With one- and two-click checkout fast becoming the norm when shopping online, the game is all about speed.
Increased conversions and therefore sales are powering growth, with the UK eCommerce market alone generating almost 拢100 billion in revenue in 2021.
But for many merchants, growth is stymied by the delay in funds being transferred from marketplaces.
鈥�Amazon, OnBuy or Fruugo will take money off your credit card straight away as you place the order – but when a third-party merchant has sold you the goods, they鈥檙e not going to be paid straight away,鈥� Storfund co-founder Akbar Ahsan explains to 老九品茶Cloud.听
鈥淭here are different reasons for them to sit on that money: some of it is to do with statutory laws – you’ve got 14 days to return the goods – and some of it is to do with performance of the merchant, shipping times, the goods themselves.听
鈥淭here are some goods that have very high return rates鈥� but then there are others which have very low return rates: nobody’s going to return toilet paper!鈥�
The marketplaces devise algorithms to take into account various attributes of the goods, merchants, season and marketplace itself. Ahsan says this is how they determine when to pay the merchant the money.听
鈥淲e’ve seen anything from 14 days to 45 days,鈥� he says. 鈥�In a weird way, eCommerce is all about speed, selling more and selling quicker; but if you had a bricks-and-mortar shop, you get paid straight away. That doesn’t happen in eCommerce.
鈥淭hat’s what we’ve stepped up to solve.鈥�
Storfund was co-founded in 2018 by former investment bankers Ahsan and George Brintalos, friends and former flatmates who met while working at Barclays Capital 20 years ago.
The London startup offers retailers immediate payment on the sales they make, eliminating the long wait for payment which causes a cashflow problem for small businesses. It secured a massive 拢300 million financing deal last year to fund its model, with specialist FinTech investor Fasanara Capital committing 拢100m immediately and a further 拢200m when Storfund expands into China.
Brintalos, an economist and engineer, designed the mathematical models behind Storfund and manages its Athens-based engineering team, while Ahsan has taken the lead on business development and customer insight.
鈥淲e’re active on six different marketplaces and will probably be active on 10 by the end of the year,鈥� says Ahsan. 鈥淲e integrate directly with the marketplace and pull data out from them – some on a live feed, some once a day.鈥澨�
Key risks it eliminates
At the end of a day鈥檚 trading, Storfund pays out on 80% of sales immediately. As this is net of sales and returns, it takes into account if a product has been returned and refunded.
鈥淭here are two key risks that we eliminate in the way we use technology versus a conventional invoice discounting business,鈥� explains Ahsan.
鈥淥ne is the verification risk: the marketplace tells us what they owe you rather than you telling us, so we don’t need to verify any invoices. The other is to partner with payment service providers – this is where a large part of our USP lies – to ensure that the payment comes straight from the marketplaces to us.鈥�
Storfund鈥檚 target is to reach 拢5 billion in annual financing for eCommerce retailers by 2024. It already offers its services into North America and Europe, with plans to expand to Latin America and Asia Pacific. It has made a series of key executive hires to drive this growth.
The platform is Amazon鈥檚 only approved global provider of factoring 鈥� immediate payment on sales 鈥� delivering its service in 17 out of Amazon鈥檚 20 marketplaces. It has also secured partnerships with Cdiscount, France鈥檚 largest marketplace; PcComponentes, a leader in Spain; and Back Market, a pioneer in the circular economy.
International growth
With eCommerce companies driving international sales – for example, Storfund has UK customers which sell Marmite and UK-made Cadbury鈥檚 in the US – Ahsan says its product is easily transportable across borders. However a lot of work goes into providing an optimised local solution.
鈥淚t’s a non-regulated product in most countries in the world, which makes our lives easier,鈥� he says. 鈥淭he main challenges we have lie in the partnerships that we sign with local marketplaces: you have to get a good understanding of the working culture.
“We need to spend time and effort to understand each marketplace’s cultural nuances – what works, what doesn’t.听Sometimes things spin on one word that might not translate properly across different languages.
鈥淭echnology removes a lot of barriers that traditional businesses have: we can switch on in a new country with a new marketplace within a few weeks if everything goes to plan, whereas if you want to do the traditional way, it’s going to take you six months or a year to go in country, set something up, hire people.
鈥淲e’ve said 鈥榥o鈥� to countries where we felt that what we do would be regulated and we would have other hurdles in place. There are some countries which, for example, have exchange controls in place: you could be a UK-based trader selling in Hong Kong, in South Africa, in Dubai… but if you’re doing that, that means money has to flow cross-border.听
鈥淪o there have been instances where the opportunities looked interesting, but there were a lot of regulatory hurdles – and so we weren’t in a position to take that any further.鈥