The Ultimate Guide To Ecommerce Lending

The Ultimate Guide To Ecommerce Lending

Ecommerce is booming. And it’s only going to continue to grow. More people are leaving their 9 to 5 jobs and striking out on their own. More people are scaling their current ecommerce businesses for a chance to capitalize on increased online sales or else getting their performance maxed out in hopes of a successful exit. Starting a business is easy. Growing a company at scale or being able to exit is a whole different ball game. Many people will grind it out for a while and then after failing to grow enough – shut it down. But the people that make it big all have one thing in common: they have a business that scales. And the businesses that scale the fastest are usually taking advantage of an ecommerce lending solution with the right terms and cost of capital.

This means their unit economics are decent at worst and mind-blowingly awesome at best. It also means that they know when they put $1 into the business how many dollars come out the other side. They have proven methods for scaling their audience and a growth strategy that nets them more customers, better margins, and inventory that stays in stock.

Keeping an ecommerce business alive can be a struggle. “Sales cures all,” said Mark Cuban. “No, that isn’t always true,” says experienced ecommerce merchants that know profit margin, supply chain challenges, and cash flow problems can take a company with extraordinary sales – straight into the red if they don’t adapt quickly and have the capital ready to do so.

ecommerce is a different monster. You have to be flexible and comfortable with dealing with pressure, a certain amount of chaos, and profitability variables that aren’t always inside of your control. You have to be able to aggressively reinvest or find other sources of cost-effective and reliable capital to deal with supply chain variability, staying in stock, scaling marketing, paying your people, affording fulfillment, and expanding your product line. 

The worst part? Traditional lenders are setup to work against e-com sellers in many ways. And the only people that really understand ecommerce people… are other ecommerce people. 

By the end of this guide, you’ll know everything there is to know about ecommerce lending, and how it can be the linchpin in your ability to not only keep your business alive – but to scale it to its full potential and open up the best opportunities for a lucrative exit. It’s time to start digging into the topic! Let’s learn how to scale, exit, or die. 

Why the Ecommerce Lending & Acquisitions World is Changing

The data behind the growth of the online selling industry is just as impressive as you might expect. Over 90% of Americans have made at least one online purchase in their lifetime, and online sales are only going up as more people turn to their mobile devices and browsers to make purchases.

In 2022, online sales have been predicted to grow to a whopping 6.54 trillion dollars. If that’s not impressive enough, by 2040, almost all purchases are expected to take place online; 95% of them to be exact. Between Web 2.0 and Web 3.0, digital purchases are the present and future. 

While the impact of COVID-19 may have boosted online sales for many businesses and pushed a lot of ecommerce resistant retail businesses to finally make the leap, it also caused a large number of issues with supply chains (both from growth and logistical perspectives).

Here are some numbers to prove just how many online businesses struggled in the pandemic: 56% had to renegotiate their contracts, 28% tried to change their sourcing, and 28% had shortages and even ran out of inventory. 

Challenges with Online Seller Funding

You work hard as a brand owner to attract relevant traffic to your selling channels. Maybe you're crushing it when it comes to session volume, and maybe you're crushing it when it comes to conversion rate as well. The sad reality of ecommerce is that just because you're making a lot of money doesn't guarantee that your business is prospering. 

You must still provide the goods to the consumer, never run out of stock, and do so with an exceptional customer experience while keeping a high-profit margin, and all while costs continue to climb. 

There are a number of things in and out of your control, but you have to deal with all of them to the best of your ability. We'll talk about how to manage the challenges of each, as well as new ways to continue growing in the face of rapid change. Plus, the one thing that fixes most problems that a lot of ecommerce merchants don’t realize until it’s too late.

For example, supply chain issues or a manufacturer fall-through can be an absolute nightmare. Third parties are, however, not the only ones that can cause issues with your supply. Your own errors are just as likely to create headaches, especially when it comes to inventory forecasting during times where it’s hard to predict just how much inventory you might need. 

If the holiday season or BFCM are approaching, and you haven’t restocked enough inventory, then no matter how well your month-over-month metrics look you’ll still feel bad knowing you left a ton of money on the table – and as an Amazon seller, this can be disastrous. 

This leads to an important question you must ask yourself when considering your strategy as an ecommerce business owner: scale, exit, or die? In today’s business climate scaling isn’t a choice, it’s a requirement. 

How To Grow Your Ecommerce Business with Ecommerce Lending

There are a lot of ways to go about this, so let’s break it down.

The Basic Needs

When making the decision that your business needs to grow and evolve, there are three main things that you have to be prepared to prioritize in your journey. These are the foundational pillars of any path you might choose to go down in the future.


