Why Do You Require Accounting Software for eCommerce Business!

Why Do You Require Accounting Software for eCommerce Business!

While dealing in the eCommerce industry, you need to take care of your finances and manage your accounts successfully. Always keep in mind that you end up selling products online to earn some profits, and to keep that profit on track, you need effective accounting software for your eCommerce business. Keeping up on the books can be time-consuming and exhausting without a dedicated eComm accounting software. If you are selling your products all over India, you have to track the taxes for every state, and it can be a full-time job by itself.

Mistakes and errors in accounting and taxes can negatively affect your business. If you think you can earn profits after skipping this step, let me tell you that you’re living in denial. There is no shortcut to generating revenue by skipping the accounting process. You have to go through this if you associate with any online or offline business. To maintain the perfect accuracy in accounts, you need to speed up your business’s accounting system. In this particular blog, we have mentioned the requirement of accounting software for an eCommerce business.

Significance of Accounting Software for eCommerce Business

The traditional way of doing the accounting part increases the chance of significant errors. That is why you need to take the help of integrated accounting software, as it is the only solution to all the manual accounting and financial issues of an eCommerce business. This industry is emerging rapidly. That’s why you need to be as quick and accurate as possible. Accounting software such as eVanik OWS takes over all the responsibilities right from reconciling payments and tally integration. Apart from that, it also provides the solution for inventory management, omnichannel order processing, and so on.

The Clarity in Financial Report

To have clarity on finances and visualize the bookkeeping, you need to have a chart or graphs. Accounting software for eCommerce businesses provides you the clarity to understand your business’s financial statements in real-time. With a single click, you can get insights about all the individual orders and other expenses. This type of accounting clarity lets you consider your finances at any second rather than consulting with multiple accountants or waiting until the end of the month. It can help you learn essential information about your customers’ spending habits.

Hassle-Free Integration

Most eCommerce sellers use tally to manage their accounting part. Accounting software such as eVanik easily gets integrated with your tally prime and makes managing your accounts much more effortless. It provides you with a matching tool where you can match your sales tax report with the data integrated into tally prime. While using the accounting software, it won’t require you to install any third-party module in your tally prime because it is already integrated with tally prime through API. Apart from that, it minimizes the requirement of downloading or uploading any excel CSV (comma separated values) files from various eCommerce marketplace seller panels.

Accuracy in Bookkeeping

It doesn’t matter how good you or your team are at doing the maths manually in the eCommerce business. We are human, and humans are prone to error compared to computers. You have to understand that integrated payment processing is more accurate in any individual transaction. To maintain accuracy in bookkeeping, you need to take advantage of any accounting software. It can also screen the errors across informational categories to maintain overall accuracy. To maintain the cash flow and grow your business, you must provide accurate bills to your customer on time. The best accounting software lets you automate the invoicing as well. You can also send follow-up reminders, create recurring invoices, and accept digital payments directly from the invoices.

Integration with eCommerce Platforms

If you sell products on various eCommerce platforms, you require accounting software for eCommerce businesses that integrates easily with multiple eCommerce channels. Entering every transaction and other expenses manually includes significant errors, which is time-consuming. However, the software integrates smoothly with various eCommerce channels to provide accurate financial information and data. The software that integrates with your banking system is something that all businesses find convenient for themselves. If you are dealing in the eCommerce business and selling products on various platforms, a compelling accounting software with integration feature is something crucial you should look for.

Three Tremendous Types of Accounting Software

Cloud-Based Accounting Software

This type of software totally relies on the cloud to keep all of your financial data in one place and provide you the access to operate it from your computer and smartphones as well. Undoubtedly, it is convenient to access, but on the other hand, it does open up your data to potential hacking on a cloud. So, while choosing such software, you will have to check out the security they provide.

Cloud and Desktop-Based Software

This kind of software allows you to keep some information on the cloud and other essential information on your desktop. It can be much beneficial when you want to have some reports accessible online, but you don’t automatically want all of your business’s financial data on the cloud.

