Walmart Inventory Financing: Challenges & Options
Just like with a brick-and-mortar business, anyone who wants a thriving eCommerce business will need to build it from the ground up. While you might have suppliers, third-party logistics providers that mean you never see your inventory for yourself, and marketing services, the decisions about what to sell and where to sell are all in your hands.
If your goal is to scale up your business, an omnichannel sales approach is critical—you need to sell across multiple platforms, from an independent site with Shopify integrations, to social media storefronts, to online marketplaces like Amazon and Walmart. If you’re reading this article, you may already be there, but you may also be stuck on how to ramp up growth across your platforms.
Once you have your foot in the door of a new market, you need funding to secure your grip. Some store owners may slowly ramp up via revenue from sales, while still others have money set aside or are using financing. When your efforts are focused specifically on the Walmart Marketplace, you can take advantage of their in-house financing program along with a variety of conventional and non-traditional eCommerce financing options.
In this article, we’ll explore the details of the Walmart Marketplace Capital program, including its advantages and disadvantages. Then we’ll zoom out so you can consider all of your financing options and pick the right one for your business strategy.
What Is the Walmart Marketplace Capital Program?
Walmart Marketplace sellers can secure more funding through Walmart Marketplace Capital, a program that gives qualifying sellers a funding advance. The funds can be put toward growing your business via Sponsored Ads placement, more inventory, or Walmart’s in-house fulfillment services. The upfront cash can be a convenient and powerful tool for loading up your store with the inventory you need, expanding to new products, or otherwise focusing on scale instead of day-to-day operations.
It works by assessing your on-platform sales volume. Higher-volume sellers will receive a bigger advance offer than lower-volume sellers. If you accept the offer (which will be located in your Seller Center on your dashboard), it will be paid out through your preferred payment method.
Related: Is Merchant Cash Advance Financing the Right One for Your Online Store?
Walmart Marketplace will then pull repayment installments from your future revenue, and those repayment amounts are based on your store’s sales history. If you didn’t see enough sales to cover a repayment installment, your repayment amount for that time period would automatically come from your connected account.
How Inventory Financing Can Fuel Your Business’s Growth
There are three key use cases for Walmart Marketplace Capital funds: more marketing, enrolling in Walmart’s fulfillment plans, and expanding your inventory or product catalog. That last option is uniquely valuable to sellers because:
- You can increase customer cart value per transaction by offering complementary items, bulk orders, or products that align with your target market’s interests. Increasing cart size is the most efficient way to increase your total sales volume.
- You can experiment. Expanding your catalog is a potentially risky proposition, especially if you don’t have data to direct your efforts. But introducing test products, examining the results, and deciding whether to permanently or seasonally sell different products can make your store much more robust.
- You can prepare for big sales seasons. Upfront cash lets you buy more inventory ahead of the holiday shopping season and other peak times for your business. You don’t have to be limited to the cash you have on hand, and you can better capitalize on your position in the market.
- You don’t have to wait to scale up. Without financing, increasing your product catalog and available inventory is a very slow, turbulent process. You might cede ground to competitors or miss opportunities. But financing means you can act immediately and take bigger steps.
While Walmart Marketplace Capital isn’t the only avenue for financing business growth, the focus on increasing your inventory can help direct your efforts to more efficient profits.
Unique Benefits for Sellers
The Walmart Marketplace program itself may or may not be a good fit for your business. Considering its unique pros and cons relative to other financing options can help you make the right choice for your business now and in the future. Some of the unique advantages the program offers are:
- Upfront simplicity: Since the offer sits right in the Seller Center, you don’t have to navigate through additional platforms. You receive an offer amount if you’re a qualifying business, you can choose to accept the offer, and then you receive the funds.
- Additional resources: The more you dive into the Walmart Marketplace platform, the better your results can be. So working with the system to optimize your store with Walmart Sponsored Products, more ads, and insights from the Seller Center’s Catalog Dashboard can power new business growth. The Catalog Dashboard provides plenty of insights regarding the popularity of trending products, and you can use those insights to grow your catalog with minimal need for course correction.
- Speed: Once you accept your offer, you receive the funds either day of or by the next day.
Potential Drawbacks for Sellers
Walmart Marketplace Capital also comes with some significant risks that can make it a poor fit for your business’s growth. These drawbacks include:
- Relatively inflexible repayment terms: Money is due back based on your sales history, not the performance in the current month. So if you have a slow month that doesn’t cover your repayment amount due, Walmart will automatically pull funds from your connected bank account to make up the difference.
- It doesn’t assess your business’s overall performance: Walmart’s funding is based on your performance with Walmart only. So if you sell across a variety of platforms, only a portion of your sales will be used to evaluate your potential.
- Limited control over the process: Walmart decides if you qualify and how much money you’ll receive, with relatively little transparency. All you can do is accept the funds or not.
Walmart Marketplace Capital can speed up your business’s growth, but it can also potentially jeopardize your cash flow if you have turbulent sales cycles. If you have an offer, keep it in your back pocket as you explore other options.
4 Options for Walmart Inventory Financing
Financing lets you grow your business, but it will always come with repayment requirements, and your business’s performance will dictate the amount of funding you can access. However, different financing options behave differently, and not all are equally suited to omnichannel eCommerce businesses. If you’re ready to grow your business, consider these four commonly used methods.
Slow Growth With No Additional Financing
For some businesses, financing may seem more restrictive than helpful. You can opt to slowly grow your business by just using the revenue to purchase inventory and ad space.
However, while this seems like the more cautious route, it does carry risk. You can miss out on sales opportunities, be pushed aside by faster-growing businesses, and still experience severe cash flow concerns despite your austerity.
Walmart Marketplace Capital
If you’re a successful seller on Walmart Marketplace, their Walmart inventory financing program can be a convenient answer. Be sure to read through the restrictions and repayment terms so you know your business will stay afloat before you plan on too much financing.
Conventional Business Loans
Small business loans are always an option, but they may not be a good fit for your eCommerce business. Commercial lenders look at the hallmarks of a successful brick-and-mortar business (capital, collateral, commercial credit, and assets) to gauge your business’ risk level.
Related: Financing Options for Amazon Sellers
Even flourishing eCommerce businesses don’t always stack up against these conventional measures, so you may receive limited financing or a high interest rate. There can also be restrictions on what you can use the funds for.
Merchant Advances From Providers With Walmart Integrations
Online business funding providers offer more versatile financing options. Merchant advances offer cash upfront based on sales volume, which is one of the truest measures of an eCommerce business’s health and future performance. Some funding providers offer financing with a factor rate instead of an interest rate. They may also restrict what the funds can be used for.
Other models offer upfront cash and create a repayment schedule based on your monthly sales volume so you only pay a small percentage of your sales volume to pay down the advance. Depending on the service you use, you can receive financing that can be used for inventory, growth, and day-to-day operations, without interference or restrictions. Opt for financing providers that have transparent fees, limited restrictions, and flexible repayment terms that tie to your sales volume.
Before you make a final decision, make sure your merchant advance provider integrates with each platform you sell on. They need to integrate with Walmart so they can assess your store’s real performance and potential.
Fuel More Inventory and Business Growth With Fast Financing
You can grow your store and product catalog faster with financing that prioritizes your business’s success.The right support structure lets you maintain cash flow across high- and low-performance months without dipping into savings.
At Onramp, we offer financing based on your sales performance and only require repayments equal to 1% of your sales volume for each payment cycle. We also integrate with Amazon, Walmart, and more—so we can offer financing based on your overall performance, not just performance on one platform. Talk to us today about your growth plans for your store and see where our eCommerce financing options fit into your business plan.