Timing is so important. Because of the rapid changes in the space, it is crucial to have cash flow so that you can adapt. You need cash-flow so you can get ahead of “too late”. Running out of inventory can mean waiting MONTHS in some cases to get your next batch in. You can’t afford to wait that long. So building a good forecast and then knowing when to be more aggressive on ordering. This is why your inventory should be in lockstep with your acquisition/marketing strategy. If you know you’ve got a big campaign coming up or potential partnership launch etc. Make sure you have the inventory on hand. 

The same applies to your payments. You need to have clear documentation on all of your inventory, so you can see when payments are due at each step of the journey and make sure that your supply chain is running smoothly and with as few hiccups as possible. 

Unit Economics

Feel familiar? Despite high revenue, profits are low. Oof. 

Growing your online business is tough! Especially when you're trying to make it from 6-figures to 7, or 7-figures to 8-figures. 

If you've got tons of cash to literally set on fire and a strategy that puts revenue above all else, maybe it will work. But who is doing that? Anyone? Hopefully not. 

True success lies in the money you take home. Whether that be today. Or, if you like going all-in with 100% reinvested profits, the day you exit. 

If you're crossing your fingers that supply chain costs don't take you underwater every month, or simply not buying as much inventory as you think you could sell, or not pushing your marketing as hard as you should because of cash-flow constraints then this one's for you.

The thing that matters most here is getting your unit economics right. 

First, you need to deconstruct your business down to the most fundamental form: per unit. Then you need to look at the levers that move 1 unit from your mind, through manufacturing, to your warehouse, into boxes, onto trucks, and to your customers doorstep, and even beyond in the case of returns etc.

Knowing the steps and the costs associated, along with what you stand to earn is crucial to running a successful business.

The general steps are as follows, you’ve got to:

1. Know your basic Unit Economics

2. Account for Fixed vs. Variable Costs

3. Determine what % of profits you should reinvest to grow

4. Increase Lifetime Value (LTV) per customer and decreasing Customer Acquisition Costs (CAC)

The basics. All ecommerce businesses can be broken down into the following levers:

a) Visits: the cost it takes to get a relevant prospect to your site.

b) Conversions: the cost it takes to get a relevant prospect to complete a purchase.

c) Lifetime Value: the total amount of revenue on average a single converted customer generates across their "lifetime" with your business.

d) Variable Costs: what it costs you to get product to their door. 

It takes money to make money. We've all heard it. We all know that it's true. Even if you're a trust fund baby it costs money to set that trust up.

Not all costs are created equal. Some happen regardless of what your sales are doing, and some change dramatically based on what your sales are doing. Example: OPEX such as rent (that is until you sell so much you need a bigger space jk) is fixed. Fulfillment costs are variable, since they change based on your sales performance. Double whammy since they also literally change all the time as carriers keep upping costs to keep up with demand and logistical challenges.

You should make a list and fill out what the costs are roughly per unit (maybe in a spreadsheet with a fixed and variable cost column).

Next, you need to look at COD. That's: cost of delivery. This is all about the costs associated with your products, from creation to delivery and beyond. You've got a big chunk of expenses in there which you can breakdown something like this:

  1. COGS or Cost of Goods Sold
  2. Shipping + receiving (getting it to your warehouse)
  3. Payment processing fees
  4. Fees for Picking and Packing
  5. Shipping + fulfillment (getting it to your customers)
  6. Returns (ship from customers + restocking + storage etc.)

Once you break all of that down you can begin to calculate your gross profit. Gross Profit is, quite simply, the amount of direct revenue minus the total cost of delivery. Which you might be thinking, profit that isn't mine yet... That IS gross. So let's talk about the better kind of profit when considering ecommerce lending metrics.

Net profit. This is the profit you take home after all variable costs per unit. Sorry about those fixed costs. Feels like when it comes to costs it's a lot of addition and when it comes to money in your pocket it’s a lot of subtraction, but that's the fun of business ownership. Don't worry, we've got some ways for you to take WAY more money home ASAP. The short of it -- let us front the costs of your supply chain.

Most people set a net profit target then reinvest a heavy percentage back into the business to grow it (which is smart because grow or die, but also sucks, because having some money to show today from all your work yesterday is nice). That's where we come in.

We are an amazing ecommerce lending solution and give you the capital you need to scale. You use it and grow. You pay us back on a schedule that's around 1% of your sales each month. It really doesn't get much simpler than that. No more reinvesting all your profits. Take it! We've got you. Maintaining a good net profit will be crucial for getting a great payout if you plan to sell. 