Desktop-Based Software

Desktop-based accounting software keeps all of your data rigidly on the desktop. Until or unless you export it and share it in some other way, you will not be able to access it on any available cloud networks. If you don’t want to take any risks while having your information hacked on a cloud, it will be an efficient and secure choice.

Conclusion

If you want to manage your online business’s finance efficiently, you must use accounting software for an eCommerce business. It will provide you with an instant overview of your profits and expenses, which ultimately helps you plan and fix a budget for your business. Besides this, the accounting software allows you to analyze your financial data. This can make you streamline the whole eCommerce process, manage the inventory and develop intelligent pricing strategies. All of it can help you to stay competitive in the market. So, if you are convinced that you should use accounting software for your online business, why not consider the eVanik OWS. It provides you with all the essential services required for your online business. It provides you the excellent feature of tally prime integration, Zoho books integration, Aligns books integration, and Quick books integration. Apart from accounting, it helps manage the inventory and provides the payment, shipping, and returns reconciliation benefits.

Practices to Improve Payment Reconciliation for eCommerce Business!

Practices to Improve Payment Reconciliation for eCommerce Business!

In the past few years, businesses from various categories have been forced to drastically change their operations and shift themselves to eCommerce platforms. Along with the rise of online shopping, the requirement for several payment methods has also arisen. eCommerce platforms provide their customers the options for online payment, and it has been boosted during the pandemic as customers opted more for the contactless payment method.

It can become troublesome for you to keep track of how much money you should receive from various eCommerce platforms as a seller. You can experience a lot of trouble if your logistic partner and wholesalers don’t follow the same payment cycle as yours. The eCommerce business requires you to have robust payment reconciliation software that can handle all the payments for you. This kind of software automates the payment reconciliation process to help you remain competitive while handling multiple payment vendors and customers. Here in this blog, we have mentioned important factors that can help you enhance the payment reconciliation process for an eCommerce business. Let’s get going and check out how you can improve this for sustainable performance.

Impactful Practices to Enhance the Payment Reconciliation Process


The ever-emerging eCommerce industry has undoubtedly become a profitable platform for you as an online seller. But to run your eCommerce business on multiple platforms, you may have to face the everyday challenges related to the payment reconciliation process. However, following some of the impactful practices related to this process can help you enhance it. To make it genuinely impactful, you can also use some of the payment reconciliation software such as eVanik. It can boost the improvement process. Let’s check out the impactful practices in the payment reconciliation process that you should adopt.

Assess Current Payment Reconciliation

Because of the sheer figure of transactions in the eCommerce business, the payment reconciliation process with an unregulated and traditional approach inevitably leads you to hazardous data entry. It also promotes regulatory and compliance issues. If you are still using the manual reconciling transactions using clumsy spreadsheets, it can result in inefficient workflow, other blockages, and delays. You need to go through your current payment reconciliation process to find out the glitches and keep track of all the transactions. To enhance this process, you need to identify the challenges and then work accordingly. In the Process of Assessing reconciliation, you can take the help of payment reconciliation software to automate this Process, diminish the errors, and save you enough time.

Work on Internal Controls

Operating the eCommerce payment reconciliation process, it is vital to involve an array of internal controls that can quickly identify and catch any possible issues such as accounting errors and fraud associated with payments. Internal controls basically work as software that can get installed in the entire standardized process. Implementing internal controls can help minimize the risks, establish the integrity of your business, and provide errorless financial statements. If you have a team of sales members and accountants, you should surely let them know about it and train them with internal controls. To apply the internal controls perfectly, you can also take the help of any payment reconciliation software.

Implicate Integrated Solutions

Most errors occur in the Process of Payment reconciliation at the stage of data analytics. You can spend your maximum effort to extract, select, and load the data despite identifying the results and assuring error-free financial statements. However, various software providers in the industry can provide you with software related to payment reconciliation. This software basically provides robust solutions to quickly diminish several errors related to this Process. This software includes technical solutions that automatically import and compile the transactional data from your ERP system, or it can directly extract it from several marketplaces you are selling your products on. It can provide you with an auto-generated list of all your transactions in a monthly, quarterly, and annually format. These software clarifies the mode of payment, product cost, and vendors’ commission. It automatically saves your time and makes it a valuable affair for you.

