January 13, 2022

Categories:

• Amazon
• Financing

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Financing Amazon Sales: Seller Central vs Vendor Central

There is no denying that Amazon is one of the most important retailers to work with, and having your products available on Amazon is a great way to raise your sales volume. However, for most companies, a large increase in sales volume is not sustainable if they don’t have financing available. While there are financing options available for Amazon, it is important to understand that Amazon offers two very different ways of getting your products onto their site which they call Seller Central and Vendor Central. Depending if you are on Seller Central or Vendor Central will determine what types of financing may be available to you. Let’s take a deeper look at these two options, discuss the pros and cons of both, and see what sort of financing options will be at your disposal.

Seller Central

If you are on Seller Central, then you are a third-party seller on Amazon’s marketplace. In this case, you get paid when one of your items is purchased by a consumer on Amazon. You also have the option of allowing Amazon to handle the fulfillment or handling the fulfillment yourself. Should you wish for Amazon to handle fulfillment, along with customer service and returns, you need to ship your merchandise to their warehouses.

There are quite a few pros to being on Seller Central. First, anyone and everyone is invited to be on Seller Central. If you want to sell a product, or products, all you have to do is create an account. Of course, they do have rules about what types of products can be sold on their site, but so long as you comply you can become a seller.

Perhaps one of the biggest pros to Seller Central is you get to control the pricing of your products. As a result, if you also sell your merchandise to other retailers, you can make sure that the price on Amazon is the same as it is in other retail stores. This of course will keep your other customers happy as they won’t have shoppers looking at the price on Amazon and deciding to purchase the product from them instead. Another benefit is that you can adjust the price, so if a competitor lowers their price you can do the same

Another pro with Seller Central is that you are in complete control of how your product appears on Amazon’s site. You are uploading the images, writing the copy, and control the SEO. Therefore, if you are good at marketing and SEO you have a very good chance that you can get your product to rank high on search results and have greater sales. Of course, this can also be a con if marketing isn’t your strong suit and you don’t have a good understanding of Amazon SEO, which is different from Google SEO.

The other pro about Seller Central is short payment terms. In theory, Amazon will pay you as soon as your product sells, there is no waiting 30 days to get paid. The con however is that this is only in theory. If you are handling fulfillment yourself, Amazon needs to trust that you are actually shipping the products and that they arriving on time. Furthermore, regardless of who is handling fulfillment, if you have returns then Amazon needs to be able to recoup the money they returned to your customer from you. So, if Amazon sees that you are having problems with shipping or have a high rate of returns, they may withhold payment from you for however long they feel is necessary to protect themselves.

As for cons, you have two major cons. First, if you choose to have merchandise fulfilled by Amazon then you need to pay them for this service. This can be rather expensive, especially if the items you sell are cheap. This really is only practical for expensive items. Should you fulfill it yourself, then you either need to build the shipping expense into your products price, or charge additional for shipping, either way, your product won’t be eligible for Prime delivery which can hurt your sales figures. Regardless of who is doing the fulfilling, you will still need to pay Amazon any fees or commissions that they charge you.

The other major con is that products being sold by third-party sellers simply don’t sell as well as products being sold directly by Amazon. Part of the reason for this is trust, consumers trust Amazon but don’t trust a third-party seller who they’ve never heard of. That trust is further eroded by the fact that many third-party sellers are located overseas. The other issue is that you aren’t just competing with other third-party sellers, but with Amazon themselves. Obviously, it is in the best interest of Amazon to sell their own products over someone else’s products. Not to mention, no one knows better how Amazon’s SEO works than Amazon.

Vendor Central

Being on Vendor Central is a more traditional way of selling your merchandise. You are one of Amazon’s vendors and are therefore selling your products to Amazon, not to consumers. It is no different than having your product appear on a shelf at a grocery store, department store, or any other brick-and-mortar retailer. You are only responsible for shipping your merchandise to Amazon, after that Amazon takes over how they sell it to customers and how they fulfill customer’s orders.

Perhaps the biggest pro to being on Vendor Central is the fact that you have made a sale. Amazon has provided you with a purchase order, you shipped them the merchandise, and in 30 days you will get paid. You don’t need to worry about whether or not Amazon’s customers purchase your product as you are getting paid either way. Of course, as products sold by Amazon tend to perform better than products sold by third-party sellers, you should expect your merchandise to sell well on Amazon and to receive future purchase orders.

Another pro is that you don’t need to worry about the marketing of your product, that will be handled by the professionals at Amazon. They will decide how your product listing should look on their site and will be in charge of handling all the SEO. So, if marketing and SEO aren’t your strong suit, you don’t have anything to worry about.

A very important pro for anyone, especially those who sell cheaper products, is that fulfillment is not your responsibility and you do not have to pay for it. Amazon is solely responsible for fulfilling orders of your product, and your product will be eligible for Prime delivery. That said, Amazon will sometimes place restrictions on certain items stating that they will only ship with orders of $25 or more, but in general this not have too big of an effect on sales as most consumers will want to purchase more than just your item on Amazon.

Amazon also gives their vendors better tools. From better marketing tools to allowing them to participate in subscribe and save programs, vendors are given the tools needed to increase sales and therefore receive faster reorders. Plus, if you are on Vendor Central you can participate in Amazon Vine where you can send out free products to influential reviewers to ensure that your product has plenty of quality reviews before it starts showing up in search results.

