Why Big Businesses Need Financing to Win BFCM (2024)

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The annual retail frenzy of Black Friday and Cyber Monday (BFCM) is a prime opportunity for commerce businesses. In 2023, Shopify merchants reached an unprecedented milestone by generating a record $9.3 billion in sales during BFCM, underscoring the importance of preparing for the holiday season. The prospect of a massive surge in consumer spending is undeniably exciting, but the question remains: How do you capitalize on this peak season without being outpaced by demand?

As a large retailer, incorporating strategic financing into your BFCM strategy is crucial. If you’re looking to secure more working capital ahead of the holiday rush, traditional lending channels may come with burdensome processes and timelines. Alternatively, solutions like Shopify Capital offer more agile financing options. With offers up to $5 million and no equity stake, Shopify Capital provides tailored support for businesses preparing for key sales opportunities like BFCM.

Let’s explore how large merchants benefit from financing to prepare for BFCM and how Shopify Capital can help.

The untapped potential of BFCM for large retailers

Industry research consistently highlights the significant sales boost for businesses that are well prepared for BFCM. A Deloitte study revealed that a staggering 66% of holiday shoppers planned to shop during Thanksgiving week in 2023, a considerable increase from 49% in 2022. 

With holiday shoppers buying earlier, it’s even more important for retailers to be well-stocked and operationally ready to meet this surge in demand. Retail experts agree: Tom McGee, President and CEO of International Council of Shopping Center, reinforces this point, stating, “As consumers continue to hunt for the best deals and promotions, major shopping events like Black Friday and Cyber Monday remain important despite discounts extending throughout the holiday season. While economic factors may be changing some consumer behaviors, shoppers are still spending, and retailers can expect to benefit from a strong holiday season.” 

By leveraging financing solutions, large retailers can ensure they have the resources needed to capitalize on this prime shopping period.

How Shopify Capital can help

Shopify’s lending solutions—Shopify Capital Loans and Cash Advances—are tailored to fit your business needs. These finance tools are designed to equip you with flexible and accessible financing options, so you can navigate the complexities of expanding your business. 

• Shopify Capital Loans and Cash Advances is a financing solution specifically designed to provide businesses with a one-time injection of capital to help accelerate their growth and cover expenses. Unlike traditional loans, Shopify Capital removes the roadblocks often associated with securing capital, like credit checks or taking equity Whether you need to invest in inventory, ramp up marketing campaigns, or streamline operations, Shopify Capital provides the flexibility to use the funds as needed for your business.

Businesses have received $5.1 billion in financing through Shopify Capital. This data paints a clear picture: Shopify Capital is a powerful tool for business growth.

Here’s how Shopify’s lending solutions stand out as a financing solution for large retailers:

• Fast and hassle-free financing: If approved, your financing can be in your bank account within two business days, ready to use immediately. No more waiting for lengthy approvals or traditional loan processes.

• Focus on growth, not paperwork: With Shopify Capital, the application process is simplified, freeing you to focus on growing your business.

• Customized offers: Your business is unique, and your financing should be too. Shopify Capital tailors offers based on your specific sales performance, ensuring you receive the right amount of financing to achieve your goals.

• Competitive rates and transparency: Get competitive pricing with no surprise fees and the peace of mind that comes with knowing you’ll never be asked to relinquish your equity in your business.

• Seamless integration: Shopify Capital integrates seamlessly with your existing Shopify account. Access and manage your financing directly within your familiar platform, and eliminate the need for additional logins or integrations.

Beyond traditional loans: Financing options for large businesses from Shopify

While traditional bank loans have long been a cornerstone of business financing, large retailers are increasingly turning to alternative financing solutions to fuel their BFCM success. As Sean Reyes, Founder and CEO of Shock Surplus, highlights: “Banks wouldn’t lend us a dime because our average cash balance didn’t meet their metrics. They don’t care if you’re pouring all your profits and all your cash back into the business to grow it like we were. To them, that doesn’t matter at all.”

Banks wouldn’t lend us a dime because our average cash balance didn’t meet their metrics,” Sean says. “They don’t care if you’re pouring all your profits and all your cash back into the business to grow it like we were. To them, that doesn’t matter at all.

Even large retailers with proven track records seek additional financing to expand their business. Whether it’s purchasing more stock, expanding retail footprints, or launching new products, it all requires working capital. 

Compared with traditional lending options, Shopify Capital offers a faster, more flexible path to securing capital. These solutions are designed to be more adaptable to the unique needs of an established business, often relying on factors like your sales history and performance to determine eligibility. Finding financing that works for your business is the key to future growth.

Exploring the best financing fit for large businesses

While traditional bank loans hold a familiar place in the financial landscape, large corporations increasingly leverage a broader range of financing solutions to fuel their BFCM success. This strategic approach allows them to capitalize on peak season opportunities without sacrificing long-term growth objectives.

Here’s a breakdown of some key financing options available to large businesses, each offering distinct advantages and considerations:

1. Self-financing
2. Revenue-based financing
3. Lines of credit
4. Credit cards
5. Bank loans
6. Equity financing

1. Self-financing

• Pros: Utmost control over your finances and no debt obligations.
• Cons: Limits growth potential by hindering investment in areas like inventory or marketing. Large corporations with established cash reserves might consider self-financing for smaller, strategic initiatives.

2. Revenue-based financing

• Pros: Provides flexibility as repayments are tied to a percentage of your revenue, scaling up or down with your sales. Ideal for businesses experiencing consistent revenue growth.
• Cons: Interest rates can be higher compared to other options. May not be suitable for businesses with volatile sales patterns.