Analyze the Process on a Daily Basis

Miscalculations in payment reconciliation lead you to divergence in bank statements and put your business at extreme financial risk. That is why, as an eCommerce seller, you must focus on making this process as efficient and error-free as possible. You need to understand that, whether the payment reconciliation process is manual or automated, it can work efficiently only if you analyze it daily. It helps you monitor the gaps and other issues related to this Process. This regular practice provides you the opportunity to make improvements instantly. You must observe the time it takes to complete the reconciliation process and the number of discrepancies identified in this particular Process. You need to set a benchmark to reply to the Process in continuity till you get the best results. The analysis step is quite crucial as it provides you the room for improvements.

Embrace the Payment Transformation

Payment methods have changed rapidly in the past few years. Digitization brings various payment options and promotes the transformation in payment sections. Customers prefer cashless payments these days, and to meet their demands, you have to embrace the various payment transformations. Instead of cash payment, Google pay, Paytm, and Phonepay have taken over the market. Now you can experience that you have multiple vendors to reconcile regularly. Customers and vendors are now preferring credit cards as well to make payments. Managing the credit card fees has also added a burden to your shoulder. However, handling it manually can become highly complicated. Thus, being in the eCommerce industry, you must understand that postponing the payment transformation of your online business costs you more than the actual transformation does.

Conclusion

Hence, payment reconciliation is an exhausting yet essential task to perform if you sell products online. These days, it has become more challenging, but the above practices can extraordinarily help you perform the payment reconciliation adequately and skillfully. However, adopting an automated and integrated payment reconciliation process can make it an error-free and less time-consuming Process. It also lessens the risk of fraud and prepares smooth financial statements. It will also help if you keep an eye on the automation and workflow to keep it updated as per the customer demands and market trends.

Payments and Deductions Reconciliation on Amazon India Marketplace

Payments and Deductions Reconciliation on Amazon India Marketplace

Amazon India is one of the largest eCommerce marketplaces Globally and now also in India. Amazon provides a platform to bring buyers and sellers together. Sellers can register on Amazon and can start selling on Amazon in simple steps through Amazon Seller India.

Once Sellers lists their products on Amazon, they will start getting orders from the buyers. Amazon collects payments directly from buyers and settles them periodically as per a predefined Payment Cycle.
Amazon also deducts various types of commissions, fees, and charges from sellers known as amazon commision rates to manage the various costs like shipping costs, payment costs, packing and storage costs etc.

A simple example to illustrate this is below:

  • A seller sells a pair of shoes worth Rs. 500/-
  • Amazon levies the following costs on the sale: 12% commission (Marketplace Fee), Rs. 50/- as shipping costs, Rs. 20/- as Fixed Fee, Rs. 15/- as packaging charges. Alongside, Amazon also deducts a TCS (Tax Collected at Source) of 1% on the selling price (excluding GST)
  • Let’s total this up: 60 + 50 + 20 +15 + 5 = Rs. 150/-
  • Hence, Amazon will settle an amount of Rs. (500-150) = Rs. 350/- to the Sellers Bank Account.

However, payments are not settled for individual orders. They are cumulatively settled for orders fulfilled over a period of time. This is known as a Payment Cycle. Payment cycles may vary from time to time. An example of a payment cycle is:

  • Orders from 1st to 10th of a calendar month => Settlement on 15th of the same month
  • Orders from 11th to 20th of a calendar month => Settlement on 25th of the same month
  • Orders from 21st to 30th or 31st of a calendar month => Settlement on 5th of the next month
Why is it important to organize the reports by month?

eVanik Reco Plus syncs your Amazon data reports and sorts them as per the preset algorithms into different smaller tables, helping to prevent skews in your sale numbers.

By working through these tables, it matches the low-level transaction amounts to what Amazon considers high-level transaction categories in their settlement report.

