As more people start the Amazon FBA business model, the competition stiffens, meaning success can become challenging. Still, it’s not impossible and can come with great rewards if pursued effectively.
Growing your e-commerce business in 2021 means, you’ll have to channel effective branding, marketing, and use of the Amazon platform. To do these things and to do them well, you’ll need the right amount of capital.
But what if coming up with capital is a challenge? Or what if scaling your FBA business considering the rising costs in logistics becomes overwhelming?
Well, you’ll have to dig deep and find unique ways to drum up those extra funds. That’s what this article is all about, helping you find the best ways to increase capital so you can scale your Amazon FBA business in 2021.
Starting with a Healthy Budget
Several years ago, you could start an Amazon FBA business with a few thousand dollars and see a 3X scenario in an exit. Starting an FBA business in today’s climate, however, means you may have to plan to have a healthier budget than a few years ago due to increased competition, rising costs in logistics, and steep inventory restrictions.
Consider all upfront costs in getting started and take some time to review some of the more hidden costs like Amazon FBA fees. See our Amazon FBA profit and loss tracker to help you understand your margins once you get started.
#1 Seek Extra Capital from Family and Friends
In today’s world, you never know who may be considering the jump to e-commerce. It could very well be that your friends and family have the capital you require to start selling on Amazon FBA, but they could lack the understanding or time.
Initiate conversations with friends and family that you feel could be a good fit for your Amazon FBA business venture. Ensure you have proper business negotiations and contracts in place to protect all parties.
While these relationships in your life are key, always remember that parties should mutually understand and agree to terms before any exchange of capital.
#2 Capital from Credit Cards and Bank Loans
Not everyone will have immediate people in their lives to consult for additional capital to grow their Amazon FBA business. With this in mind, it’s always a good idea to review what credit you may qualify for as a small Amazon FBA business owner.
Nowadays, many credit cards offer lower interest rates and incentives to help small business owners start or scale their entrepreneurial journey. Banks also provide particular loans for small businesses depending on their credit score and number of years in business.
Just keep in mind that credit cards may not offer the high limits you may require to grow your inventory levels and can leave you with long-term balances as you wait for your Amazon payments to roll in.
Credit cards and bank loans should be used wisely and as a shorter-term solution.
#3 Amazon FBA Business Lending
Did you know that Amazon offers lending for small Amazon FBA businesses but by invitation only?
If you qualify, the terms are for 12 months, and you may be able to gain anywhere from $1,000 to $750,000 in working capital. Interest rates can vary from roughly 5 to 15 percent. Amazon charges a fixed percentage of gross sales and deducts this percentage from the Amazon FBA seller’s account.
For some, Amazon FBA business lending is a great option as there are fewer fees, and the money is strictly dedicated to growing inventory sizes and the FBA business in particular.
#4 Accelerated Payout Solutions
Once you start your Amazon FBA business and have an active Amazon seller account, you may qualify for accelerated payouts from various Amazon FBA business payment solutions.
Accelerated payouts help Amazon FBA sellers avoid delays in payouts from Amazon. If a seller qualifies, they can get their payouts advanced every day, including on weekends and holidays, so they can effectively increase the capital in their Amazon FBA business.
Many of these payment platforms offer a variety of banking needs aside from accelerated payouts. Many offer the ability to accept payments in various currencies, helping Amazon FBA business owners save money and, in essence, increase capital.
Here are a few great service providers that offer accelerated payouts for Amazon FBA business owners:
- PingPong
- Payability
- Sellers Funding
#5 Leverage Amazon FBA Reimbursements to Increase Captial
Amazon FBA reimbursements are great hack Amazon sellers can take advantage of to increase the capital in their Amazon FBA businesses.
When selling on the Amazon marketplace, discrepancies are a regular occurrence, and according to our data, 1-3% of a seller’s inventory can be affected by a discrepancy.
Discrepancies include overcharges in Amazon FBA fees, lost inventory, damaged, disposed of inventory, or destroyed inventory. Sellers qualify for Amazon FBA reimbursements on these discrepancies.
Once an Amazon audit is performed, a seller can make an Amazon claim to file for these reimbursements. Shameless plug here guys, but GETIDA is the global leader in Amazon FBA reimbursements. We work to get you, the seller, the maximum Amazon FBA reimbursement you are eligible to receive.
Once recovered, this capital can be used to scale your Amazon FBA business in any manner you choose. Increase your inventory size, make more frequent shipments, or update your branding and marketing. These are just a few ways the capital from Amazon FBA reimbursements can help you grow your Amazon FBA business.
Final Thoughts
With aggregators flooding the industry looking to purchase Amazon FBA businesses, now is the time to get started so you may achieve a healthy exit and multiple in only a few year’s time.
Securing capital can be a little daunting, but there are many great options out there to research. Just like your decision to start your Amazon FBA business, what is essential is taking all the necessary steps to take action.
Be diligent in your research, ask questions and compare fess to ensure you get the best products and solutions available to increase your capital.
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