Ecommerce Financing Tips

Ecommerce Financing Tips

Statistically, ecommerce has seen tremendous growth over the past decade, with more and more people choosing to pursue careers in this particular field. Launching e-stores take commitment and hard work. There is a lot of rigorous analysis, and a lot of understanding that must be gained before you can decide on the product or service you wish to sell. These activities don’t come free of cost, so you’ll have expenditure and budgeting to do before your store even kicks off, and customers have started rolling in. Expenses may grow or decrease in later stages depending on the kind of business you’re planning to run, but the initial phase is still a crucial budgeting stage. Below, we have listed a few tips that you can keep in mind while financing your e-commerce store even before customers begin to step in.

FREE PLATFORM: there is a multitude of free e-commerce platforms that you can access at the click of a few buttons, thanks to the miracles of the internet and the world wide web. There are some free platforms you can choose from to get your ecommerce website started, but they come with their fair share of dangers. Always research the background and terms of use that these sites have before you begin using them, to avoid any complications that may come up later.

There are many websites whose policies may seem appealing for the short term but can affect business and customers negatively in the long run. Even if you’re aiming to cut down on costs, untested websites are a risky bet, and you will need to proceed cautiously. The more comfortable and safer idea would be choosing historically reliable ecommerce platforms, and then opt for the cheapest or most basic plans that they have to offer. Some may even have trial periods or offers which you can work to your advantage. If your marketing strategies and tactics are in place, you will be able to utilize this free period to your advantage and gain customers before you have to start paying for the platform.

CREDIT: Credit is a well-known concept to anyone who indulges in financial transactions. Credit cards can be the very basis upon which you begin your entire ecommerce website. However, keep in mind that your first step should be separating the cards or accounts you use for the personal expense and for the business, to avoid any confusion at a later stage. Equip yourself with knowledge about the credit policies that are offered by different banks and how they will play to your advantage.

A lot of comparison between the various terms and offers can help you find the bank whose policies are ideal for you. Some banks will also have offers and extras based on your expenditure in certain areas, travel history, and history of good credit. To qualify for these, your expenditure for a specific period would have to be high, which the start of an ecommerce business is ideal for. Keep in mind that credit is always a risky business and it can slip away from you very fast if you do not pay careful attention, and map out all your plans. There are numerous stories of people whose businesses fail just because their debt is far greater than the amount they earn. Strategize wisely and stay focused on your priorities for the business to avoid such situations.

UNDERSTANDING PROFITS: The price at which you are planning to sell your products or services can be a significant factor in deciding how your entire business model is going to shape up. Ideally, the profits you make should be enough to cover the manufacturing or service costs, as well as all the additional costs you have acquired as a business, and leave a margin of profit. If you aren’t sure about how to calculate these accurately, turn to an expert. Pricing decisions are crucial and messing up here can be the single factor that breaks your business. If your pricing cannot cover all the costs and expenditures, your ecommerce business cannot hope to continue in the long run.

INVESTORS: If you’ve ever watched finance based shows such as shark tank, you will be well aware of terms such as ‘investor’ and ‘investment’ that get thrown around regularly in conversations about emerging businesses. This also applies in the field of ecommerce business, where you can attempt to kickstart your work and setup by looking for investors who may be willing to pay the initial costs. Some investors are always on the lookout for new businesses that have fresh and innovative ideas which they can see taking off in the long run. The entire idea behind investment is that they can spend a small amount of money to help kick-start the business, and get a certain percentage of the business and its profits in return over the long term. Getting investors interested in your business proposal essentially involves selling it to them so that they find it profitable and are willing to spend their own money to ensure that it works. Presentation and pitching become key.

CUSTOMER FRIENDLY: Since most ecommerce businesses start on a credit basis or will have previous expenditure that they need to cover as soon as possible, the consumer becomes their most important focus. Attracting and retaining consumers is a daunting task for anyone, and even more so when the business is just getting on its feet. Make sure you have a marketing strategy in place that is strong enough to attract consumers to your site.

Make your site as customer friendly as possible so that they are not confused or overwhelmed in their shopping experiences. Moreover, since you have so much competition out in the market, you will need to have elements or policies which attract consumers. This could be exciting offers, good return policies, easy payment opportunities, or essentially anything that gets them hooked to your website. The customer should always be your focus because there is very little hope for your ecommerce business without them.

WAREHOUSING AND STORAGE: If the ecommerce website revolves around the sale of products, you will need a storage space where you store your goods until they are to be shipped. Warehousing is an expensive affair, and it is more sensible to rent one in collaboration with other businesses when you first start. Unless your products are large, bulky, or have already been produced in large quantities, this is a logical approach. Moreover, as time goes on and you see your ecommerce business picking up the pace, you can begin investing more into buying or renting more warehouses. Remember that this is a crucial expense which you will have to factor into all your budgeting and models.

If you are an ecommerce business that focuses on services and not the sale of tangible products, the expense in this area will translate into expenditure on working spaces, or the equipment required by your employees for producing these services. There may also be expenditure which is incurred for transportation, and communication, which you will have to estimate well in advance. Overall, keep in mind that even if your consumer is not physically present at the time of ordering the product, they are still looking for real commodities which take up time and space and need to be accounted for.


Hopefully, these few pointers have given you a general idea of how you will need to go about planning the initial budgeting and finances for your ecommerce website. We wish you the best of luck with your new ecommerce venture!

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