A good general rule of thumb is to keep your COD, OPEX, CAC, & Profit all at around 25%. Kudos if you can move more of the percentage into the Profit quadrant.

If you need help with this stuff, let us know!


Cash-flow is the ultimate lever of any business that is setup with a decent model and unit economics. The uncontrollable supply chain variables of ecommerce can crush someone without the cash-flow available to adapt in real-time. But if you’ve got a good business model + the capital to remain flexible… You can become a titan of industry. Seriously, the companies that grow the biggest fastest have all figured this out. And very few people are using their own money to do so anymore that succeed at scale. Why would you spend your money when you could use someone else’s and hit growth goals 5x faster? Let’s look at some of the ways you can use capital from ecommerce lending to remain flexible. 

How to Grow Your Ecommerce Business Fast with Ecommerce Lending

We’ve established the big three basic focus points, but now let’s dive into more specific things that should be on your radar in terms of growth solutions.

What else should you focus on when having ecommerce growth as a focus?

Product Expansion

There are many ways to expand your product catalog. You can add more variants of popular SKUs/ASINs, you can add new upsell products that build on popular cart contents, you can add new cross-sell products to expand cart value horizontally, etc.

Regardless, start by determining what your best-selling product is, and consider what complementary products pair well with said item. This way, you can expand your average LTV for customers that convert on your most popular products. This is low hanging fruit. 

The items that aren’t making the kind of sales you wish they did shouldn’t be thrown to the back of your head either. Try to figure out what exactly is putting your customers off buying a said product, and think up an improved, updated one. This way, you’ll have both the buzz of a new launch and a way to push forward an older, less desirable product.

Going back to what you have already been selling and reinventing is a very good way of scaling. After all, you already have the necessary analysis and some customers who swear by what you sell. However, creating new and innovative products is just as, if not even more important, for those looking to grow their online store.

When something new is launched, it reengages your current customer base while garnering new attention from current and expanded audience segments. This also gives you an opportunity to enhance your related product recommendations and marketing automation for revenue expansion through up-sell and cross-sell opportunities. 


The importance of quality content that communicates your brand and its products to customers can hardly be overstated. 

Your copy, photos, and videos are basically how people evaluate your products. Outside of social proof, which is a very important content element: reviews, testimonials, user-generated content, etc. lends credibility and creates trust as well as desire. People can’t just pick up your product virtually (or at least this isn’t super common yet). So leaning heavily on words and images and sounds is necessary. You have to make the content so good that they don’t mind not having smell or touch as part of their decision making process. You’re down two senses so take the others seriously. Create a strong brand story that they can connect with beyond just a good enough product. That’s how you create word of mouth trust. That’s how you create brand loyalty. 

Similarly, if you are looking to scale, trust is also built through testimonials and reviews from real customers. Encourage your buyers to leave a review of your product if they’ve enjoyed it! Duh. This should be an automated process for most sellers. Hit them at the right time and ask politely. Most people will oblige with a well-crafted ask. 


If your business isn’t growing at least 10% month over month, then it may be time to reconsider your marketing strategy.

Are you promoting on the right platforms? Are you allocating enough spend? Is your model built to give you a good ROAS (return on ad spend)? If you are taking care of it yourself and not seeing the results you need it may be time to ask for help. 

Having the capital on hand to scale your marketing campaigns once you have some proven winners can be massive for your business, which is why finding the right solution for ecommerce lending is so important. The goal is to hit the ceiling on what each channel and campaign can do, you should never not be at that ceiling just because you’re underspending to potential based on the cash-flow you have available. Max it out! Then find the next channel or campaign to break through your growth ceiling again. 

Supply Chain

Supply Chain challenges and how you deal with them can be the difference between success and failure. 

First and foremost, your product has to be high-quality, and therefore so does your supplier. If you’re looking to scale, and you envision thousands of new people discovering and falling in love with what you’re selling, then you need to give them something they can truly fall in love with. Something worth sharing. Plus – shipping low quality items or having items break due to improper packaging etc. is a great way to ruin your unit economics, brand reputation, and ability to effectively forecast revenue. Not to mention, you will be at least doubling your shipping costs on every one that shows up defective. And have to replace the product itself. Quality is important. 

