capital or credit lines to top up on their inventory which means they start paying back balances on inventory they haven’t even had the chance to sell yet.
We offer flexible working capital options and interest only repayments for up to 6 months to our clients because we know that the supply chain and logistics crisis is adding additional stress to these businesses. We understand that they shouldn’t have to pay on inventory before they can move it.
5. As ecommerce has expanded around the globe, are there international complexities that you feel that FinTech is uniquely positioned to help solve?
Ricardo Pero: Fintech is opening the door for more specialized capital solutions. SellersFunding knows ecommerce and offers tools specifically for this demographic.
We have capital in the merchant’s hands in days, not in weeks or months like many institutions. The data we collect from our clients and the technology we built that backs us is a supplement to our financial savvy that drives our proprietary credit risk model.
This makes us a better partner than traditional lenders. Ecommerce is a world of its own.
6. Please take a look into your crystal ball. Is there anything you see coming that you would want your ecommerce-selling friends to know and prepare for?
Ricardo Pero: Here are some trends that we anticipate for ecommerce:
- Going into the holiday season for 2021, Black Friday/Cyber Monday are both going to continue to be relevant as shopping events/holidays. Most groups are estimating YOY (Year over Year) sales growth, but due to supply chain issues (such as longer shipping times, higher shipping and material costs, and increases in the cost of labor across the board), you can expect fewer deals compared to previous holiday seasons. This year is also expected to tell whether or not the large shift to online shopping is permanent, which is largely expected post-COVID.
- The strongest retailers and brands will be the ones who began planning earlier in the year (July/Early August), where companies that are following the traditional 3-month logistics timeline that was the industry standard pre-COVID may see more items out of stock or unavailable.
- With the rapid maturation of the ecommerce segment of the market, the providers, tools, and methods both born and refined during the pandemic are rapidly changing the face of the way we buy and sell. The entire industry is booming behind the scenes, and the marketplaces that can adapt and take advantage of this new technology will see the largest growth.
- The global supply chain disruption caused by covid will inevitably drive change in the space. From policymaking to new innovation led by AI (Artificial Intelligence) and digitization, we expect there to be an increase in efficiencies to support this new era of global commerce.
- Direct to consumer brick and mortar will be making big shifts into ecommerce as people sink into the convenience of online shopping. This includes ever expanding the ways clients can pay. (PayPal, BNPL, card, Google, Apple Pay, etc)
Better Solutions for a Tougher Ecommerce Landscape
A big thank you to Ricardo Pero for taking the time to give us all a better understanding of this new way that online sellers can navigate a constantly changing marketplace.
Ecommerce in 2021 is played out in an increasingly competitive arena. Two of the most important components of success are the assistance of a financial technology company like SellersFunding, and the support of a skilled Amazon agency such as CANOPY Management.
The CANOPY Management ‘Tribe’ is a team founded by top Amazon professionals, multi-million dollar sellers, and award winning ecommerce experts. When you’re with Canopy you’re more than a client, you’re a partner.