EP #316] [ENG] - Importance of leveraging working capital to expand your brand overseas - Nadav Gorlicki

EP #316] [ENG] - Importance of leveraging working capital to expand your brand overseas - Nadav Gorlicki Speaker 2: Welcome to The Ecommerce Lab By Ecomcy. This is the place for everything related to Amazon private label and e-commerce. Learn exactly what you need to start or scale your business. Get insights from the top industry experts who will discuss the latest trends and best practices in the world of Amazon. From choosing products and sourcing from a supplier to setting up your Amazon account and marketing your business, you will hear it here. Let's get started. Here is your host, Vincenzo Toscano. Speaker 3: Hello guys. Welcome to another episode of The Ecommerce Lab By Ecomcy, the place where everything related to Amazon, FBA, Private Label and Ecommerce. My name is Vincenzo Toscano, founder and CEO of Ecomcy and today we bring a very close friend of mine, founder and CEO of CAPEC, Nadav, this guy is the king when it comes to financing. CAPEC is the best solution when it comes to, you know, actually figuring out how to put cash flow into your business. We know as an Amazon seller, if you don't have cash flow, you die. And that's where CAPEC, you know, comes on board and really can be the solution for a lot of Amazon sellers. And I think this is a conversation that is, you know, very, very important in 2025 with everything going on with the states around the tariffs. And how global economy is getting more and more challenging competition. Like if you don't really have a financial solution that can sustain, you know, how you can keep buying inventory, how you keep fueling your advertising, how you keep launching products is going to be a very tough journey. So that's why I wanted to bring Nadav today to, you know, have a conversation about that topic, how solutions like CapEx can come on board and just give you as many insights as possible. So Nadav, welcome to the show. How are you doing my friend? Speaker 1: I'm great. Thank you, Vincenzo, for having me. Thank you. Pleasure. Speaker 3: As usual, you know, we have actually a very nice time together, Prosper and other events in the past. And, you know, I really have seen the value that you and the company CAPI bring to this space. So hopefully today, you know, we can give some some insights to the community. So I guess let's start with For those that might not know you or might not know CapEx, just give us a quick intro about you, the company, and we go from there, yeah? Speaker 1: Yeah, sure. So CapEx, first of all about me, I've been a seller for 10 years myself. I started CapEx about three years ago because I felt that there really wasn't much of a solution for sellers like us. It really came from having sellers come to me and ask for investments and always it was for buying more inventory, buying more inventory. When you look at the ecommerce space and how you need to manage your cash flow, it's a very unique environment. It's different than Anywhere else almost because in most cases if you're manufacturing product, you have certain terms with your manufacturer and therefore your cash flow is very ups and downs until you get your inventory and start selling it. And then until you actually start getting paid back, it's a relatively long time. It can take six to nine months from when you ordered your product. So we wanted to create something that really correlates exactly with the cash flow of these type of sellers. And therefore, CAPEC today, our solution is more of a partnership type solution. We actually check your product, do an underwriting audit on your store and your products. And if we feel that you're working right, you're profitable and therefore we're willing to take the risk and invest in you, we'll pay up to 75% of all your manufacturing, shipping, landed costs of your product. And then we bring it, we do a grace period to get it into Amazon, start selling. And then we do the repayments to match the sales rate of the product basically when you start getting paid back from your sales. This allows you to grow as much as you need when it comes to inventory and also not have to worry about the cash flow of how you pay it back and when you pay it back. Those are two important things. The third important thing also is that we, like I said, we're partners, so we only take collateral on the inventory itself that we paid for. Therefore, It's also managing risk. If something goes wrong, we're going to be there to help get you out of it. Otherwise, we're not going to get our money back. And also, if it doesn't work out and things do happen on Amazon, then at least you didn't lose all your money and you had a partner and investor that did the best to get to improve things. But if not, he lost. We lost most of that money. So yeah. Yeah. Yeah. Speaker 3: So I think, I mean, everything that has to do with financing and capital, especially in today's market dynamics, it's been a conversation that's been, you know, kind of scary for most people because people is like experiencing so much uncertainty. And the last thing they want to do now is get into debt. But what they don't understand is that usually on moments like this is where the biggest opportunity arises, especially because Most people now is retracting from expansion. Most people is not launching products. Most people is dealing down advertising. And that's where you as an Amazon seller, if you find solutions such as CapEx, you can really maximize the extra influx of cash that you can put in your business and really do things that you wouldn't be able to do during other circumstances. So we're talking about Europe before going live. And it's something that Even for us, it's been a conversation that's been like constantly people coming to us and say, oh, now U.S. is like in a very bad spot. And we believe. During this administration, things are just going to be very shaky when it comes to us. So people are saying like, I need to diversify, I need to go to Europe, I need to go to Asia, Latin America. And what people don't understand sometimes is that a good strategy could be as simple as using the historical performance in the US and the strength that the business has to then get some capital and deploy to a region. So what is your recommendation and advice around that? Speaker 1: So I agree with everything you said. I mean, most of the problem we have is the uncertainty in the U.S. I mean, if we knew that tariffs were staying at a certain rate, then we'd all do the changes