Project description
A German entrepreneur is setting up an online trading company that sells its products via the Amazon marketplace in Germany.
The range consists of a few carefully selected products for children. Further products are about to be launched.
A strength of the company was the structured approach to selecting suitable products. A weakness was the immature calculation. We supported the retailer in setting up a contribution margin calculation for the products and variants with all relevant direct costs.
e-commerce is characterised by the need for pre-financing of purchased goods. Many internet retailers suffer from a lack of liquidity to finance inventory – including this young company.
The Amazon seller was looking for six-figure financing for his company. In order to achieve this, a coherent communication towards the bank had to be worked out beforehand, in which the corporate strategy, the capital requirements as well as the debt servicing capacity of the online retailer were outlined.
The capital raised is used to pre-finance the growing purchasing volumes. On the one hand, new products are to be added to the product range, and on the other hand, sales will also be made on international Amazon markets (beyond Germany) in the future.
What banks look at in an online retail business plan
Online retailers on marketplaces such as Amazon depend on margins, inventory and platform rules. The plan should show the product range, purchase prices, selling prices, marketplace fees, shipping and return costs, so that the contribution margin per product is clear.
Inventory is the main use of capital: the plan needs a stock and reorder model with supplier lead times, and the cash tied up between payment to the supplier and payout from the marketplace. Advertising costs per sale and the risk of depending on a single platform should be addressed openly.
A monthly liquidity forecast for at least two years, including VAT, customs and seasonal peaks, helps the bank see how much working capital is needed and how it will be repaid.
