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Could Revenue-based Funding Be the Secret to Your Success?

A growing number of e-commerce merchants are turning to revenue-based funding as they seek out financial solutions to help them keep pace with the continued growth of demand for digital commerce, despite the recovery of in-person retail from last year’s lows.

Lockdowns and health concerns that drove consumers to seek out online solutions last holiday season weren’t a catalyst for change — they simply accelerated a trend that began as digital-native generations matured and expanded their purchasing power. Experts predict that U.S. online retail sales will increase by 14.4% this holiday season, with e-commerce accounting for nearly one fifth of all consumer spending in November and December.


Merchant Needs Shift as the Market Changes

The 2021 holiday season isn’t all online merchants need to be planning for. Predictions for e-commerce trends in 2022 include a continued increase in online shopping, greater interest in custom packaging, and the expectation that brands will offer a more personalized experience and better payment processing for consumers.

Taking advantage of growing interest in digital retail can mean different things to different merchants:

  • Expanding inventory
    Out-of-stock messages remain at abnormally high levels as supply chain disruptions persist, and many online merchants are looking to increase their on-hand inventory to meet rising demand.
  • Reaching new markets
    Global interest in e-commerce has opened up opportunities for retailers to reach consumers outside the market they operate in. You may be searching for ways to expand your footprint to sell to a wider audience.
  • Ramping up marketing efforts
    Social and retail media are gaining popularity, and digital merchants who want to get their brands out in front of consumers clamoring for online shopping merchants need to make marketing investments a priority.
  • Competing with big brands
    Giants like Amazon, Walmart, and Apple have scooped up a massive share of e-commerce growth in the past year. Smaller merchants are seeking out ways to compete with special offers and free shipping, both of which can eat into merchants’ bottom line.
  • Upgrading platforms and payment tools
    The consumer experience — especially during payment — is playing an increasingly important role in conversion rates. In fact, 36% of shoppers say they’ve abandoned a cart mid-purchase because they didn’t trust the merchant’s site with their credit card information.


New (and Old) Challenges Stand in Your Way

Some of the challenges e-commerce merchants face have existed since the industry first appeared. Traditional business financing models (think banks, investors, and venture capitalists) aren’t necessarily built to support online retail, where there are often lengthy gaps between paying for inventory and seeing revenue from it.

Loan providers willing to work with digital retailers often base the borrowing limits on the value of on-hand inventory, while securing investments often requires merchants to yield control of some of their business. At the same time, many current product sourcing models require large upfront payments, leaving online sellers short of funds for promoting their offering until inventory arrives and begins to sell.

Meanwhile, pandemic disruptions to shipping and supply chains are increasing delays between ordering and selling inventory, compounding the challenges that merchants face, even as e-commerce opportunities increase. And that’s where revenue-based financing can make a difference.


What is Revenue-Based Funding?

Revenue-based financing can empower e-commerce merchants to seize current and future opportunities and address the roadblocks standing in their way. How does it work? Funding providers who offer revenue-based financing solutions look at your business’s potential earnings, rather than the value of the inventory or assets you hold.

Adobe has partnered with Wayflyer — a revenue-based funding solutions provider that works exclusively with e-commerce merchants. This partnership allows Adobe Commerce and Magento Open Source customers access to fast and simple financing when they need it the most. It also helps grow customers quickly. Merchants can use Wayflyer funding for growth, whether it is for inventory, additional marketing spend, or investing in digital.

Financing can be complicated. Learn more about how revenue-based financing simplifies short-term financing and allow greater e-commerce growth. Download a free copy of “Are Traditional Financing Solutions Holding Your Online Business Back?” or visit the Wayflyer website for more details.