Of course, there are cons to being on Vendor Central as well. Perhaps the biggest is that you have no control over the pricing of your products. Amazon is able to work on razor-thin margins because they make their profits by selling in large quantities. Plus, while Amazon may have to pay for shipping, they aren’t paying rent for expensive retail space and in general have fewer salaries to pay than a physical store would due to their highly automated warehouses. That means that Amazon may be able to undercut other retailers who you sell your product to. If consumers can purchase your product for less on Amazon, they may not be willing to purchase it from a brick-and-mortar store that they are shopping in. This of course can make other retailers mad and unwilling to carry your product in the future.

Another con to Vendor Central is the fees that you will have to pay. While you aren’t paying the fees and commissions that third-party sellers and Seller Central are paying, Amazon does take very large deductions for co-op fees and damage allowances. This of course will all be spelled out in the purchase order, but is something that you need to be aware of and build into your price.

What Financing Options Are Available?

With either Seller Central or Vendor Central, financing your business is crucial, especially if you start to experience sales growth as a result of Amazon. While Seller Central may pay you quickly, you still need to wait for a consumer to purchase your product before you will get paid. You also need to worry about Amazon slowing down your payments if they see a delay in shipments or an increase in returns. With Vendor Central, you may not need to wait for consumers to purchase your product or worry about returns because a customer changed their mind, but you will need to wait 30 days to get paid and hopefully will be receiving additional purchase orders during that time period. Unfortunately, there is no one-size-fits-all solution for financing your Amazon sales. The solutions available for Seller Central and Vendor Central are completely different.

For Seller Central your options are limited. Pretty much the only viable solution is Amazon’s own Amazon Lending program. While this is certainly a great option for third-party sellers on Seller Central, access to it is by invite only and Amazon determines who is invited and how much funding is available. Unfortunately, if you don’t receive an invite, Amazon Lending is not option. Banks or SBA loans are also most likely out of the question as they will require collateral, namely receivables, which you won’t have with Seller Central. There are other businesses who specialize in financing for Seller Central, but we are unaware of how reputable any of them are.

With Vendor Central you will have many more options because you have receivables. For one, getting a bank or SBA loan may be a possibility, but applying for these is a long process and they are difficult to obtain. Accounts Receivable Factoring, on the other hand, is a very viable option for Amazon vendors. With accounts receivable factoring rather than waiting 30 days to get paid by Amazon, your factoring company will purchase your receivables and fund you the same day you ship. As a result, with factoring you are speeding up your cash flow by 30 days. Another solution at your disposal is purchase order financing. Once you receive a purchase order from Amazon, you can then borrow the funds necessary to produce that order. For companies experiencing massive growth, purchase order financing can be an extremely powerful tool to have at your disposal. Often times factoring companies will offer purchase order financing to their clients, although it can also be obtained through companies that specialize in only in purchase order financing.

It is important to keep in mind, regardless of whether you are on Seller Central or Vendor Central, while there may be multiple financing options, you will be limited to choosing only one of them. The reason for this is that you can only pledge your collateral to one financial institution, with the most valuable collateral being your receivables. It is also important to keep in mind that with the exception of Amazon Lending, financing solutions will apply to more than just Amazon and will be available for all of your customers. Even if you are on Seller Central, it is possible that you could finance your Amazon sales through the factoring of receivables that you have for other accounts. It is important that you look at the entire picture when determining what financial solutions are available to your business and will meet your needs.

Which Should I Use?

The decision between Seller Central and Vendor Central is one that you need to make for yourself, assuming that you’ve been invited to participate in Vendor Central. There is no correct answer here, and it is possible that you may wish to utilize both options as Amazon may only want to purchase certain SKUs on their Vendor Central platform, meaning that you could sell other SKUs via Seller Central.

About DSA Factors

DSA Factors is a family owned business that has been providing accounts receivable factoring for over 35 years. We work with many clients who are part of Amazon’s Vendor Central program, but also provide financing of receivables for other major retailers as well as mom-and-pop stores. In addition to accounts receivable factoring, we also offer purchase order financing to our clients. If you have any questions or would simply like to learn more about factoring you can give us a call at 773-248-9000, email us at info@dsafactors.com, or chat with us here on our website.

September 7, 2017

Categories:

• Amazon
• Technology

Alexa, ask how long until Thanksgiving?

There are 77 days until Thanksgiving, which falls on November 23rd. Thank you for using the Birthday and Holiday Countdown presented by DSA Factors. Have a nice day!

So it may not be about factoring, but as the number one factoring company in creating new Alexa skills, we have created an Alexa skill that tells you how long until a certain holiday or date. All you need to do is ask Alexa, ask how long until... and from there you can choose just about any holiday or give it a date such as your birthday. We won't bore you with a list of every holiday available in the skill, but lets just say it is a lot! It can tell you how long until any American holiday, as well as Christian, Jewish, and Chinese holidays. That's right, it even knows when holidays based on a lunar calendar will occur.

So what are you waiting for, find out how many days are left until your birthday, until you go on vacation, or until you get to go trick or treating! As a bonus, if you ask Alexa the day before or the day of some holidays, she might even have a special message for you!

