If you have clients with ecommerce businesses, you know that it is constantly changing space. With fierce competition in nearly every type of retail, many ecommerce businesses expand to multi-channel ecommerce for increased exposure, new markets, and higher revenue. For example, one of your clients may sell their products on their website through Shopify, but for increased exposure they decide to sell on Amazon as well.
Although selling on multiple channels does provide new opportunities to generate more income, there are additional layers of complexity that businesses must address if they want to succeed in the ecommerce space. Below we list the five most common mistakes while expanding to multichannel businesses that can lead to a loss of revenue for your clients and more headaches for you.
Mistake #1: Manual data entry
While some single-channel businesses can survive by entering data manually into an accounting tool such as QuickBooks, once a business expands to multiple channels, it’s impossible to stay profitable without automating data entry.
The most common ways that businesses lose time and money if they continue with manual data are as follows: a) High cost to pay someone to enter the data or loss of time if the owner enters the data b) Human error leading to mistakes in the books and lost time/resources manually correcting the data c) Low customer satisfaction if orders are shipped late due to inefficient workflows d) Errors in inventory, leading to overstocking or overselling e) Time spent manually matching online payouts to bank deposits.
Here at Connex, we have worked with thousands of businesses since 2011, and in many cases the owners are spending a significant portion of their days and weekends manually entering data into QuickBooks. Not only is this frustrating for the owners (and their families), but it takes time away from running the business and solving high-level problems. Once the businesses have an automated workflow to get their ecommerce data from their selling channels to their accounting solutions, they have the resources to develop new initiatives to grow their businesses.
Finally, an automated system that matches payouts from multiple ecommerce platforms to bank deposits can save businesses hundreds of hours a year, as the transactions do not need to be manually confirmed.
Mistake #2: Overselling or overstocking inventory
This mistake was briefly mentioned above, but it is so significant that it deserves its own space. When your client sells only on one channel such as Shopify, managing their inventory is straightforward. However, when they expand to Amazon and sell the same items on both channels, it is possible for them to sell the last item on Amazon, and not have it reflected on their website. Overselling leads to refunds, poor customer satisfaction, and after incidents removal of a listing on Amazon.
As ecommerce is 24/7, it is impossible to keep up manually with inventory updates. Some businesses try to prevent this problem by overstocking, but there are several disadvantages: a) overstocking ties up capital b) it can lead to spoilage of inventory and c) if the inventory is not sold it cannot be deducted as a business expense.
The solution is to implement an inventory management solution that is a good fit for your customer in terms of the functionalities they are looking for to manage their inventory.
Mistake #3: Fields not mapped correctly to QuickBooks
One of the most common issues we see among businesses is incorrectly mapped fields from selling channels to QuickBooks. This can lead to errors in syncing, incorrect reportsing, and ineffective marketing strategies. Here are some examples:
• Mismatched Products
The product SKU in the selling channel is not matched to a specific field in QuickBooks such as the Item Name. It’s impossible to automatically sync orders between QuickBooks and selling channels when products are not matched correctly, and businesses resort to manually entering data.
Mismatched products become an even bigger hurdle when your clients expand to multichannel businesses. Without specific field mapping rules from different channels, they will not be able to sync their orders or their inventory. If they try to implement an automation, they will get sync errors.
• Customer matching
Many businesses want to add all orders under a single customer or under the name of the selling channel. In QuickBooks, you can run a report of sales by customer. In your report for your clients, you can break out Amazon FBA sales versus MFN. This will help your clients decide whether the expenses are worth selling on FBA.
• Transaction type
We see business owners who want to create a sales order, then close it with an invoice after the sale has shipped. Other users want invoices for unpaid sales and sales receipts for credit card orders.
• Asset accounts
As an accountant you probably want to separate sales from Amazon and other channels into distinct folders. When fields are mapped correctly, you can easily match payouts from online selling channels with bank deposits.
• Class matching
Many ecommerce businesses want to assign a class per order item to categorize sales. QuickBooks offers a sales by class report. With class matching,for example, you could categorize clothing sales from school supplies for your clients.
• Sales Rep
If a sales rep sells a product over the phone, you or your client can map the sales rep's initials to QuickBooks. Then, your client can run a report on sales by sales rep field and commission their employees. This will help your clients evaluate their sales reps.
• Custom Fields
For order fulfillment purposes, your clients may want to map data to QuickBooks custom fields. These fields are used for custom reports or order fulfillment, which can be especially helpful when your clients expand to new ecommerce channels.
• Sites and Bins
As your clients begin selling on multiple channels, they will want to map an inventory site and bin to ensure inventory remains in stock. This prevents oversells and overstocking of inventory.
Mistake #4: Not marking up shipping sufficiently
The cost of shipping will be different from different selling channels, and your clients need to calculate how much to charge for shipping to remain profitable. For example, if your client dropships when an item is ordered from their website, the cost of shipping will be different from shipping that same item through Amazon FBA.
Automation tools that mark-up shipping by a percentage or a dollar amount depending on the shipping carrier, can help your clients remain profitable even as shipping companies increase their fees.
Mistake #5: Incorrect reporting
As your clients expand to multiple channels, they will need reports on the profitability of different products on various channels. Shipping costs, advertising, and merchant fees vary across different channels and will affect the bottom lines for your clients. Without correct reporting, your clients will not know which products and selling channels are profitable, and how to allocate marketing budgets.
We observed that business owners who set up accurate reporting as they expanded to an additional selling channel, were able to streamline their fulfillment workflow and stay profitable. Mistake #3 above (Fields not mapped correctly in QuickBooks) expands on several fields that need to be correctly mapped to enable your clients to create the reports they need to increase their profits as they expand their businesses.
In summary, as your clients add new selling channels to their ecommerce businesses, they need to be mindful of the additional costs and layers of complexity this entails. By implementing automation where possible, mapping fields correctly in QuickBooks, generating accurate reports, and being proactive about the costs and workflows on different platforms, your clients can remain profitable as they expand their businesses, and your work will be simpler as well.
Author Bio: Dora Farkas, Ph.D., is the marketing manager for Sync with Connex. Sync with Connex, founded in 2010, provides an automated two-way integration between ecommerce platforms and QuickBooks Online and QuickBooks Desktop editions to sync sales, inventory, customers, sales tax, and fees. With nearly 30 integrations, and a 100% US-based team, Sync with Connex has helped thousands of small business owners automate data entry into QuickBooks, grow their online sales, and expand to multi-channel sales.