Your supplier also needs to be reliable, which does go hand in hand with high quality. As an online seller, providing your buyers with their purchases on time is a large part of the reputation you will make for yourself. So you have to: 

a) know how much to order for each batch to make sure you don’t run out, but also so you don’t overstock to the point that you’re paying for product you can’t move to take up space (this is why inventory & marketing should be in sync)

b) make sure you have the capital in place to purchase to your potential and not just to what you can afford. I can’t tell you how many ecommerce merchants could be way further along in terms of growth just because they are limited by what they can reinvest from previous profits on inventory (and marketing). Don’t make this mistake. 

“Find a source of capital that scales and adapts with your business. Don’t force your business to adapt to your capital.” 

There are multiple ways to go about ensuring that you never experience an inventory shortage. An important one is effective inventory management, and just a few of its benefits are:

  • Improved inventory precision
  • Lowered chances of overselling
  • Lower costs and higher profit
  • Increased productivity

For this reason, ecommerce financing solutions exist and ecommerce loans should be at the top of your priorities when scaling a business – but from the right lender. This cannot be stressed enough. If they don’t adapt with your sales, they aren’t actually for you. And most do not. 

You should be on the lookout for simplicity, flexibility, and ecommerce specific solutions. That’s what Onramp does best. And as I’m sure you know, we’d love to talk to you about that if you’re ready to take the next step in your growth journey.

There are various ways in which you can obtain the necessary funding, but not all of them put you at an advantage. Later in the guide, we’ll discuss exactly which option works best for you as an online seller, and why (spoiler alert: it’s ecommerce lending).


True success in the online selling world is being found anywhere your target audience makes decisions on the products you sell. From strategic ads to a well-thought-out and optimized social media presence, it’s unlikely you’ll browse the internet without bumping into them somewhere.

Your online store should be no exception. Firstly, it should stand out through its SEO content, from landing page to product descriptions, blog articles, and more.

Furthermore, there’s no limit to where you can sell your products. Sure, we all start somewhere, but there’s no saying that you can’t sell on multiple platforms if it makes sense for your product and strategy. After all, it’ll give people higher chances of encountering your business, no matter their preferred shopping sites. Having your own site that you can build SEO equity in and a brand name on while protecting your own data is crucial. But it’s also important to consider marketplaces such as Amazon, Walmart, etc. Just know that each of these models require a different strategy for growth and their own unique challenges. You don’t want to try and do too much too soon and you also don’t want to do too little for too long. It’s a balance. However, the right partners can you help you make the best decisions and, yet again, having ample cash-flow can solve a majority of these challenges. 

Last but not least, partnerships are your best friend. Again, of course, if it makes sense for the product you are offering. There are endless examples of why this works; Makeup Revolution’s never-ending collaborations (Friends, Elf, and much, much more), Pandora’s Marvel collaboration, the many co-branding partnerships that happen in the fashion world daily, and these are just the first that come to mind.

Different Types of Ecommerce Lending

Traditional Lending

Bank Loans

Pros: The benefit of bank loans is people are used to dealing with this type of loan. The terms are usually (relatively) simple and you can vet them using traditional means but it's not usually the best for ecommerce lending.

Cons: The amount of money you can get (or even your ability to get any) as an ecommerce seller, specifically a newer ecommerce seller can be very limiting. It takes a lot of time and requires a lot of paperwork. Even after going through all the steps, there’s no guarantee you’ll receive a loan, since online businesses have quite a low approval rate. And don’t expect for the loans to be flexible or adapt to your sales. You owe what you owe, and if you need more – well, tough until it performs to plan (which sometimes getting more or having flexible repayment is the only way to actually see the success required which is a sick catch-22).

SBA Loans

Pro: This type of loan is common for small businesses, and therefore has a higher approval rate. Low-interest, long-term SBA loans are a feasible choice for business owners who want to expand their operations but are unable to obtain other non-governmental funding. 

Con: The process for obtaining an SBA loan is also very long, and credit matters when you are being considered for approval. And again, the amount can be a challenge. It’s unlikely you’ll get the amount you need or repeat loans at the scale you need to be successful. Repayment is also not very flexible. It can be great for simpler, less volatile businesses. This is not ideal for ecommerce lending as the variables are plenty and volatility can be intense. But not the best solution usually for ecommerce sellers. 

Business Credit Card

Pro: A business credit card is very common, and for good reason. It’s easy to qualify for and brings many benefits such as cashback and travel credit. If you do your part and pay in full monthly, then you won’t have to worry about any interest either. 

Con: There are many pros, but many cons as well. Firstly, the fees; there are annual fees, usage-based fees, and an interest rate with high variability, especially if you fall behind on payments. Moreover, in most cases, personal guarantees are mandatory in order to be cleared for a business credit card. You also don’t get to just up your amount all the time. Which lacks, yet again, the most important piece: loan amounts and repayment that are flexible enough for your business type. ecommerce lives and dies by adaptability.