to find different suppliers or to raise prices or to continue working with the rate that's going to be. But the uncertainty really puts us in a situation where it's hard to make decisions. But similar to many things and many changes that happen on Amazon or in different platforms, it's not only in the U.S. government. I mean, we as sellers on Amazon, every few months we get new updates and regulations and fees from Amazon that can change the profitability or the course of our product. Therefore, I think already in general, the past last year, it may be started this year, is probably going to be the year of making changes and finding other alternatives. A good entrepreneur should always be Find be able to mitigate risk by having multiple sources of income or spread out his income on multiple marketplaces or or markets and I think these changes that happen that are surprising all of us sometimes very fast Give us that push to to go and really investigate and find the different things we can do so whether it's a Having multiple suppliers, not only from one country like China in place so that in the future, if we do need to make a change, we're ready for it. Or as you said, much more now looking into the European marketplace where I think many, many, many sellers were afraid of it or didn't have the time to invest in it. We're too overwhelmed with the regulations to get into it. I think today with the right partners, it's not that hard to open up these new marketplaces and it's something that should be looked at. There's definitely, depending on your product and category, there are certain countries in Europe that are more potential to that specific category that you're selling in. And if you do have your history and your success, Coming from the US market, I think you can find the right partners to launch your products in Europe and CapEx on the financing side of it can definitely help you at least free up capital with your existing major marketplaces because in most cases, most sellers, it's not that they don't have money, it's tied up in their inventory and their existing major sales market. If Capit joins in with you, you can free up 50 to 60% of your capital and use that money to go and find new marketplaces, launching new marketplaces, bring maybe new products that have different tariffs in this case or different types of regulations, source from different countries. So always having free capital is a very important thing for a business. And that's why you should always have this type of financing in place. That way, even if, especially our type of financing, if you have it in place, you don't always have to use it, but at least when a situation arrives like this that nobody anticipated on, you have that extra cash flow to make up for tariffs if you needed it or to free up capital now so that you can go and do other expansions that might be an opportunity right now compared to regular market And how we are operating ongoing. Another big advantage of working with us in CAPIC is that since we are correlated to the cash flow of the business in situations like this, if you decide not to ship your product or you're waiting, like I am also on some of my products, the financing doesn't start. You don't have to pay back anything yet. You don't even have to receive anything yet compared to term loans or other loans that you might have taken from a bank when you placed your order and now you're already starting to pay it back and you're not even shipping your inventory out. On the other hand, also, we know how to spread out payments if Things are going slower now or if product is being delayed. I mean, we're very aware of the situations and the business and therefore we always also consult and try to help our sellers to pass this time in the best way and just having us as a partner that can help you during these times. As an entrepreneur, seller, most of us feel alone most of the time. It's all on us. So it's great to have someone with you in that situation. For sure. Speaker 3: So now I have a question when it comes to as well the things that have to do with the time to make this happen. So essentially would be because a lot of people have this question and they ask me like how long it takes for all this kind of money hit my account because Okay, I want to do it. I want to expand to Europe. I want to launch a new product or I want to really, you know, ramp up operations. But some people are scared that this might take, you know, months or very long time, which by the time the money then hit the account, maybe they cannot take action. So I know that's not the case. And I wanted to hear from you, like, you know, actually how effective this process looks like in terms of, you know, applying and getting the money, you know. Speaker 1: So once you apply through our online application, we'll set up a call with you. But if you connect API, we pull the data and we can give you an offer within a couple of days. And then if you decide to move forward with us, like I said, we pay the suppliers and the manufacturer on the date they need to be paid. Usually that doesn't take more than a few more days more to get their suppliers paid. So it's a very fast process because we don't go into your business or your personal credit or things like that. We're more underwriting the product itself, your store, your sales history, things like that that we can pull through automated data into our softwares. So the process is very simple and fast. Cool. Speaker 3: Now, going back to the strategy as well, something that I'm sure people are wondering is in terms of, you know, how the actual payment kind of solution works, because I'm sure people say, okay, let's say I take the capex kind of opportunity to get cash flow into the business. But then of course, by nature is going to mean I'm going to invest in the business, the business is going to grow, I might need more cash, and I might be I need some time to pay the money back. And that's why you explained at the beginning that you guys are putting a lot of risk because you really believe in the product, the brand and you becoming a partner. So How does the relationship stays healthy from the perspective of making sure that it doesn't kind of kill the business because you have this debt, you know, from that perspective. What is your experience with that? Speaker 1: So the fact that our debt is going to correlate and connected directly to the cash flow and sale of your product. I mean, we take a small percentage, basically, of your profit that you're going to make from the