Our general advice is not to necessarily use the same grouping that Amazon does in your financial reports.

However, it is also important to note that Amazon also deducts the value of Customer Returns or Courier Returns from the overall Delivered/Shipped Orders when making the payment. Since, few of the returns are in transit and therefore, the status is not available, Amazon will hold back a calculated amount to cover the forthcoming returns. This amount is called the “Reserve Amount”. When making the settlement as per the Payment Cycle, Amazon also deducts the reserve amount which gets subsequently settled in the next payment cycle on receipt of the returns that were earlier in transit.

Amazon also provides the facility of advertising to sellers. Sellers can choose to promote their products on the Amazon platform by opting in for promotional events such as:

  • Lightning Deals
  • Coupons
  • Sponsored Ads

For events such as the above, there are additional fees and charges. At the time of making the payments against the net delivered orders to the sellers, Amazon also deducts the charges against these events.

Best Reconciliation Practice:

eVanik’s learnings from over 13,000 Sellers since 2016 has helped us in defining the best recommendations for reconciliation of your Amazon Marketplace Account: Here’s a summary of how one must do a basic payments reconciliation for Amazon Business:

  1. Sign in to your Seller Central Account.
  2. Download your MTR (Merchant Tax Report), Date Range Settlement Report for the period that you would want to do the reconciliation. It’s advisable to add 15 days in the Date Range Settlement Report when doing the reconciliation match
  3. Match line by line item on the MTR report with the Settlement Report. In accounting terms, this process is typically referred to as matching account receivable (A/R) (created at the time of fulfillment), with undisbursed payment (in your seller payable account). When completed, all increases to accounts receivables (delivered orders or sales) will be matched to undisbursed payment in your seller payable account. This feature is known as Payment Reconciliation.
  4. When you identify any line item in the sales report that does not have a corresponding payment match, highlight that row with a noticeable color. There could be many reasons why that particular Order ID will be showing as unsettled, such as return in transit, order canceled, settlement in the next payment cycle, etc.

One must also note that spreadsheets have their own challenges, which may increase the gap in your reconciliation activity. Following are the challenges when using spreadsheets or manual systems in the reconciliation process:

  1. Dynamic nature of eCommerce business. Assume that your downloaded sheet has few orders today showing order status as delivered and we start reconciling as per that. However, the next day, few of those orders moved into returned or canceled status. Effectively, we would end up working on wrong data expecting to get the right results
  2. For sellers having huge order volumes, spreadsheets may take a long time to process the information especially if there are multiple sheets having formulae, etc.
  3. Reconciliation on spreadsheets cannot be on a real-time basis, as the commission/fee structure keeps varying from time to time.
Procedure To Reconcile Amazon Settlement Deposit

Here is the step-by-step procedure to get the reconciling done for the Amazon settlement deposits.

  • Step 1: Wait For The Settlement Deposit
    As stated above, Amazon pays the sellers every two weeks. So, wait for the settlement deposit, after which you can go ahead with the process of reconciling. Most of the suppliers or business owners integrate their bank accounts with the accounting system of Amazon to start the process right away.
  • Step 2: Get The Amazon Settlement Report
    Find the reports section under your seller dashboard and go to payments to view your settlement report. Select the report that you want to reconcile, then save the statement as a PDF.
  • Step 3: Determine The Gross Settlement Deposit
    Firstly you need to make sure that you have added all the accounts onto the accounting system of Amazon to continue with the reconciling process. You cannot continue with this process if you have not done it yet.
  • Step 4: Check The Income Statement
    After you have broken down the costs and income in the system, check on the income statement for the results. You can check your income statement in Xero. Check for the right format along with the placement of amounts appropriately.

These are the steps that you need to follow for reconciling Amazon Seller payments. You need to understand the process well as for big businesses that involve a lot of sales, deposits, or expenses, the process becomes a bit complex. So, get well versed and implement the steps accordingly.

