eCommerce companies live and die with their supply chains. From manufacturing delays to shipping hurdles, eCommerce business owners must anticipate and react to changing conditions. However, before they deal with supply chain issues, store owners must model their needs.
Supply chain modeling is essential for eCommerce success since it defines how quickly a company can grow. It also helps business owners plan their working capital position ahead of time.
Unfortunately, eCommerce businesses face a huge gap between their supply chains’ cash needs and the funding marketplace. Funds often arrive at the wrong time and hinder growth instead of boosting it. However, one company believes it has created the ideal solution.
Growing with 8fig
8fig, a Tel Aviv-based planning and funding platform for eCommerce sellers, does not act as either a banker or an investor. Instead, the company is built with eCommerce businesses in mind. To be precise, eCommerce supply chains are 8fig’s biggest focus.
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“SMB sellers’ needs are very different from other small businesses,” says Roei Yellin, co-founder and CRO of 8fig. “Instead of exiting (through acquisition), we want to empower them, give them the ability to grow. When they do want to exit, they can do it when they’re not forced to sell because of no access to cash flow or other resources.”
eCommerce store owners routinely face the situation Yellin describes. Traditional funding sources such as banks are inflexible and prioritize timely payments. However, an eCommerce store’s cash flow is not predictable. It varies depending on various factors, such as seasonal demand.
Thus, store owners are forced to hoard cash during the good times to overcome future shortfalls. And when they must pay back banks on a strict schedule, interest payments divert their attention away from modeling growth and future supply chain needs.
When eCommerce businesses do prioritize growth, they often find themselves short of cash. After all, due to a lack of planning caused by bank interest payment needs, most store owners fail to consider the knock-on effects of marketing and distribution costs when modeling supply chain needs.
As a result, they fall short of their goals and experience shrinkage. Even worse, some encounter stockouts that damage their standing with not only their customers but with eCommerce marketplaces like Amazon, accelerating losses.
In stark contrast to banks, 8fig prioritizes growth above all else and aligns itself with sellers. Sellers can define and model their growth plan on 8fig’s platform and earmark the times they’ll need capital injections. For instance, a big campaign eight months from now will need cash at different points in time.
Marketing, manufacturing, raw material sourcing, and distribution occur at different times and overlap with each other. 8fig knows this and takes 3PL and other ancillary costs into account when building a custom growth plan. Store owners can input and model everything from inventory to marketing costs, giving them a well-rounded picture of their supply chain needs.
With an efficient planning tool, store owners can project cash needs and plan their cash flow accordingly.
Solving the VC issue
While traditional funding sources don’t always align with eCommerce supply chains, VC and private funding also miss the mark. Most VC firms prioritize growth, but on their terms. For instance, a store owner who gives up equity in exchange for funds must answer to their investors at all times.
They cannot let cash sit in a bank in anticipation of future expenses. Instead, every dollar must be spent on funding growth. However, an eCommerce business operates on a different rhythm. For instance, store owners will find it tough to boost growth during the first quarter of a year.
While sales are steady during this period, they must prepare for the lean patch in the middle of the year. In turn, that lean patch offers owners the time to invest for growth in anticipation of the end-of-the-year holiday season rush.
8fig’s free growth planner gives eCommerce owners an easy way to project costs. If their business generates more than $100,000 annually or has a minimum revenue of $8,000 over the last three months, 8fig can also provide supply-chain optimized cash injections based on the growth plan.
The company offers cash flexibly, enabling eCommerce owners to change their growth plans and prioritize different portions of their business. Yellin explains using an example. “If a container is stuck in port, meaning they can’t sell that item, they can log into the 8fig platform, press a button and submit a change request,” he says. “Their cash flow plan is automatically adjusted without a change to the seller’s account.”
8fig funds up to 90% of a company’s supply chain costs, dramatically reducing the burden business owners face.
This method offers store owners an alternative to VC funding, which is extremely demanding and out of sync with eCommerce needs. The growth plan prioritizes convenient cash outflows so that 8fig’s payments never represent a burden on store owners.
From six to eight figures
8fig has grown considerably since its founding in 2020, which is a testament to the success of its product and the many eCommerce businesses they have helped to scale.
Glitch Energy is one of 8fig’s many success stories where the eCommerce store turned down VC funding and instead scaled to seven figures annually using 8fig’s platform. The company even navigated the supply chain effects of the COVID-19 pandemic without suffering stockouts or cash shortfalls.
As 8fig continues to grow, we will undoubtedly hear more stories such as this. As Yellin puts it, “Our name is 8fig, we want every seller to become an eight-figure seller. Our goal is to help 100,000 sellers to do that. Their success is our success, and we want them to feel empowered, to maximize their potential, and we will do everything to support them.”