August 29, 2017

Categories:

• Amazon
• Factoring
• Technology

Alexa, open invoice factoring

Alexa just got a whole lot smarter. Earlier in the month we introduced our Accounts Receivable Factoring skill which would tell you exactly how much it will cost to factor an invoice, and it was so popular it even got written up on the Small Business Trends blog. So DSA Factors is proud to introduce our newest Alexa skill, Invoice Factoring. Simply tell Alexa to open invoice factoring, and then start asking anything you have questions about.

You can ask simple questions such as what is factoring, or more complex questions about recourse vs. non-recourse, purchase order financing, credit checks, submitting invoices, and virtually anything else. Of course, you can't expect Alexa to be able to give you the personalized service that you have come to expect from DSA Factors. Furthermore, Alexa can only answer questions about general knowledge and not about your accounts. That is why you can still give DSA Factors a call anytime at 773-248-9000 and one of our principals will be available to speak with you over the phone.

August 9, 2017

Categories:

• Amazon
• Factoring
• Technology

Alexa, open accounts receivable factoring.

DSA Factors is proud to announce that we have published our first skill for Amazon's Alexa service. If you own an Echo, Dot, Tap, or any other device that supports Alexa, you are no longer just limited to playing music, turning on lights, asking how to spell words, listening to a news report, or asking about the weather. You can now ask Alexa to open accounts receivable factoring and learn exactly how much it will cost you to factor an invoice. That's right, DSA Factors has created the world's first ever factoring skill for your smart home, and there is no telling how this skill may revolutionize the world.

You will of course have to tell Alexa how much your invoice is for and what you factoring rate is for the invoice. After that Alexa will do the rest for you and will tell you exactly what the factoring fees will be and how much will be held in reserve (assuming it is 10%), so that you can know exactly how much funding you can expect to receive.

So go ahead and make your smart home even smarter by activating the accounts receivable factoring skill today.

P.S. If this news wasn't exciting enough, we have more skills in the works... stay tuned!

June 30, 2017

Categories:

• Amazon
• America
• Furniture
• Retail
• Technology

How Would an Amazon Furniture Store Impact the Furniture Industry

Amazon is already a retail giant, but up until recently all of their sales have existed only online. However, that is slowly changing. In November 2015 Amazon opened its first brick and mortar bookstore in Seattle, and has opened a handful more across the country in the last year. They also started experimenting with cashier-less grocery stores at the end of last year. Of course the big news came a couple of weeks ago when Amazon announced they would be purchasing Whole Foods for $13.7 billion. While Amazon is yet to open a brick and mortar furniture store, there have been reports that they are looking into doing so. If, or when, they do open a furniture store, you can bet that it will have some pretty dramatic effects on the furniture industry.

Amazon and the Book Industry

Amazon of course started off as an online book store back in 1995 and didn't turn a profit until 2001. The impact that Amazon has had on the book industry has been dramatic. They drove Borders, a 500+ store chain and former Amazon partner, out of business in 2010. Barnes and Noble has survived but is struggling. So it is interesting that the company that has been responsible for closing hundreds of bookstores around the country, and has no problem selling books online, would want to open up their own bookstores. Of course, for a company like Amazon, the cost of opening up a bookstore is insignificant, and it could be worth it to Amazon to open these stores even if the stores themselves are not profitable since they can be used as market research and for marketing Amazon's other services such as Prime. The fact that these bookstores are popping up slowly and only in several cities may indicate that indeed the stores are not profitable on their own.

Amazon and the Grocery Industry

Groceries, however, unlike books, have been a much bigger problem for Amazon. While non-perishable foods can be shipped, they are also heavy and shipping them can be expensive. Of course fresh produce is much more problematic, not only does it have a short shelf life, but most consumers wouldn't want someone else picking out which bananas or cut of meat they are purchasing. Then you have refrigerated or frozen foods, if it took Amazon two days to deliver your milk, it would go bad long before it arrives at your doorstep. At the end of last year Amazon started experimenting with several grocery store concepts in Seattle. Amazon Go offered cashier-less convenience stores. You simply walk in, take the food you want, and walk out, with your credit card automatically getting billed. Amazon Fresh Pickup allows customers to order food online and then pick it up at a nearby drive-thru. While Amazon Fresh Pickup still doesn't address the issue of allowing consumers to pick their own produce, it at least addresses the issue of short shelf life and refrigeration. But just like with bookstores, which also started out in Seattle, these stores are being rolled out slowly and Amazon still has an insignificant market share of the grocery industry.

That of course has all changed with Amazon's buyout of Whole Foods and its 460+ stores across the nation. In a matter of seconds Amazon made a major move not just into the grocery industry but into brick and mortar retail. They instantly gained hundreds of locations around the country where customers can pick up orders, drop off returns, and do their shopping all at the same time. They also can roll out some of their new technologies on a much larger scale than they have done so far.

Amazon and the Furniture Industry

The Challenges of the Furniture Industry

With Amazon apparently solving their grocery problems, that leaves only one other industry where Amazon is struggling to get their foot in the door, the furniture industry. While furniture may not go bad like fresh fruit and vegetables, it has its own challenges. First of all, it is a major purchase, even the cheapest pieces will cost you at least a hundred dollars, and if you are updating a room you can expect your bill to be in the thousands. When making such a large purchase consumers are going to take their time to shop around to make sure that they are getting exactly what they want. In the case of upholstery and bedding, consumers need to touch and feel the product to make sure that it is comfortable. Furthermore, many furniture purchases are custom orders where the consumer picks the colors and finishes they want. As a result retailers are not able to stock the merchandise but instead need to order it, meaning it could take anywhere from 4-12 weeks for the consumer to receive the merchandise. This doesn't work well with Amazon's goals of reducing delivery time from two days to two hours. But of course the largest problem with furniture is delivery. Furniture is bulky, heavy, and easily damaged. While it can easily be transported to distribution centers and stores, it is delivering it the final mile into the consumer's home that presents the greatest challenge, along with assembly for items such as beds that would not be able to fit through doorways if they were delivered fully assembled.