Look for the deposited amount information in Zero and click on Add Details. After this, you can start to enter the accounts along with the respective amounts. While doing this, you need to make sure that the total amount equals your net deposit. The main aim of the sellers here must be to add the revenue amounts to the related costs for making the total amount equal to the net deposited amount. Once you are done with that, you can save the transaction.

Hence, it is important to have an automated tool that keeps updating your Amazon reconciliation data on a real-time basis and provides you with instant Amazon reconciliation reports that can also be filed for claiming the gaps from Amazon.

eVanik, as an Amazon Reconciliation Tool provides 14 plus R2R (Ready to Reconcile) reports

Alongside there is also an amazon reconciliation dashboard that summarizes periodic payment reconciliation reports, cash flow statements, and lots more.

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 inventory management for small businesses

Importance of inventory management for small businesses

“Stock, level, place, time and cost should be right” that’s all it takes to manage inventory.

Sounds simple right!

Let’s think about Danish who is an online retailer and has been selling his fashion wear products in one online marketplace.

He is hardworking and wants to grow his business. So, he registered at 4 more online marketplaces and started selling his products on all of them.

It was simple to list products in all the marketplaces.

And Danish was initially able to manage the orders coming from all these marketplaces manually.

But once the orders started increasing, things started moving out of hands.

His products and inventory were common across all the 5 marketplaces, but the orders were coming in individually.

Gradually, he started facing many challenges like updating inventory for every single product manually for each marketplace and ensuring that there is no loss of sale because of not updating the inventory.

Another challenging situation was when product stocks went out, still, he was getting an order for the products as he did not reduce the inventory to zero at all the marketplaces.

The problem becomes more challenging with thousands of products selling across so many different marketplaces.

Danish thought it would be fine soon.

But with the growth of the business, the complexities started growing more.

Danish now spends more time and effort in getting his stocks right, throughout the day, for all his products.

He also went to the extent of hiring 5 people (one for each marketplace) just to update the inventory tens of times every day.

And yes, this was all done manually!

His daily routine was to download the sales from each marketplace and update spreadsheets, containing the inventory of the products 5-10 times a day and share it to his team.

His team would then manually update the stock at the marketplace for each product one by one.

This cyclical process gave him no option but to stay where he was and quit the objective of business growth.

Despite hiring a large team to manage the inventory manually.

He was now confronted with more order cancellations leading to penalties, sale loss, long wasteful hours of manual work and no time to focus on growing the business.

More cancellations lead to lower seller-rating and tarnishing the brand image.

All I want to tell you is, “managing inventory is the key to a profitable business”.

Experienced business owners spend most of their time and efforts in automating the inventory and supply chain process.

The right inventory at the right time at the right price in the right place is the key, and there is serious science behind that.

Stock shortages or aging inventory have crashed many businesses. And when it comes to managing the inventory on e-commerce marketplaces, the challenges multiply geometrically.

Let’s take the around, in this part Danish invested in automation software for his online inventory management.

And he realized that the cost of this automation is a fraction of the 5 resources which he had hired.

More than massive savings on cost, his business started growing!

Now, there were zero order cancellations and his average inventory count reduced dramatically, reordering got more organized.

Now, he could find all the time to think about growing his business.

The above story was to reflect the importance of inventory management for your business.

But how does this concept start?

Evolution of the inventory management process

Everything in this universe is evolved i.e. gradually developed with the time, and so does the process of inventory management.

The process started even before the introduction of technology or the invention of computers. 

However, the process is believed to be started before the industrial revolution when merchants had to do the inventory management process manually, understanding the needs of customers.

With the manual process, merchants were not able to manage inventory accurately, leading to loss.

At the time of the industrial revolution, the demand for mass production rose and the businesses grew leading to a better inventory.

Finally, in the 1930s Harvard University designed the first modern checkout system. The system used a punch card in the catalog that was inserted into the device that read them.

And data was stored, the same checkout system was used for inventory management.

With time and the introduction of fine technologies, the process turned out to be more refined. The barcode and scanner brought a drastic acceptance of the process making it very simple and convenient for retailers.

