Understanding Marketplace Reconciliation for Online Sellers

Understanding Marketplace Reconciliation for Online Sellers

we at eVanik felt the need for complete guide on marketplace reconciliation for all E-commerce sellers. This article will make you understand all the stages where there is revenue leakage and what parameters you should keep in consideration for marketplace reconciliation

Let’s start with the general definition of “Reconciliation” or “Account Reconciliation”.

Account Reconciliation is the process of comparing internal financial records against monthly statements from external sources—such as a bank, credit card company, or a supplier/vendor/customer other financial institution—to make sure they tally with each other. 

In our discussion, the external source is an e-commerce marketplace such as AmazonFlipkartSnapdealPayTM etc.

In every business, reconciliation of accounts is essential to maintain the financial health of the company, detect frauds, errors and discrepancies and ensure long term sustenance and profitability of the company. Using a software like eVanik OneWorld Suite to reconcile your marketplace business does most of the work for you and saves over 99% of time for you, but there is still that bit of human intuition and intelligence required to make the reconciliation process fool-proof.

Many e-commerce sellers are unable to complete the marketplace reconciliation process in a timely and accurate manner, which introduces risks, leakages and losses and eventually winding up of business. Sellers that adopt a more automated and continuous reconciliation approach benefit from a more controlled and preventive environment and reduced risk of misstatement.

To understand the marketplace reconciliation process in detail, we will first list down the basic steps involved in the reconciliation in a traditional business environment.

Now let’s expand the above by understanding the transactional complexities involved in marketplace business. Let us quick understand  the business process flow vs the reconciliation process / challenge involved.

Business Process Parameters Reconciliation Challenges
Buyer Order Status Multiple stages like pending, approved, packed, ready, shipped, delivered, returned Dynamic statuses get updated regularly thereby making it impossible to track on downloaded spreadsheets
Marketplace Payment Cycle Orders get cumulated for a time period and get collectively paid Aggregated payment cycle involve deductions and reserve amount held up to cover future possible returns from customers
Commissions & Marketplace Fee Marketplaces deduct commission charges on all orders Commissions vary basis category, event based seasonality, tier/level of seller, fulfilment model etc. Actual vs Applicable charges
Shipping Shipping charges levied by marketplaces for delivering orders Shipping charges calculated basis weight type (dead weight vs volumetric), distance (Local, Zonal, National) and charged twice in case of customer returns
Returns Orders returned either by buyers or by shipping providers and Replacements Return Status (Received or Not), Damaged or Sellable, courier or customer return
Claims Marketplaces reimburse some amount to sellers against loss or damage caused due to customer / courier or at the Marketplace Warehouse Check claim eligibility, claimed on time (Claim Window), right amount claimed, claim reimbursement status, right amount reimbursed
Cancellations Orders can get cancelled by Buyer, Marketplace or Seller at any stage of the order Orders which are not cancelled by the seller may attract a penalty which may need to be claimed back
Other Charges Marketplaces levy other charges like Fixed Fee, Closing Fee, Packing Fee, Storage Fee and many more. Multiple heads of charges against every order level for thousands of orders across multiple marketplace channels, products and categories is virtually impossible to keep track of.
Payment Settlement Marketplaces pay after keeping themselves covered and deducting the applicable charges and holding a reserve amount. Bulk settlement invites reconciling every single order under various cost heads. Manually doing this will involve huge manpower bandwidth and costs and a very long time.
Inventory Reconciliation Fulfilment models like FBA involve storing sellers inventory at the warehouses owned and operated directly by marketplaces. With no physical ownership and visibility of inventory at FBA type warehouses also involving fast and continuous movement of stocks, it is impossible to keep track of inventory count on a real-time basis. Some marketplaces move the stocks between multiple warehouses and provide a stock statement only once at the end of the month. Inventory also gets damaged, stranded or lost at these warehouses.
Others Other challenges including non-order related costs like advertising fee, storage fee etc Non-order related fees are deducted from the eligible settlement value and a statement is provided at the end of the month.
Accounting Sales, Returns, Commissions, Payments, Reserves, TCS Automating accounting entries into the accounting software used by sellers, ensuring that the same is always matched with the reports provided by the marketplaces and being compliant on GST and other Government requirements.

E-commerce sellers business owners typically spend their maximum time trying to be on top of their reconciliations with marketplace channels. 

However, the results are mostly ambiguous and outdated because of the dynamic nature of e-commerce business. Complexities widen when sellers are doing business with multiple marketplaces and have expanded their operations to various branches across multiple locations.

Manual and spreadsheet reconciliations are good in a situation when orders are limited and sellers are operating in a single marketplace and a single location. When the multiplier effect steps in, manual efforts will not just increase costs and inefficiencies, it will also lead to frustration and loss of sale.

Marketplaces also impose penalties based on their policies and subsequent algorithms configured thereof. Some wrong penalties may get unnoticed and the seller could incur unwanted losses on the same.

Keeping the above in mind, it is absolutely essential that one should have a good payment reconciliation software which has established credibility, is time tested and approved by marketplaces themselves. All of these ingredients are available with eVanik OneWorld Suite, which is helping sellers reconcile and recover millions of dollars arising from reconciliation gaps and leakages.

Here’s what you can expect from a good marketplace reconciliation software.