How does Amazon Enter the Furniture Industry?

So of course the next question is what will Amazon do? Amazon has committed to selling furniture; they have opened up showrooms in both Las Vegas and High Point. While it is possible that Amazon may experiment with opening its own stores, it is likely that when they are ready to make the jump into brick and mortar furniture, they will buyout a furniture retailer. Of course, there are very few furniture retailers that have locations nationwide like Whole Foods, but Amazon doesn't necessarily need to purchase a furniture retailer. Purchasing a department store might make greater sense as they are larger, have more locations, and would allow Amazon to sell other merchandise that is difficult to sell online, such as appliances and clothing.

If you start looking at department stores, Amazon has a lot more opportunities as many of the department stores are struggling, mainly due to having to compete with Amazon and other online retailers. Purchasing Macy's would give them access to 800+ locations around the country. JC Penny would give them over 1000 locations. But most interesting is perhaps the department store that has told its investors that it may not be able to keep its doors open. If Amazon were to buyout Sears, not only would they be able to purchase it at a bargain price, but they would immediately have access to over 1500 retail locations and a wealth of real estate all around the country.

Of course all of this is just speculation, what isn't speculation is that Amazon is going to do something in the furniture industry. There is talk of them using technologies such as virtual reality or augmented reality so that you can picture what a particular piece of furniture would look like in your home. Another possibility is offering delivery windows within hours of when you make a purchase in their store. But whatever they do, it is going to be big and everyone is going to have to keep up with Amazon if they don't want to lose out.

What will be Amazon's Impact on the Furniture Industry?

FURNITURE RETAILERS

While retailers will face stiffer competition, they may also benefit from the new technologies that Amazon brings to the industry. If existing furniture stores are able to adopt Amazon's technologies, they too could use those technologies to increase sales. Of course, the real advantage to traditional retailers comes in the area of customer service. A company like Amazon will never be able to provide personalized service and most likely wouldn't have trained salesmen who know about all the products in their store, instead they will probably rely on Amazon reviews like they do in their bookstores, and perhaps a specific customer's buying trends. While Amazon may already know if a customer is looking for a more traditional or contemporary look based upon their online purchasing patterns, a traditional salesman can simply ask the customer what they are looking for and forget about all the algorithms. By offering exceptional customer service and a knowledgeable staff, current furniture retailers should be able to compete with Amazon and would definitely do better in customer retention.

FURNITURE VENDORS

From a vendor's point of view, Amazon stores can potentially open up more possibilities. Smaller vendors, who have trouble getting floor space in the showrooms of larger furniture retailers, may have an easier time getting floor space in an Amazon showroom. While certainly Amazon could offer everything online, it will be limited in what they can display in their showroom by the amount of real estate they have. Unlike traditional furniture retailers who buy from a handful of vendors, Amazon purchases from everyone and that of course is what sets them apart.

If Amazon's bookstores are any indication of how they do business, products that perform better online will have the upper hand. At Amazon bookstores there is a very limited selection of books, and the selection is not based on which books Amazon's buyers feel should be on the shelves. Instead the book selection is all determined by algorithms which look at sales volume and customer reviews of each book. As a result, a category that has a more limited selection but sells modestly well may get more shelf space than a hugely popular category that offers a much wider variety of books to choose from. For example, Amazon bookstores have an excellent selection of recipe books which individually sell well online, but a very limited selection of fiction, a category that performs incredibly well as a collective group, but not as individual titles. Furthermore, where a traditional bookstore will feature every book that Dr. Seuss ever published in their children's department, Amazon bookstores would probably only have one or two of his books that sell extremely well online, if any. There is no reason to believe that Amazon wouldn't take the same approach in a furniture showroom.

This could be huge for niche manufacturers. While overall your sales volume may look insignificant when compared to someone like Ashley, if you have a single unique product on the market that sells very well, it is quite possible that it would get floor space in an Amazon showroom. While Ashley may offer 1000 different products, it means that each product only gets a thousandth of Ashley's overall sales volume, and your single product receives 100% of your sales volume. As a result, your single product would have better sales numbers than any individual Ashley product, and if it receives positive customer reviews, it would perform better in Amazon's algorithms.

If there is any lesson to be learned from this, it is quite simple, online matters. If you don't want to get left behind, you need to bring your business online, and the more you offer the more you have to gain. Getting sales and positive reviews right now on Amazon could result in even greater sales volumes in the future when Amazon starts opening brick and mortar stores. If you are looking to get your product for sale online, DSA Factors is here to help. We provide factoring for Amazon receivables, as well as Wayfair, Hayneedle, One Kings Lane, Zulily, and many other online stores. Give us a call today at 773-248-9000 to learn more about how DSA Factors can help you grow your online business.

June 9, 2017

Categories:

• Amazon
• Fintech
• Financing
• Small Business

Is Amazon Lending Right for My Business?