The technology is still moving ahead and coming up with more surprises in the future!

What is inventory management?

Mayank Kumar quotes, “Inventory management is the process of exposing the right inventory to all available demand channels and maximizing throughputs profitably without losing a single opportunity”.

Inventory management involves tracking and managing the lifecycle of stock and includes ordering, handling, and storage.

In the e-commerce scenario, it is the process that involves managing returns, multi-warehouse movements, managing damaged inventory, warehouse management and lots more.

Large companies invest huge finance into inventory and warehouse management systems especially to address these key questions.

  • Is this product available in the warehouse?
  • Where is this product stored in the warehouse?
  • How much to reorder?
  • When to reorder?

Right inventory management is helpful in optimizing your stock management process and to work in a more cost-efficient manner.

It is quite obvious, that inventory management provides you a detailed outline of every product when it enters or leaves the warehouse and it addresses the following requirements

  • Centralized view of stock- Managing inventory gives you an overview of your entire business, you can now have an accurate track of your inventory as they are centralized at one hub.
  • Planning and forecasting- Imagine knowing what your customers demand and how much stock you require for the coming time.

Isn’t it all you need as a perfect business plan!

With the right management of inventory, you can easily make reports to analyze your stock.

It helps you in making a smart business decision and gives you information on what is demanded more.

  • Time-efficient- Inventory management is one of the most time-efficient methods to work with, it not only helps you to work fast and accurately.

But also helps you to complete the inventory process with improved delivery and getting high customer satisfaction.

For every business, it is important to keep track of their work. It helps them to understand the direction they are moving, and inventory management provides you that opportunity.

Basically, inventory management solves all your queries related to stock and its management.

Remember, in today’s competitive world you have to be ahead of the crowd.

How to manage inventory in an e-commerce marketplace scenario?

As we now know the importance of managing inventory for any business, let’s see how we can do that when selling on e-commerce marketplaces.

  • Search and research  – Planning is really crucial to make your move smooth.

For successful inventory management, you can use data and reports such as product sales velocity, profit calculator, sales comparison, channel-wise movement, etc.

It will help you to deep dive into past trends and plan for the future.

Do you know, marketplaces such as Amazon provide business reports on their seller central dashboard.

Do not overlook stuck or stranded inventory and stock in transit.

Remember, people tend to order more stocks without seeing that there is existing inventory in the system which is either not active/utilized/published or stored at the right place.

  • Focus on profitability – Margins & profits through sales on e-commerce marketplaces are more than just sales and purchase.

There are dynamic costs such as commissions, shipping, packing, advertising, storage, etc.

And they get loaded to your product.

For example:

Your purchase cost of a pair of Jeans is Rs. 200/- and you are selling it at Rs. 400/- on Amazon.

This may look to be a gross margin of Rs. 200/-, but here are some of the real costs which may simply change the picture

  • Average shipping cost = Rs. 50/-
    • The commission charged by Amazon (15% on selling price) = Rs. 60/-
    • Packing, storage, fixed fee, etc = Rs. 50/-
    • Average Returns (20% and 10% of these are damaged) = Rs. 8/-
    • Net GST payable (Input on purchase and fees and output on sales) ~ Rs. 5/- (assuming that the product is on 18% GST category)
    • Total costs – Rs. 173/-. Add a TCS cash-flow block of 1% = Rs. 4/-

The net realization from the marketplace on a product being sold at Rs. 400/- and the purchase cost being Rs. 200/- is just Rs. 23/-.

Now think about your internal costs – salaries, warehousing, procurement, bank interest, etc.

As I said, “it is more than just sales and purchase”.

  • Use a warehouse management system – On-time delivery of online orders is the key to growth and reduction in cancellations.

When you get multiple orders and your inventory is not well organized, it will lead to delays in picking, packing, and shipping, leading to more cancellations and returns from customers.

Therefore, a scientific and agile warehouse management system ensures automated, timely and well-structured movement of stocks.

  • Monitor aging inventory – A product that has spent a huge time in your inventory is known as aging inventory.