  • Transactions related to orders, returns, commissions and payments always updated in your panel 24×7
  • Identify wrong charges
  • Provide alerts on claim window timelines
  • Provide reconciliation reports in the format which can be directly raised as tickets to the marketplaces
  • Keep track of your claims with marketplaces
  • Micro analyze gaps in every cost component like commission, shipping, pick and pack charges, fixed and closing fee, carrier damaged without reimbursement, replaced orders not reimbursed, customer refund claims and lots more
  • The system should incorporate the reconciliation reports in-line with the claim and reimbursement policies of the marketplaces
  • Provide profitability statistics at product level incorporating your purchase costs / COGS and GST / Tax rates giving you the true picture so that you can drill down if there are any gaps.
  • Estimated receivables vs actual received at order and product level.
  • Fully integrated and compliant with all popular accounting software like Tally ERP9, Zoho Books, Alignbooks, FCA Integral, Netsuite, SAP, Navision etc
  • Downloadable reports with summary of reports for CXO / Management view

If you are looking for a robust, time-tested and proven marketplace reconciliation and integrated accounting solution for your e-commerce business, look no further. eVanik OneWorld Suite has helped over 12,000 e-commerce companies since 2006 to power-up their performance on marketplaces. To request assitance on Reconciliation click here.

Importance of MultiChannel Inventory Management

Importance of MultiChannel Inventory Management

Multichannel inventory management becomes important for online sellers  who often get confronted with the problem of managing a common / centralized inventory across various channels including their own website, offline store and e-commerce marketplaces. The buyer journey and preference especially on e-commerce marketplaces is largely unknown to the sellers and the need to be optimally stocked up on all channels is the key requirement to win the sales race. Loss of orders due to stock outs and over ordering due to inventory not updated on-time, everytime can lead to serious business disasters.  Sellers would tend to spend more money on the inventory carrying cost than the amount spent on buying the inventory itself. Also the stock which a seller is carrying has depreciation and devaluation risk due to obsolescence or expiry dates. Hence the need to optimize stocks through a robust multichannel inventory management system is essential. Timely reordering and getting on-time stock alerts is also one of the important parameters when building your inventory management system.

In simple words, the opportunity to reach your customers / audiences on their preferred channels at all their journey points is called multi-channel management. While this can be done at a very raw and basic level manually, there are good multi channel ecommerce software available in India and globally to solve this problem.   Most buyers are now using marketplaces like AmazonFlipkartEtsyeBay etc to buy products. Their search behavior is largely dependent on many things like listing quality, product rating etc, but more importantly the availability of the product is the key for them to make the spot decision. As a seller it’s most important to be on that spot all the time.   For a seller it gets harder with more channels and more SKUs to manage as the business keeps growing. This often leads to late orders, penalties, higher return rates and dissatisfied customers. Also, customers really don’t care about the problems or the efforts which sellers face for fulfilling their orders. Their single motto is to get a great shopping experience and be well taken care of.     Overselling is also a key pain area. More than getting penalized for unfulfilled orders, it leads to embarrassment and pain of losing customers. Multichannel inventory and order management software will allow you to create powerful and easy integrations with unlimited channels and give you access to a dashboard from where you can manage and control your inventory and orders centrally.    Agile platforms will start building their own inventory from the first channel that you connect. This could possibly be your best or biggest sales channel. You can use this inventory or modify it to publish it across all your channels. Syncing stock level across your multi channels regardless of how and when they were changed will relieve you from all the problems of managing inventory. A good inventory management software will let you check your stock from anywhere, whether you are at home or even enjoying a vacation with family anywhere in the world.   A lot of sellers try to execute their multichannel order management requirements through spreadsheets like Excel or building custom algorithms in the Excel spreadsheet. But this may not be the right method, as excel is an offline utility and does not have the capability to consume real-time information of orders and inventory coming through various platforms. Real-time inventory synching is crucial to success to get the multichannel inventory and order processing right. Because this delivers strong fulfillment rates, loyal customers and great reputation with marketplaces.    A good multichannel inventory management system will also help you in linking your duplicate SKUs and managing bundles and product combos.    A great tool which connects your products, orders and inventory of all your channels including your marketplace channels, offline store and website is absolutely essential for succeeding and growing your business in a multichannel business environment. This is how a seller can focus more on business and not on inventory.    If you are selling on international marketplaces, one of the advantages of having a multichannel e-commerce order and inventory system is that the seller will have the ability to reach out his products to international customers without needing to invest in physical warehouses.   Due to COVID-19,it has become even more important that you save your valuable time and power up the efficiency of your business. Invest in a good multi channel inventory and order management system for your marketplace and e-commerce business..

Omnichannel Versus Multichannel : In depth Strategic Analysis

Omnichannel Versus Multichannel : In depth Strategic Analysis

Everything existing in this universe has a meaning and when we deep dive to find it, we explore a wider spectrum. Similarly, with an objective to learn more about e-commerce, we landed on its integrated approaches, bringing up the idea of omnichannel and multichannel marketing.

Splitting the words we understood it better.

So, when we talk individually as Omni and channel, Omni is a Latin word that refers to “everywhere or everything” and the channel is “media”. Therefore, omnichannel marketing refers to the marketing process done in every channel holding the same background which means “the channels are integrated”.

On the other hand, comes the multichannel marketing process which is more concerned about the product and promotes a particular product on different channels with any link of one another.

Let’s make it more clear and interesting with infographics. Everything you are looking for about “omnichannel versus multichannel marketing” is now just a glimpse away.

Omnichannel Versus Multichannel : In depth Strategic Analysis

Still confused, here’s a story to take you to the journey of omnichannel and multichannel marketing with a shopping exorbitant girl “Sneha”.

Let’s go shopping!

Major difference 

Since the terms are now comprehensible, let’s take a look at what are do’s and don’t of both these marketing practices.

Challenges you may encounter in Omnichannel and Multichannel

No matter what we do, we certainly have to face some challenges. But knowing about upcoming challenges can help you reduce the risk and plan for the future.

Do’s And Don’t of both the strategies

Both these channels are equitable in one or the other way. Now it’s your turn to choose.

Which model to choose?