Q4 Budgeting And Resources

How are you setting a budget as you develop plans for your business this holiday season? 

Are you accounting for any supplier negotiations, fulfillment cost increases, or how the cost of advertising has increased? 

The bottom line is additional funding may be necessary if you want to make the most of what will likely be the biggest online shopping season ever.

In this webinar, Ricardo Pero, CEO of SellersFunding, joins Teikametrics as we discuss critical elements sellers should know about when bringing on additional capital. 

We cover key considerations for 2021 given recent trends, as well as examples of sellers using additional capital effectively during past holiday seasons.

Webinar Topics

  • Unique business challenges of 2021 and why your business may need to leverage additional capital for Q4 growth
  • How the cost of advertising on marketplaces shifts during Q4, and how this varies by vertical
  • Detailing different financing options, and what are best for different business use cases
  • Illustrating real-world examples of businesses who successfully used additional capital to their advantage during the holiday season

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Watch the Getting The Budget You Need For Q4 Replay:

Key Takeaways

Expect the unexpected

COVID has increased complexity and expenses for ecommerce sellers. It’s best to be prepared to flex and pivot as conditions inevitably change.

“Unfortunately since COVID, with everything that happened, we saw ecommerce taking off, but with the increase in activity, we saw an increase in challenges related to logistics, relationships to suppliers, Amazon imposing rules for sellers to use the FBA system. So everything became more expensive and complex to deal with logistics issues.” – Ricardo Pero

Budget for product launches

Product launches are a time to utilize all your resources to give your products a chance at success on a new marketplace. 

Let’s say you’re launching a new product. You want to take advantage of everything at your disposal to make that product a success during that period where conversions are going up, the volume is there. Do you have everything on hand to make that a reality to put your best foot forward?” – Andrew Waber

Know that Amazon can be slow to pay out

When you launch a new product, Amazon may hold a large portion of your payments. The Daily Advance program from SellersFunding can help you to access those funds more quickly to free up working capital. 

“When you scale a new product and you scale fast, most likely Amazon will hold your payments. I just had a call with one of our clients. He has $80,000 in receivables being held by Amazon. Amazon will pay him like $25,000 because he’s growing too fast with a completely new line of products. So the Daily Advance can be a great solution for that.” – Ricardo Pero

Anticipate a big Q4

An enormous amount of annual shopping happens during the Q4 holiday shopping season, so it’s critical for ecommerce sellers to be prepared.

“In general about 40% of retail sales in the U.S. happen in the last quarter. And that’s no different for ecommerce and for our client base. So having a plan and a budget in place is really important to face that specific time of the year.” – Ricardo Pero

Avoid stock-outs

Stocking out isn’t ever good, but during Q4 it can be ruinous. You want to try to manage your inventory to avoid those stockouts.

“What you don’t want is a situation where you’re dealing with a lower than expected inventory, which is going to hamper your ability to grow over the course of Q4. And you don’t want to go out of stock. That can impact your business, going forward for months, especially on a marketplace like Amazon.” -Andrew Waber

Don’t rely on last year’s data

Shopper habits have changed over the course of the pandemic. It’s helpful to look at last year’s data to get ideas about what might happen, but you can’t assume that shopper behavior will be the same this holiday season as it was last holiday season. 

“What you want to do is really keep your finger on the pulse. How are things evolving now and how are those trends? And you want to make those decisions as you see them occurring. Where are you seeing conversions? Where are you seeing costs rise, maybe more precipitously than you were expecting? Is that worth it? Really considering the value of the products of value per click.” -Andrew Waber

Prepare for rising CPCs

Across Amazon, CPCs have been rising steadily for the past few months. There’s a good chance they’ll continue to rise through 2021, so you’ll need to optimize your ads and have the budget on hand to continue to run them. 

“Between February and this past month, you saw an average of 7% increase month-over-month on CPCs. It’s going to vary by verticals – certain verticals would be more, certain verticals would be less. But that’s a big number when you look at month-over-month.

Now, how do you look at that? How does that continue through December? We shall see, but that’s definitely a trend you want to watch. You’re potentially in a position where those CPCs between earlier this year, by the time we reached Q4, it could be 50% high. That’s a real possibility. And you need to be prepared for that.” – Andrew Waber

Optimize your ads

Rising CPCs aren’t necessarily a cause for concern if you’re seeing even larger rises in conversions. However, you do need to optimize your ads to gain the most out of them that you can. 

“You don’t want to be in the position where it’s, ‘I can’t spend enough to get the marketing necessary to actually convert those sales.’ 

And on the optimization front, working with someone like us, we can help you do this. But even outside of us, clean up your campaign structure now, especially on places like Walmart and Amazon. You taking that more optimized frame where it’s a many-to-one structure, an auto campaign where I can see how performance goes, and then if performance is good, move those keywords over to manual so I can bid more effectively on them. 

That’s something you should be doing now. That does take time to get into a practice and get those muscles working as an organization. But this really works.” – Andrew Waber