In inventory management, you have to keep an eye on the stock or product that is in your inventory for 12 months or more.

It is very important to manage aging inventory as it is consuming your inventory space, hampering the management of your inventory.

  • Manage returns in real-time – Returns are a hard reality in e-commerce.

You can control some of the returns by keeping a habit of rechecking before you ship the product.

However, this helps to only some extent, so at that point, you are left with nothing but to handle return in a smarter way.

As for any industry, average returns are in the range of 25-30%. With such high ratios of return orders, it becomes even more important to manage inventory more intelligently.

To make it easy you can do is to track returns and keep them at the top of inventory management.

  • Keep a habit of audit- A habit of auditing every six months or annually can be a great support.

This will help you to know what you have in your stock and what you can add more to grow your business.

Moreover, the process of auditing helps you to check over the quality of products and monitor the machinery of your inventory.

  • Track product information- The most important part of managing inventory is tracking the product information especially barcode data, SKU, suppliers’ information, etc.

All these processes can be really hectic and time-consuming.

Additionally, manual tracking can lead to lots of errors.

What to do?

To ensure an optimize inventory management, you can integrate your inventory with inventory management software.

With the integration process, the system of your company gets integrated, not only with the back end of your company but also with suppliers and 3PLs, making the tracking process more accurate.

Integrating inventory will help you to integrate financial activities like logistics, HR,  sales and financial production solving problems of reconciliation. 

It will connect the demand channels for offline sales, and will also connect with discovery engines through digital payment acceptance.

With integrated inventory system software, you can easily make local sellers and stores digital and discoverable.

Connecting to the global market with Indian economic merchants.

Therefore, importance of inventory management for small businesses isn’t just limited to stocks but also provides you all accurate financial reports including tax returns that are important for your investors and government.

So, If you are looking to integrate your inventory, eVanik can help you!

Best accounting software for e-commerce sellers in india

Best accounting software for e-commerce sellers in india

Finding out the most appropriate accounting software for your online business on marketplaces could be a really difficult task to choose from.

When you are considering to buy accounting software for your eCommerce business and especially if you are selling through marketplace platforms such as Amazon, Flipkart, PayTM, etc, it’s important to consider several factors. Moreover, if you buy the wrong one, it wouldn’t be easy to make a switch to another one in the middle of the year.

Here’s what all you must consider before you go ahead and buy your accounting ERP