You may have noticed Amazon Lending in the news recently. According to Bloomberg, Amazon has given out more than three billion dollars in loans since the inception of the Amazon Lending program in 2011, with one billion of those dollars being lent in the last twelve months. They have reportedly given loans to 20,000 businesses throughout the US, UK, and Japan in amounts ranging from $1000 to $750,000. Their loans supposedly carry a very modest APR between 6% and 14%, which would make them cheaper than most other Fintech lenders out there. But just like with PayPal Working Capital, there is a catch. While the APR may be low, Amazon makes up for this by taking a large sales commission. As a result, Amazon Lending may work for very small businesses, but if you're ready to take the next step in growing your business, accounts receivable factoring may be the better option.

Who qualifies for Amazon Lending?

You can not request a loan from Amazon Lending, rather Amazon makes loan offers to sellers on Amazon Marketplace, and those sellers can either accept or ignore the offer. It is unknown what criteria is used to determine when a loan offer is made, how much the loan offer is for, what the term of the loan will be, or what the APR on the loan will be. However, Amazon bases the loan on the seller's sales history on Amazon Marketplace, so you can probably assume that if you don't have large and steady sales figures, you probably won't be offered a loan. Furthermore, if you sell directly to Amazon, then you do not qualify for these loans.

What is the difference between Amazon and Amazon Marketplace?

While shoppers who use Amazon will see all the products available from both Amazon and Amazon Marketplace every time they search for something they want, the platforms are very different from a wholesale point of view. If you sell direct to Amazon, it is like selling to any other retailer. They give you a purchase order, you ship the merchandise and invoice them, and when the invoice is due Amazon pays you. However with Amazon Marketplace, it is kind of like selling your product on eBay. Amazon will list your product on their site, and will take a commission for each sale you make. If you would like your product to qualify for Amazon Prime, then you need to ship your product to Amazon warehouses, pay storage fees, and when the product sells, you are charged a shipping fee as well. Basically you are giving Amazon merchandise on consignment, and you may be paying them additional fees as well.

How much are Amazon Marketplace commissions and fees?

Commissions are based on what type of product you are selling. Commissions can be as low as 6% if you are selling computers, and as high as 45% if you are selling an accessory for an Amazon device, for example a Kindle cover. In general, commissions are typically around 15%. In addition to these commissions, Amazon may charge you either a monthly fee or a transaction fee on each sale. If you let Amazon warehouse your product so it qualifies for Prime, you will be paying storage fees and shipping fees as well. If you ship yourself, then you are responsible for paying for shipping. Additionally, Amazon will also charge you a closing fee for each item sold.

Should I accept a loan offer from Amazon Lending?

Only you can decide whether or not a loan is correct for you. If you sell your merchandise on Amazon Marketplace and wish to continue doing so for the term of the loan they offer you, then you are already paying their commissions and the loan may carry an attractive APR. The loan gets repaid automatically as you sell more merchandise through the Amazon Marketplace, so as long as sales volume remains steady you won't need to worry about paying off the loan. However, if you would like to start selling directly to Amazon or any other retailers, then this loan probably isn't right for you.

Are there other options for financing my small business?

Accounts receivable factoring is another form of alternative lending that works with small businesses. Unlike Amazon Lending, accounts receivable factoring works with companies who sell directly to Amazon or other retailers, both online and brick and mortar. With accounts receivable factoring you get funded for your receivables the same day you invoice your customers. Plus, since your factoring company is purchasing your receivables, you aren't taking on any new debt.

What's my next step?

Amazon Marketplace may be a great way to introduce your product to the market, and Amazon Lending might allow you to purchase more product to increase your sales volume. However, if you really want to grow your business and want to take the next step, you will have to start selling direct to Amazon and other retailers. If you are ready to take that next step, then give DSA Factors a call today at 773-248-9000 and find out how we can help you fund your growing business.

October 31, 2016

Categories:

• Amazon
• Consumers
• Retail

The Benefits of Online Sales

As a manufacturer you may think that online retailers are simply another retailer who you can sell your product to, however, there may be a lot more to an online sale than just the sale itself. It's quite possible that making one online sale could lead to many more sales both online and in brick and mortar stores. The reason for this is because of the importance that consumers place on online product reviews.

When consumers use their phones to go shopping at home or on the road, you may be surprised that the most common things that they look for our store locations and hours. That's right, 75% of internet users at home and 80% of internet users on the road want to find a brick and mortar store to shop at. Other popular uses of the internet include some more obvious benefits such as comparing prices, looking for coupons, making actual purchases, checking on the status of orders, and of course reading product reviews.

Of course, once these consumers get to an actual store their use of the internet changes. Once in the store the most popular use of the internet is searching for and redeeming coupons, an activity that 55% of smart phone owners do. 51% of smart phone owners will compare prices at other stores to make sure that they are getting the best deal. Then the next most popular activity is looking at product reviews which is done by 47% of smart phone owners.

Over three-quarters of Millennials and Generation Xers state that product reviews are very influential in the decision making process when purchasing something. Nearly six in ten Baby Boomers feel the same way, and almost half of all seniors also take consumer product reviews very seriously. Of course these product reviews are online, and the only way you are going to get them is if your products are available from online retailers.

