(12.4) Working Capital When Selling on Amazon – Amazon PPC Campaign Model

Working Capital When Selling on Amazon

Eazyppc welcomes you to the article ‘Working Capital When Selling on Amazon’ – you should read and fully understand the previous posts, as Eazyppc uses terms and concepts already explained in earlier lessons throughout this one.

For individual Sellers, there is typically a limited working capital with no large budget dedicated to advertising. Therefore, being able to generate profit early is extremely important, as it allows the Seller to ‘use the grease to fry the meat’ — meaning using Amazon’s own revenue stream to continue running ads and restocking inventory based on that same revenue.

Working capital you need to plan for to avoid cash flow disruption while selling on Amazon:

First, Sellers need to know — when an order is placed on Amazon and the customer pays, Amazon will delay 14–28 days before transferring the funds to the Seller’s account (rolling payout cycle based on the order date). This means that because there is no immediate cashflow, you do not have money immediately from sales to sustain other operations. However, advertising costs are still deducted daily, and other operating expenses must still be paid on their regular cycles (e.g., account maintenance fees). For operating costs, Sellers can estimate them from these two posts: Estimated Advertising Costs and Financial Plan for Your Product

-> Sellers should pay attention to:

• Credit card limit sufficient to cover daily advertising costs continuously during the period Amazon holds your revenue. It is recommended to use a deferred debit card to prevent Amazon from being blocked when charging.
• Reserve capital for restocking the next inventory shipment