“Digital commerce relies on automation that allows customers to self-serve their desired purchase online without any human intervention. Major retailers are leading the way in this space, having implemented full automation, but businesses in all sectors are enjoying the many benefits of digital commerce.” – Nana Guenther, CPA (Practice Solutions Expert)
It is a widely stated fact that a decade’s worth of e-commerce growth happened in just 90 days in 2020, reaching 5 trillion USD in 2021. With 30% of annual global retail sales now online, the shift in demand continues to grow and more and more businesses are launching digital sales channels to take ‘a slice of the pie’. Or indeed, fight for survival.
This is also true of businesses that were not traditionally part of the retail industry. To take just one example, many restaurant businesses adapted to closing their doors to the public by offering delivery, take out or ‘pantry items.’ Meanwhile, direct-to-consumer retailers popped up everywhere as people avoided visiting grocery stores and wanted to cut out the ‘middleman’, often setting up subscriptions that would permanently change their purchasing behaviours. It now became a matter of convenience and saving time.
All the additional players means that today, the digital commerce industry is massive. It also means that with few barriers to entry into the biggest global marketplaces like Amazon, Walmart, Etsy and Shopify, competition is by far the biggest obstacle to achieving growth in 2022. Selling in these giants’ spaces meant that businesses would be captive to the added fees and costs, and as they reopen their doors to the public, it may no longer make financial sense to pay to play.
More than ever, businesses need to understand their customers and their shifting purchasing behaviours to inform their go-to-market strategies. They also need a detailed, real-time understanding of their cost base, and their cash flow to inform their commercial decision-making. This is where accountants can add strategic value to their clients by anticipating their digital commerce pain points, and speaking their language.
So how can accountants help their digital commerce clients?
Firstly, understanding your clients’ business model is key to ensuring you can support them with the varied set of digital commerce challenges they face. With the mass shift to online purchasing came a whole host of considerations for retailers and merchants to navigate, some or all of which may be impacting your clients:
- Omnichannel orders (online, offline and hybrid) – keeping track of transactions across multiple channels requires careful management to separate the data into sales, fees, refunds and reimbursements.
- Multiple payment methods – as well as traditional card payments and bank transfers, payments from digital wallets, online payment services like Stripe, Paypal, and Square need to be processed and itemised.
- Overseas transactions – transactions may be processed in different time zones, languages and currencies – sometimes now including cryptocurrencies – and need to be collated in a standardised format.
- New tax liabilities – to comply with tax regulation at the point-of-sale and to calculate accurate sales figures, it is vital to split out fees and taxes so that businesses can allocate the correct tax rates to local and international sales.
- Inventory management forecasting and supply chain management – sellers of all sizes need to understand consumer demand to anticipate and mitigate stockouts and shipping delays to maintain cash flow and profitability. Processing returns correctly is also a vital part of effective inventory management.
Whether your clients are large or small, growing or closing, if they haven’t embraced digital commerce accounting best practices and are still relying on manual data entry – they’re at risk of mistakes creeping in. As you know, helping them automate their accounting practices will ensure no transaction gets stuck, fails, or gets attributed to the wrong account – however complicated it is to process.
As well as being more complicated than traditional sales accounting, digital commerce accounting is typically much faster-paced. So much so that keeping up-to-date with transactions in real-time is near impossible without automated accounting. By offering your clients a smart, digital sales accounting solution as part of your service, you can relieve your collective team from ‘busywork’, help scale processes effectively, and facilitate an accurate and real-time view of their assets, liabilities and equity.
With their full financial picture at your fingertips, you can provide a new level of in-depth reporting to help your clients make proactive decisions and future-proof their business. As agile cash flow management will ultimately be key to their success, you could, for example – with the time you save – help them consider their sales trends to identify when to cut expenses to the bare minimum. Or help them explore ways to stand out from the crowd by investing in top e-commerce initiatives such as multi-channel sales, VR/AR, hyper-personalisation, retention schemes, or fulfilment flexibility capabilities.
After all, speaking your e-commerce clients’ language, tapping into their hopes and dreams, and making their pain points disappear is not only a great way to cement your existing relationships, but will also demonstrate your accounting specialism in a rapid-growth market. This could be the game-changer you need for your firm’s growth.
To learn about Digital Commerce, how your firm can expand into the industry and what to look for in a tech stack to support you on that, watch our webinar on demand here.