There has never been a better time to start an e-commerce business which means that quick to the mark Cloud Accountants are targeting and winning clients in a a healthy new market sector destined to grow considerably for at least the next decade.
Platforms such as Shopify, Woo Commerce and Magento allows your clients online stores to be live within a day, or even hours. PayPal and Stripe allow payments to be taken across the world with ease, whilst dropshipping services from Amazon mean your clients never have to physically hold the stock of what they are selling. However, because it is now this easy, they will not be alone in setting up stores. So how do they stay ahead of their competitors? How can you ecommerce accounting service add value? One answer can be found in making consistent marginal gains with cloud accounting apps.
I first became aware of the concept of margin gains whilst reading the excellent Black Box Thinking book by Matthew Syed. Black Box Thinking is a fantastic dive into how understanding and overcoming failures can lead to massive breakthrough, and is peppered with examples from business and sport. One such example is the success generated by the Team Sky cycling team, whose General Manager Sir Dave Brailsford experimented with tweaks to a huge number of areas of his team’s performance. Individually each change was miniscule, from slight amendments to cycle design, diet and even the suits worn on the rides. Some didn’t have any effect and were tweaked again and again until they gave a marginal gain on performance and against the team’s competition. Cumulatively, however, the effects were massive and the success enjoyed by the team in subsequent Olympic Games is testament to that.
So how can this concept be applied to your clients e-commerce store using cloud accounting apps?
The more time spent on paperwork in their business, the less time available for analysing performance and expanding the product range. It follows that any marginal gain achieved through automation should be exploited. Some examples of how this can be done are:
- Ensure their e-commerce platform is compatible with your cloud accounting applications
Shopify and Magento, for example, feed in all online orders, including contact name, reference number, items sold and payment method used. The result is simply no need to manually replicate any data from the website sales. A2X and Cin7 are great examples of how this can be extended into marketplaces such as Amazon and eBay. Put simply, if their e-commerce store cannot do this their competitors are one step ahead. Advise them of this, they will thank you for it.
- Automate supplier bills processing
Same for sales above, why have someone manually enter your clients supplier bills. Using Receipt Bank or Datamolino they can use OCR technology to create automated entries into Xero. Manually processing supplier bills can be a massive drain on bookkeeping staff time. Freeing that up removes an overhead from you managing their business that can be applied to more value-added activities.
One of the key criteria now when selecting banks is the ability of that bank to feed transactions into Xero. If it can’t, they need a manual intervention every time you need to update your bank, and your supplier payables etc. If their competitors aren’t having to do that and can respond to new opportunities for sales with an accurate real time bank balance, they will miss out.
One of the keys to e-commerce success will be driving efficiency from key metrics. So, rather than analysing revenue in isolation, understanding how that revenue actually arose and how it performed against forecast. Revenue by product, margin by product, revenue by sales channel, cost of acquisition by channel, conversion rates by channel etc. A growing e-commerce store will closely monitor these metrics daily. However, the challenge is in getting the data efficiently and in 1 place.
Thankfully tools such as Futrli now exist to satisfy the analysis needs of your e-commerce business. Futrli integrates with Xero to bring in all financial metrics live. It then also allows non-financial metrics to be added, e.g. Google analytics and key traffic and conversion stats from your e-commerce store. Combining these financial and non-financial metrics onto a single visual dashboard can enable fast analysis and swifter decision making. Reacting faster than competitors can mean a huge gain especially around peak trading times such as Black Friday or Cyber Monday.
- Access to Funding
Growing e-commerce stores can grow fast but often needs working capital to support digital marketing, staff increases, expanding premises and increased stock levels. A lack of finance can stunt growth and allow competitors to overtake. But getting funding via banks is hard! Alternative finance exists purely as a result of the traditional high street banks inefficiency and inability to work with smart, growing online businesses. So rather than wasting time meeting bank managers, completing paper forms and waiting for weeks before getting a lending decision, platforms such as Capitalise have been created to fast track this process online. Capitalise pulls in key, live financial data from Xero and then applies a bespoke lending search across a marketplace of alternative finance lenders. Information is traded online, without forms, and without having to be repeated for each lender. The result is fast decision making and money in bank often within days. It doesn’t take long to work out what e-commerce store can grow stock and marketing spend fastest when they access lending in this manner.
These examples are just some marginal gains that are being applied every day by successful e-commerce stores learning the power of cloud accounting. There are undoubtedly many, many others further illustrating the fact that marginal gains in accounting efficiency, operational support and profitability analysis will build the framework for a long standing successful business.
Click here: If you are an Accountant wanting to target the eCommerce sector to win new clients.