For years, e-commerce has increased its market share by leaps and bounds. The pandemic has only accelerated this trend, with US e-commerce sales increasing 44 percent over the course of 2020. With most physical locations set to shut down at least temporarily, even traditionally internet-averse businesses have found ways to get creative and pivot to a new reality. While these methods have served as a lifeline during tough times, they also present accounting challenges for businesses.
Two of the most popular contemporary methods of selling online are using multiple sales channels and partnering with third parties to complete transactions. While none of these options are brand new innovations, they are more common than ever. Accountants who understand these concepts and their business implications have a huge opportunity to serve as advisors as their clients solidify their strategies around these practices. Adding channels or collaborating with third parties adds complexity to a company’s operations. Therefore, many business owners need guidance on how best to navigate these waters.
A sales channel is a platform through which a business can sell its goods and services. If a retailer has a store where they sell products, that’s a channel. In the digital market, however, many businesses rely on a multitude of channels to provide maximum exposure to potential customers. It’s not uncommon for a business to have its own e-commerce website and sell on Amazon, eBay, Etsy, etc.
Along with the potential to increase sales, adding channels gives businesses a lot more to track. They need to be able to share units of inventory between channels, consider the landed fees and costs associated with each channel, and design their strategy to leverage the benefits of each channel without getting bogged down in management details of everything.
It is important for accountants to familiarize themselves with popular channels and the inventory management issues that can arise from multi-channel commerce. The main reason most companies don’t add channels is the fear of being able to deliver the same great customer experience across all channels. If you have the skills to help them achieve this goal, you can help them grow tremendously.
Third party partnerships
Have you ordered from a delivery app in the past year? If so, you know firsthand how third party operations became. In addition to delivery apps, many companies have partnerships with other vendors who put their products in, for example, delivery grocery boxes. Much like adding sales channels, these programs increase the reach of a business. However, they can also have serious drawbacks.
Numerous articles were written to find out if delivery apps are good for restaurants in the long run. While it’s a vital lifeline during the pandemic, many restaurants are hoping to transition away from the practice as pandemic-related restrictions ease. These questions are exactly the kind of problems that accountants can help solve. Every case is different, but if you understand your customers’ data and specifics, you can provide them with powerful insights into what makes sense to them.
As the world increasingly returns to normal, whatever that means, companies will look to develop proactive long-term plans rather than reacting to unique circumstances. What served as a lifeline in 2020 could end up being an anchor in 2021. Channels that have been adopted all the time may have the potential to increase growth for years to come. These types of considerations are precisely the areas in which companies must be willing to step in and help their customers.
As accountants, we have the power to consult with our clients on best practices, fueled by data and insight into their operations, markets and concerns. In today’s e-commerce driven marketplace, understanding multiple channels and third parties is essential to delivering the most cutting-edge consulting services. If you can grasp these concepts today, you will help create a better tomorrow for your businesses and your customers. The pandemic may have accelerated the transition to e-commerce, but the wave was still coming. Now it’s up to us to make sure our customers catch it and we’re ready to serve them.