Navigating the Challenges of Freight Cost Increases in eCommerce

The cost of shipping has been a significant challenge for businesses, especially those in the eCommerce sector. In recent years, the increase in freight costs has become a major concern, with shipping a 40-foot steel container from Shanghai to Rotterdam costing an average of $10,522 as of 2022, a marked increase from typical costs in the last five years.

Why Are Freight Costs Rising?

Several factors are contributing to the surge in shipping costs:

The global shipping container shortage, leading to higher demand and limited supply. Inefficient cargo ships, which can impact delivery times and increase overall costs. The impact of the 2020 Suez Canal incident, which caused significant delays and resulted in costs between $2.2 billion and $3.9 billion in international trade. The global supply chain disruptions caused by the Covid-19 pandemic, which led to a sudden increase in demand and a slowdown in the logistics sector.

These factors have created significant challenges for businesses, particularly small or newly established companies. According to studies, over 82% of such companies fail due to ineffective management of cash flow.

Protecting Your Business with Cash Flow-Based Financing

To protect your business against these unforeseen challenges, a cash flow-based financing and repayment model can be highly effective. This model ensures that your most critical costs are covered, even during periods of high uncertainty.

A prime example of such a financing solution is the 8fig model. 8fig provides funding for supply chain freight shipping, enabling businesses to focus on growth even in challenging times.

How 8fig Works

8fig funding works through a system of continuous capital injections, with a personalized and adjustable remittance schedule. This means that payments start only when you begin selling the funded product. Additionally, the model is non-dilutive, ensuring that no equity is taken, allowing you to retain the fruits of your labor.

Requirements for 8fig Funding

To get started with 8fig, businesses need to provide information about their inventory, restocking needs, and a minimum revenue threshold. The process is quick and does not require a credit check. You simply need to answer a few questions about your business and funding requirements.

For e-comm brands, revenue of at least $100,000 over a year or $8,000 per month for at least three months is required. You must contribute 10-20%, which is the amount of cash-flow based financing you need. This is referred to as 'participation' and demonstrates your commitment to the plan.

Companies that have successfully utilized 8fig include UnderOutfit, which scaled to seven figures in a single year and avoided stockouts with sustainable growth.

Conclusion

Understanding and navigating the challenges of freight cost increases in eCommerce is crucial for business success. By leveraging a cash flow-based financing solution like 8fig, businesses can ensure that they remain resilient even in the face of unexpected obstacles.

Join the growing number of businesses that are leveraging 8fig to scale sustainably in any environment. Contact 8fig today to learn more about how their financing model can benefit your business.

References

The Suez Canal Incident

The Suez Canal is a vital waterway that handles over 12% of global trade. The incident in 2021 resulted in significant delays and cost $2.2-3.9 billion in international trade.

The 2020 Global Supply Chain Disruptions

The global supply chain disruptions caused by the Covid-19 pandemic led to a sudden increase in demand and a slowdown in the logistics sector, further exacerbating freight cost issues.

8fig: A Cash Flow-Based Financing Model

8fig is a financing model that provides continuous capital injections and personalized remittance schedules, allowing businesses to cover their most critical costs without equity dilution. This model is particularly beneficial for eCommerce businesses navigating the challenges of freight cost increases.

UnderOutfit: A Success Story

UnderOutfit is an example of a business that has successfully utilized 8fig to scale to seven figures in a single year while avoiding stockouts, demonstrating the potential and benefits of the 8fig financing model.