From the sales of those products and we know your profitability and therefore we're a very small percent of that. So as long as as long as you're growing or you have steady sales, we'll always be able to finance your growth. So you'll never have to run out of inventory and you'll always be able to buy as much inventory as you need. And as long as you're growing, I very much recommend using finance solutions because it mitigates risk and gives you peace of mind. So that's not a problem. And our product. Because it correlates with your cash flow, you're never going to have cash flow problems. I mean, in any given time, if we're financing 70% of your inventory, then you should have a lot of free cash flow to be able to expand, grow, or even take a salary, buy a house, things like that, that I think are also very important. You should be able to be supported by your business and not only be supporting your business. And with the right partner, you can reach that situation. Speaker 3: Cool. Now, something people listening and watching this episode might be wondering is like, how do I know I'm ready for this? Because maybe I'm too small or maybe, you know, it's not the right timing for X, Y reasons. So is there some guidelines or tips you give to people that is exactly indicated that you need a solution like CAPEC? Like, when do you know it's the right time? Speaker 1: Yeah. I think if you've reached around 200,000 in revenue, yearly revenue, if your POs are around 20K, then we can start being a good partner for you. I mean, other than that, most people, that's a pretty starting out point that they should have some investment in their business and that's where they started off with a few tens of thousands of dollars to start creating revenue and sales. And we're here to, when they have to grow into the high tens or hundreds of thousands of dollars or millions, obviously most people don't have that free capital for their business to grow. So that's where we come in. So we'd like to see a store that's been operating for at least a year, a product that's been selling for at least six months, and like I said, a revenue of around 200K a year. Speaker 3: Now, I guess in terms of strategy. Something I would be curious to also hear from your side is like another conversation is purely driven now around Amazon. But I'm confident that this can go beyond Amazon or everything they were saying. Like this also applies if you want to do Walmart, you want to do TikTok, you want to do your own website. So how does a solution like from a cash flow perspective can also be used for that? Because I guess a lot of people when they think about financing, it's all about buying more inventory, spending more on PPC. But what about expanding to new marketplaces, right? Speaker 1: Yeah, so I had a customer just not long ago, probably in the last six months, was 100% Amazon. We financed his inventory and therefore he was able to free up over 50% of his capital and he expanded into more Shopify, more direct organic sales. TikTok, that was also going into his Shopify starting off. Also opened Walmart and opened a couple more marketplaces abroad Canada and I think London it was so I Once we're in the loop and we're able to free up capital, then you can do all those expansions and then we can finance those expansions in Europe or anywhere you are once they start growing. Obviously, the first batch of inventory to Europe, we're not going to be able to finance, but from the second and third, when the business starts growing, We'll be able to finance that too for you and also in other marketplaces. So this is a great solution and sellers grow all the time and we support them. As much as possible to do these expansions. Lower. Speaker 3: So I guess to start coming to, you know, to a close in terms of the importance of, you know, financial solutions like yours and how this can be deployed on your business, like what are your advice or what are maybe predictions you have in terms of what people should be aware in terms of how the whole market is looking like now? Speaker 1: So the market has uncertainty. It's something that we've been through in the past. It's not a first time. Right now it might have a slowdown and then most likely there's going to be peaks that will follow. Prepare yourself for the following peaks. As soon as things get organized, we're going to have a lot more opportunity to to make up for what was lost in these months. And also, like I said, it's an opportunity to re re reestablish your business and have failovers, whether it's through Other suppliers, being able to market in other marketplaces that aren't affected by one single place. These are things that I would look at the next few months. I wouldn't make any drastic changes at this point. I'm not changing factories myself, but I am finding out and having things ready in the backhand because when these things happen later on, I will want to have that failover ready for myself. This time that we're waiting and we're doing less is an opportunity to look into other things that we can do in parallel. Awesome. Speaker 3: Thank you, Nadav. I know for people, you know, might be wondering how to get signed up with CAPEC and explore further. Like I'm going to put the link down in the description for people to find out. I'm sure, you know, some people might want to potentially reach out to you, have a deeper conversation. I know you have a ton of experience when it comes to financing and Amazon in general. So how people can find you? Speaker 1: I'm available, you can even email me direct nadav at capec.io and of course we go to a lot of events so follow us on social media and you can come and meet us in person. We're at Seller Summit now, we'll definitely be in Accelerate and other events going forward so join our social media and you can follow and meet us at those events. Speaker 3: Thank you, Nadav. A pleasure as usual and hopefully see you soon at our coming events. Thank you so much. Speaker 1: Thank you, Vincenzo, for having me. It was great. Speaker 3: Thank you. Pleasure. Speaker 2: Thanks for listening to The Ecommerce Lab by Ecomcy. Be sure to subscribe so you don't miss an episode. While you are at it, we would appreciate it if you could leave an honest rating and review on Apple Podcasts, Spotify, or wherever you listen. That will make it easier for others to find out about the show and benefit from it. Want more? Visit our website at www.ecomcy.com where you can get your first consultation for free or find us on Instagram, Facebook and LinkedIn at EcomCy.