While it is true that anyone can write a review of a product online, what makes a review most valuable is that it comes from a verified buyer, meaning that a person bought the product from the same online retailer that they are writing a review on. If you look at reviews on Amazon, you will notice that many of them will say "Verified Purchase" meaning that the person who left the review purchased the product on Amazon. While it may not be important to consumers that a product was purchased on Amazon, it is important that the writer of the review actually did purchase the product, and isn't just someone in the manufacturer's office trying to brag about how great their product is to improve sales.

Other important features on reviews are the amount of detail included in the review, the more detail the better. If you reviewers include pictures then the review can become really influential. Also, consistency is very important as well. If five different reviewers say the same thing about a product, then it must be true.

Of course, as a manufacturer it may seem like all of these factors are out of your control, it is up to the consumer, whom you do not know, to leave a review out of their own good will. However, in many ways you do have control when it comes to leaving reviews. First you need to make sure that your product is available online so that consumers can leave reviews of it. Of course, it can't just be available from any online retailer, it has to be available from reputable online retailers where consumers look at reviews such as Amazon, Wayfair, Target, and Walmart.

Another option is to offer an incentive to consumers who leave you a review. One way of doing this is by offering consumers a chance to get a free product for leaving a review. Ask consumers to fill out a registration card that asks for their Amazon profile so you can see the review that they left for your product, as well as other products. Then select several consumers who gave valuable detailed reviews on both your product as well as other products to receive a free product. You can also look at how many other people found these reviews helpful as these are people who are highly influential in others purchasing process. You can assume that the recipients of the free product will also leave you a quality, detailed review on this free product as well.

If you need to start selling to online retailers, or need to start offering incentives for leaving product reviews and find that some improved cash flow will help, why not try accounts receivable factoring. At DSA Factors we make solving your cash flow problems easy by funding you for your receivables the same day your merchandise ships. You no longer need to worry about waiting 30 days or more to get paid for a large order, so what are you waiting for, call us at 773-248-9000 and start factoring today. At DSA Factors we have money to make your company grow.

June 24, 2016

Categories:

• Amazon
• Consumers
• Furniture
• Retail

Furniture Buying Trends

A lot goes into buying new furniture for the home, after all, furniture is something that has a major impact on the look and comfort of your home and is something that you expect to last for many years. As a result, buying furniture requires a lot of research and a lot of shopping, it isn't like picking up a gallon of milk at a convenience store. On average consumers will spend 3-4 weeks researching furniture, and purchase from a wide variety of retailers. Typically consumers will spend a lot more time researching upholstery than they do case goods, and they are much less likely to purchase upholstery from an online source.

Consumer Research Patterns

Upholstery

When it comes to upholstery, just over a third of consumers will make a purchase in 2 weeks or less. A quarter of consumers spend 3-4 weeks researching options. One fifth of consumers will take 5-9 weeks to make a decision, and another fifth require 10 weeks or more. This research is done both online and in stores. Six in ten consumers will visit stores while looking for a new sofa or chair, and three quarters of consumers will do their research online. However, given how important it is to do research online, 45% of consumers say that they will never purchase a couch from a web site.

Case Goods

Case goods have a slightly shorter research period with nearly half of all consumers making a decision in 2 weeks or less. Nearly a quarter of consumers will spend 3-4 weeks doing research, while three in ten consumers will spend 5 weeks or more. Those shopping for a new dining room set or bedroom set not only do their research faster, but also do less research than those shopping for a new couch. About seven in ten will do their research online, and just over half will do their shopping in stores. Consumers shopping for case goods are also less averse to buying online with only 21% saying they would never purchase a bedroom set or dining room set from an online source.

Where Consumers Purchase their Furniture

Of course, at the end of the research process, consumers will eventually purchase a new piece of furniture for their home, and just like with the research, who they buy it from depends on if they are shopping for upholstery or case goods.

Upholstery

For upholstery the most popular retailers to buy from are lifestyle furniture stores, such as RH, IKEA, Crate and Barrel, and Pottery Barn, as well as traditional furniture stores. Both lifestyle and traditional furniture stores receive business from nearly three in ten consumers. Just over two in ten will purchase a used couch or chair, which can come from any source including second-hand stores and garage sales. Only 7% of consumers will wind up buying a couch from an online retailer.

Case Goods

For case goods the most popular option is used furniture. Nearly four in ten consumers will buy something used, and again from a wide variety of sources such as second-hand stores, flea markets, thrift shops, antique shops, as well as from garage sales both online and on the street, and auctions. Another three in ten consumers prefer lifestyle furniture stores when purchasing a new bedroom set or dinette set. Only 12% of consumers will make their purchase at a traditional furniture store. While consumers may be less averse to purchasing case goods online than they are with upholstery, still only 7% of consumers will make their purchase from an online retailer.

What's Next for the Furniture Industry?

Purchasing furniture is clearly a major decision for most consumers, and they may put just as much time and effort into buying furniture as they would put into buying a car or even a house. As a result, it is important that manufacturers make sure that their product is visible to consumers while they are doing their research. In the same way that you wouldn't buy a car without doing a test drive, or buy a house without getting a tour, consumers won't buy new furniture without sitting down on it first. While online sales may not account for much volume, an online presence is still very important if you are trying to sell your product.

Car manufacturers and dealerships all offer excellent online sources for viewing features, options, and pricing for consumers buying a car. There are also a handful of web sites that connect to MLS for those looking to move to a new home, plus realtors tend to have excellent online tools as well. However, when it comes to furniture, there typically isn't much to look at on the web beyond customer reviews on Amazon.