Alternative Lending

Venture Capital Funding

Pro: Venture Capital Funding, or VC Funding, can bring your online shop large amounts of capital in a short amount of time. This type of ecommerce lending can be harder to come but if your strategy and business metrics align, can be worth considering. VC Funding also gives access to experts from the firm’s portfolio, and in the event of your business failing you have a little less stress on personal repercussions.

Con: VC funding is a form of equity funding, therefore in return for the money you give away a part of your ownership and, with it, a part of your say in the company and a part of your hard-won payout and profits. It’s also not as easy to get, and if your unit economics and business are attractive enough for them to want to work with you – you probably have something good enough to not necessarily need them (not true for everyone, but for many).

Merchant Cash Advance

Pro: Because the lender has direct and real-time access to all of your finances (at least your earnings), he or she can make more informed and timely decisions and thus are sometimes willing to provide larger sums for businesses that would have a very hard time getting that from a bank or traditional source. This can be a solid ecommerce lending solution because of its speed, ability to service newer businesses, and the amount of capital you can acquire. But flexibility and clarity on cost of capital is crucial.

Con: Merchant cash advances can come with a much more expensive cost of capital. Interest rates and expenses can easily add up to 40-350 percent of the loan's value per year. As a result, they're best for relatively short repayment durations (a few days or weeks). It’s especially troubling if the repayment schedule doesn’t adapt. If they aren’t willing to explain what the cost is and how it works in a way that feels comprehensive, it’s probably because they are taking advantage. If they are upfront, clear, and have simple terms and flexible loan amounts and repayment schedules – this can be a great option for ecommerce seller funding. 

Inventory Loan Financing

Pro: This form of ecommerce financing is done by ecommerce specialists. You don’t have to worry about now being able to get rid of your debt because it allows you to pay back as you sell. It can especially help with seasonal inventory problems (for example, stocking up for Christmas). This is pretty common in terms of ecommerce lending but you have to have a good plan in place for it to work.

Con: Having a hard time selling inventory can potentially make future lenders avoid your business, and therefore make it harder to get access to ecommerce lending in the future. This can create a negative feedback loop you can’t get out of. It’s usually best to avoid this, though sometimes good for certain sellers. 

The 3 Steps To Avoiding ECommerce Financial Doom

Step 1: Know The Reasons ECommerce Businesses Fail

According to a variety of sites, including Forbes and the Huffington Post, 90% of ecommerce start-ups fail within the first 120 days. According to the study, 35% of respondents believed their failure was due to them being too small to survive or having no market for their merchandise, while 32% said it was due to them running out of money. If you ask me, the 35% of respondents who believed their failure came from being too small should be added to the 32% that said it was due to money. I feel it’s safe to say – cash-flow and poor unit economics are the reasons why 75% of ecommerce sellers fail. If not more. 

When scaling a business, it’s important to do your research on the online businesses in your field and figure out where others go wrong, so you can avoid repeating mistakes.

Step 2: Analyze Your Financing Options

As mentioned before, there are a lot of different options for obtaining funding for your online store, whether they be traditional or alternative. Businesses differ, and so do their needs, and therefore it’s imperative that you take the necessary time to figure out what the best move for you is. 

It’s no secret however that ecommerce lending, aka getting loans from ecommerce specialists, will, more often than not, be the most beneficial thing for you and your store. Making sure you always have cash-flow to work with that scales with your business opportunity in real time is the best way to max out your growth and build something big. Ecommerce lending is its own form of lending that requires a nuanced look into both your goals, needs, and the specific terms to make sure you're getting the best cost of capital to take advantage of your business opportunity.

Step 3: Take Action In Real-Time

Make sure your company’s inventory and finances are in check. Don’t wait until you run out of online store inventory or have issues with your supply to take action and apply for ecommerce loans, because it may be the decision that tanks your entire business.

An inventory shortage is deadly for an ecommerce business. Knowing your finances are settled, and you can safely stock up anytime regardless of previous sales, is a huge advantage that will ensure you take off instead of crashing when attempting to scale your online store. Ecommerce lending is how many merchants make sure they never run out-of-stock and can still take home profits.

Scale Your ECommerce Business Today With Onramp!

We know the world of ecommerce lending better than most, and we understand it can be a bumpy ride. If sales are slower than expected, no worries, there will be no payments to Onramp. If they ramp up, great, you get more money! We are just as involved in the game as you because your victory is our achievement. A true collaboration, as it ought to be.