3. Lines of credit

• Pros: Offers readily available funds similar to a credit card, providing operational cash flow when needed. Useful for managing ongoing expenses or unexpected shortfalls.
• Cons: Interest rates tend to be on the higher side. Requires discipline to avoid overuse and potential debt accumulation.

4. Credit cards

• Pros: Convenient for small, immediate purchases with readily available funds.
• Cons: Typically carry the highest interest rates of all financing options. Not ideal for large financing needs due to the high cost of borrowing. Best suited for minor expenses.

5. Bank loans

• Pros: Provides a lump sum of capital for specific, large-scale projects. Offers predictable repayment terms with fixed interest rates.
• Cons: Lengthy application processes and stricter eligibility requirements compared to other options. May not be suitable for time-sensitive financing needs.

We needed funds to buy supplies to manufacture our products in time for the holiday rush, and we weren’t comfortable with a traditional bank loan. We needed a straightforward way to get funding without complications.

6. Equity financing

• Pros: Unlocks substantial financing for significant growth initiatives.
• Cons: Dilutes ownership and requires relinquishing some control over the business. Investors may have a say in strategic decision-making. This option should be carefully considered and explored only when the potential benefits outweigh the loss of control.

By carefully evaluating these financing options, large businesses can select the approach that best aligns with their specific goals and financial situation. Ultimately, the choice depends on the specific needs and circumstances of the business. 

As Ron Miskin, Co-owner of The Buffalo Wool Co., says, “We needed funds to buy supplies to manufacture our products in time for the holiday rush, and we weren’t comfortable with a traditional bank loan. We needed a straightforward way to get funding without complications.”

Keep in mind that the ideal financing solution should not only address your immediate BFCM needs, but also complement your long-term growth strategy.

What your large business can do with Shopify’s lending solutions

While long-term plans are crucial, short-term cash flow fluctuations or strategic initiatives can arise. With Shopify Capital Loans and Cash Advances, we have unique financial offerings that cater to these diverse needs. Here’s how large businesses can leverage Shopify’s lending solutions for strategic, short-term financing:

• Manage cash flow fluctuations: Large businesses can experience temporary dips in cash flow. Shopify Capital’s flexible repayment structure, based on a percentage of daily sales, helps bridge these gaps without disrupting long-term financial plans.
• Fund specific initiatives: Different departments or marketing campaigns may require immediate financing. Shopify Capital offers a fast and accessible way to secure capital for these targeted initiatives, eliminating the need for extensive paperwork.
• Optimize inventory management: Businesses with seasonal sales fluctuations can leverage Shopify Capital to purchase additional inventory in anticipation of peak periods. This optimizes sales opportunities and ensures they have the stock to meet customer demands.

• Testing new markets or products: Testing new markets or expanding product lines is especially difficult without a significant upfront investment. Investing and testing early enables businesses to gather valuable data and refine strategies before full-scale launches, minimizing risk and maximizing potential success.

• Technology upgrades: Staying ahead of the competition often comes down to the technology and software solutions your staff are working with. Use Shopify Capital to finance these upgrades, ensuring seamless integration without disrupting long-term financial plans.

• Supply chain optimization: Procurement is often a business’s biggest cost when it comes to improving inventory management. Utilize Shopify’s lending solutions to invest in predictive analytical tools, optimizing inventory levels and enhancing supplier relationships.

• Seasonal staffing: Businesses need ample staff available to meet the influx of shoppers over the holidays. Utilize capital financing to hire temporary workers, filling short-term staffing gaps without long-term commitments.

• Competitive pricing: It’s crucial to identify pricing trends through market research to stay competitive. Take advantage of Shopify’s lending solutions for funds to implement dynamic pricing strategies, offering discounts or promotions as needed to attract customers and adapt to market changes.

• Infrastructure improvements: Brick-and-mortar facilities such as warehouses or stores go a long way to improve efficiency and customer experience. By using Shopify Capital to invest in equipment upgrades, you’ll enhance production capabilities and meet growing demand.

• Risk management: Limiting potential risks and minimizing business disruptions comes down to a thoughtful, strategic contingency plan. Consider using your Shopify Capital financing to invest in insurance coverage and diversify revenue streams, reducing dependency on a single product or market segment.

Why Shopify Capital is the best loan for large businesses on Shopify 

1. Faster than alternative sources of financing because we know your business 
2. We don’t take equity in your business 
3. We leverage information about your sales to create customized offers 
4. Integrated right where you do business 
5. Can be used for whatever your business needs to grow from inventory to marketing and everything in between

Financing solutions: The key to unlocking BFCM success

Imagine achieving a staggering 375% sales surge during BFCM. That’s the kind of growth Shopify Capital helped Pashion, a company led by CEO and Founder Haley Pavone, achieve. “I’m not confident we would have been able to bring in our holiday shipment,” she said. “I don’t think we would have seen anything close to that growth figure without it.”

I’m not confident we would have been able to bring in our holiday shipment [without Shopify Capital.] Capital was vital in getting us the holiday inventory on hand that we needed to support that 375% sales growth. I don’t think we would have seen anything close to that growth figure without it.

This powerful example highlights the potential that strategic access unlocks for large businesses during BFCM. By exploring alternative financing solutions, businesses can unlock their full potential and seize the immense sales opportunities this peak season presents. Shopify Capital Loans and Cash Advances offers a compelling option specifically designed to meet the needs of established businesses on the Shopify platform.

Available in select countries. Offers to apply do not guarantee financing. All financing through Shopify Capital is issued by WebBank in the United States.

* Shopify Capital loans must be paid in full within a maximum of 18 months, and two minimum payments apply within the first two 6 month periods. The actual duration may be less than 18 months based on sales.

If Shopify is of interest and you'd like more information, please do make contact or take a look in more detail here.

Credit: Original article published here.