With online research becoming increasingly important, if you do not have an excellent web page that features your product lines, combined with SEO to make your web page show up in Google searches, you are potentially missing out on a lot of sales. Give DSA Factors a call today at 773-248-9000 to find out how we can help you grow your business. While we may not be able to develop a web page for you, we can provide you with the cash flow you need through accounts receivable factoring to grow your business. The funds you receive from us are yours to keep and can be spent in any way you want, from developing an online presence to attending trade shows to a new marketing campaign, or anything else. Call us today and find out just how easy accounts receivable factoring can be.

January 22, 2016

Categories:

• Amazon
• Consumers
• Furniture
• Retail
• Technology

Most Consumers Shop Online for Furniture

As furniture companies are gearing up for the Las Vegas Market which opens this Sunday, Furniture Today reported that according to a recent survey seven out of ten consumers shop for furniture online. But don't worry, the key word to keep in mind here as you are busy preparing for the Las Vegas Market is "shop". The vast majority, just over seven in ten, still buy their furniture from traditional brick and mortar stores. Nevertheless, it is very important that you have your merchandise available both at brick and mortar stores as well as online.

What this means is that approximately 30% of consumers still shop and buy their furniture at traditional brick and mortar stores. Another 40% will shop and do price comparisons online, but still purchase their furniture from a brick and mortar store. These numbers do vary slightly based on the age of the consumer, but this shouldn't come as much of a surprise. It was found that only 24% of Millennials, ages 18 to 35, do their shopping and buying all at brick and mortar locations, while 47% will shop online but purchase at a brick and mortar location. For Baby Boomers, ages 52 to 70, 38% will both shop and buy at brick and mortar stores, while only 36% shop online but buy from a brick and mortar store. Generation X, ages 36 to 51, falls right in the middle with 31% both shopping and buying at brick and mortar stores, while 40% will shop online but make their purchase at a brick and mortar location.

Of course this still leaves three in ten consumers purchasing their furniture online. About 12% of consumers will shop in traditional brick and mortar stores, but then purchase their furniture from an online store. While 16% of consumers will do all their shopping as well purchasing from online retailers. What is interesting is that age has no impact on how you shop for furniture that you buy online. These percentages don't change much when you break them out for Millennials, Generation X, and Baby Boomers.

Another important thing to consider about online shoppers is how they do their shopping. The biggest change comes from where they do it. In 2010 only 5% of internet users used a mobile device to do their shopping, this number has steadily risen and in 2015 over half of online shoppers are using mobile devices. Then there is how they do their shopping. It was found that eight in ten internet users will use the internet to compare prices before they make their purchase. Finally, there are the sites that internet users visit when doing their online shopping. 56% of shoppers will visit online-only retailers, 51% of shoppers will visit stores that also have a brick and mortar counterpart, 35% will visit the manufacturer's site, 16% will use deal comparison sites such as Google Shopping, while only 10% will visit social media sites.

It is important as a furniture manufacturer that your furniture is available both at brick and mortar and online stores, and with over a third of internet users visiting manufacturer sites, you too need a strong online presence. This can be difficult to do if you are too busy making collection calls and have all of your money tied up in receivables. Let DSA Factors help, we have been factoring for the furniture industry for 30 years. Give us a call today at 773-248-9000 and if you'll be at the Las Vegas Market keep a look out for Ben as he will be visiting the market and will be able to answer questions you may have about our accounts receivable factoring program.

August 12, 2015

Categories:

• Amazon
• Bedding
• Consumers
• Retail

Where do you buy your bedding?

There are a large variety of types of stores selling furniture these days, but when it comes to bedding, how old you are probably determines where you shop. A recent study in Furniture Today revealed which generations purchase bedding at different types of stores. Overall, Millennials and Generation X each have a 35% share of the market, while Baby Boomers have a 26% share, and Seniors a 4% share.

Bedding specialty stores get a large variety of customers, but they also tend to have the highest prices with the price of their average queen set costing $699. As a result Generation X makes up their largest share of customers at 37%, followed by Baby Boomers at 34%, Millennials at 23%, and Seniors at 6%.

Traditional furniture stores also seem to receive a fairly evenly distributed clientele. While not as expensive as bedding specialists, their prices are still up there with the average queen set costing $599. Millennials make up their largest share at 36%, followed by Baby Boomers at 33%, Generation X at 30%, and Seniors at 1%.

Beyond these two types of stores, things get a little more lopsided. There are the manufacturer branded furniture stores whose average queen set costs $599, department stores where the average queen set costs $499, warehouse membership clubs have the average queen set at $479, online retailers where the average queen set is $325, discount department stores where the average queen set is $275, and finally lifestyle furniture stores where the average queen set will only set you back $155.

It should come as no surprise that Millennials prefer to shop at the cheaper places. They hold a 58% share of sales at lifestyle furniture stores such as IKEA, a 43% share at discount department stores such as Walmart, and a 59% share at online retailers such as Amazon. But what may surprise you is that they also hold a 53% share at the pricier manufacturer branded furniture stores such as Ashley Home Stores.

Generation X prefers to shop at department stores such as Macy's where they hold a 55% share of the business. They also hold a 43% share at warehouse membership clubs such as Costco, a 40% share at discount department stores, and a 31% share at manufacturer branded furniture stores.

Baby Boomers do most of their shopping at the bedding specialty store and traditional furniture stores. Warehouse membership clubs are next, but only 21% of their business comes from Baby Boomers.

For Seniors who only hold a 4% share of the overall market, they take a large 14% share of business at warehouse membership clubs. They also hold a 7% share of the business at department stores.

If you are targeting your mattresses towards a certain demographic, make sure you are selling to the stores they shop at. If you need help selling to those stores, give DSA Factors a call today at 773-248-9000 and with our accounts receivable factoring you can get paid today for your net 30 day invoices.

August 10, 2015

Categories:

• Amazon
• Consumers
• Furniture
• Retail
• Technology

Online Furniture Sales are Booming

Online furniture sales for 2014 reached $9.7 billion, an over 14% increase from 2013's $8.5 billion according to Furniture Today. Leading the pack were Amazon who experienced 19.5% growth, Overstock with 14.8%, Wayfair with an amazing 44% sales growth, and Zulily with a whopping 72.% sales growth over 2013. All four of the companies had sales volumes in the billions. However, overall furniture sales only increased by 3% over this last year. This online sales growth can be accredited to the fact that 8 out of 10 consumers in the US have bought furniture or bedding online in the past year.

Now it may not surprise you that most of the people buying online were young, but you might be surprised by how affluent online shoppers are. Well over half of the households that bought bedding online this past year were under the age of 35 and make over $75,000 a year. 22% of households were under the age of 25, with 34% of them between the ages of 25 and 34. When it comes to household income, 32% of households that bought bedding online make between $75,000 and $100,000, with 12% making between $100,000 and $150,000, and another 12% making over $150,000. This might explain why only 59% of consumers agree that online retailers carry affordable furniture.

To further explain these numbers, 61% of online furniture consumers own their house, and 59% have a full time job. When it comes to education, 33% of consumers hold a bachelor's degree with another 20% holding a master's degree or higher.

The average consumer will visit five different web sites when shopping for furniture online. However, only 56% of shoppers will start their search online, the rest still start their furniture search in more traditional brick and mortar stores. The main reasons why consumers are ultimately buying online is because of the large product selection available through online retailers, and online retailers provide them with design ideas. Many of these retailers will help out consumers with design ideas by maintaining active blogs.

If you aren't selling your merchandise to online retailers you are missing out on a lot of business. Let DSA Factors help you by factoring your online retailer accounts. We have lots of experience working with Amazon, Overstock, Wayfair, and Zulily, as well as with One Kings Lane, Hayneedle, Gilt, Hautelook, and many more. Give us a call today at 773-248-9000, don't let these sales opportunities slip away.

June 12, 2015

Categories:

• Amazon
• Consumers
• Furniture
• Technology

Targeting Millennials, America's Largest Generation of Consumers

Millennials, those born between 1981 and 2000, have become the largest living generation in the US with 75.3 million people, surpassing the Baby Boomers who now number 74.9 million according to Kids Today. There are 53.5 million Millennials in the workforce compared with 52.7 million Gen Xers and 45 million Baby Boomers.

As the Millennial population continues to grow, it is important to understand them so that you can market to them appropriately. There are two major factors that need to be looked at when dealing with Millennials. First, Millennials are waiting longer to get married and have babies than previous generations. In the last ten years birth rates for mothers between the ages of 20-24 have dropped by 20.6% and ages 25-29 have dropped by 9%. However, birth rates of mothers between 35-39 have increased by 13%.

Since Millennials are waiting longer to have kids, this means that they most likely will have more money to spend once they do have kids. They also tend to be better educated as they've had more time to get their bachelor's or even master's degrees. This is resulting in consumers who are willing to pay more for a product if they can get more out of it. Very often these consumers might just being willing to pay more for a higher quality product, but they also may be willing to pay a little bit more for a product that can grow with their families.

An excellent example of a product that can grow with a family are convertible cribs. 75% of moms under the age of 30 have either bought or plan to buy a convertible crib, compared to 71% of moms age 30-34 and only 62% of moms age 35-39. Of those who have bought or plan to buy a convertible crib, 71% of them are willing to pay more for a convertible crib than a standard crib, with 34% willing to spend as much as $100-$200 more for a convertible crib.

The other important factor is the internet. 61% of Millennials will rate products and services on the web, while only 46% of the older generations will do this. In fact 35% of mothers under the age of 35 purchase their children's furniture online. Of the 65% who still purchase their furniture at brick and mortar locations, most of them will do their research online before going into a store, with many of them buying exactly the product that they chose online.

For this reason it is very important for both manufacturers and retailers to provide lots of details about their product line on their web page. But a static web page with features and specifications isn't enough. Companies need to offer dynamic web pages that allow for questions, reviews, and link to social media. Over two thirds of Millennials that use social media rely on friend's posts to influence which products they will purchase. If your company only offers a static web page, it may be difficult to sell to this young generation of educated consumers with large incomes.

As this younger generation is quickly becoming America's largest group of consumers, it is important that you target your products and marketing towards them. You need to offer high quality, adaptable products, and take advantage of the internet not only for online sales, but also for marketing via social medias. This is a big change from traditional sales methods you may have used in the past. If you find yourself short on time to adjust your products and marketing to your customer's needs, let DSA Factors help. We can manage your receivables and collections while eliminating the need for you to run credit checks, allowing you to focus on more important issues such as product line, marketing, and sales, while at the same time improving your cash flow. Give us a call at 773-248-9000 and ask about our accounts receivable factoring program today!