Integration
  1. Your accounting software should be able to automatically integrate with marketplaces and fetch all data points like sales orders, returns, payments, commissions & marketplace fee and TCS
  2. These integrations should be real-time primarily because marketplace transactions are dynamic in nature. If you are thinking of downloading files from your seller accounts and then uploading it back to your accounting software, it may not be a good idea, simply because what you have downloaded today may get updated or modified by the marketplace tomorrow. This will become an infuriating struggle to identify the changes and re-updating your accounts
  3. Most accounting software does not have a direct integration with eCommerce marketplace channels. Therefore, it’s important to look for a middle layer solution that talks with your marketplaces and your accounting software simultaneously and seamlessly. eVanik OneWorld Suite is one such option that has direct integration with all major eCommerce channels and major accounting ERP providers.
Features & Functionalities
  1. The nature of accounting transactions in the eCommerce marketplace business vs. a regular trading business is largely different. The following table illustrates some of the key differences between both.
Nature of Transaction Ecommerce Marketplace Offline / Trading Business
Sales Orders & Fulfilment Multiple Statuses (Changing dynamically)
Party ledger of Marketplace instead of the end customer
Invoicing done by Marketplace (FBA Model)
Simple direct invoicing to end customers.
Payments Received in bulk for multiple orders/invoices after multiple deductions.
Payments received against one bank account or GSTIN location even if transactions have happened in multiple locations
Direct full payment against an invoice from the end customer.
Commissions / Fee Multiple charges linked against order/product/fulfillment model etc
Charges are dynamic and ever-changing
Charges to be adjusted at every order-level / item-level and warehouse-level
Mostly unlinked to sales invoice with exceptions like Shipping Fee
Sales Returns Returns initiated by the marketplace vs. returns received by the seller – when should it be recorded
Recording accounting vouchers for replacement orders
Simple Return Voucher or Credit Note
Refunds & Reimbursements Claims vs settled reimbursements
Refunded orders but not settled to seller
No impact
Inventory Stock transfer from the main warehouse to channel warehouse
Recalls from channel warehouse to the main warehouse
Inter warehouse movement done directly by marketplace channel
Damaged and unsellable stocks accounting treatment
No impact
TCS TCS is implemented only for marketplace eCommerce business
Accounting entries of TCS
TCS on return orders
Reconciling TCS with GSTIN portal
No TCS impact
  • accounting software may not have such large data handling capability. This may cause a threat of loss of valuable data, incorrect reports and delay in filing your returns.
  • Reporting your online business comprehensively in the way you would like to see it.
  • Ease of Use / Accessibility 
    1. Simplicity is the key to good accounting software. Ensure that you take a detailed product demo and list down all your queries at the time of the demo. 
    2. Most software will provide you a limited free trial period. Make maximum use of this trial with your actual data and see if this is working for you or not.
  • Cost
    1. Acquisition cost – Initial cost and annual maintenance / AMC charges
    2. Operational cost – Server cost
    3. Support cost 
  • Support and Implementation
    1. While most accounting software comes with standard support channels, it’s important to scope out your implementation requirements and support requirements with definitive timelines.
    2. Check the ratings and reviews to see how the software company fares on customer support and implementation.
    3. Customization will be required especially when you are into this complex business of eCommerce marketplaces. 
Tally .ERP 9

Tally .ERP9 is undoubtedly the leader in Accounting software in India. 

It is a windows-based enterprise resource planning software. The software handles accounting, inventory management, order management, tax management, payroll, banking and many such requirements of the business. It supports all day-to-day processes from recording invoices to generating various MIS reports.

Tally boasts of 6 million overall customer base out of which 2 million are with an official Tally license. 

Tally does not have any direct integration with any eCommerce companies in India and hence the commonly used workaround is the import and export of spreadsheets which may not be a good practice.

eVanik OWS is the only tool that has an automated chrome extension based integration with Tally ERP9. This means that there is no need for you to manually upload or download vouchers. No 3rd party module (TDL) needs to be installed into your Tally license. All ledgers, SKUs get mapped or created automatically through eVanik. And the GST reports generated on your Tally will be 100% accurate and error-free.

The biggest limitations of using Tally are:

  1. Limitation on data. Experience says that after posting 50-70k vouchers, the software tends to slow down. Generating GST and other reports take a long time.
  2. Tally is a single company / single branch software. Branch accounting is not available
  3. Its an offline and desktop-based software and cannot be accessed from a remote location
  4. The multi-user version of Tally can run only if all the users are on the same network.
QuickBooks Online

QuickBooks Online provides direct integration with very limited marketplace channels. In the Indian eCommerce context, this is even more restricted. However, if you have the technical expertise, you can do an API integration of a few of your marketplaces (that provide API) directly with QuickBooks Online.

QuickBooks offers on-premises accounting applications and cloud-based versions with features like expense tracking, tracking bills and due dates, and reporting

Currently priced at Rs. 4,800/- per year, QuickBooks comes with a 30-Day Free Trial. The “Simple” edition of QuickBooks Online limits to 1 Billable User, 250 Charts of Accounts, lack of custom reports and no multiple branch accounting options.

Alignbooks

Alignbooks leads the house when it comes to eCommerce accounting in India. Alignbooks is a Delhi based company focused on SMBs. Alignbooks recorded 1000 new customers within the first year of its launch.

The biggest advantage of this software is that it is completely automated and integrated with eVanik OneWorld Suite. Server-based APIs between Alignbooks and eVanik ensure real-time and automated transaction posting without any manual intervention. Reports are highly customized and the support is available 24×7 from the company. It’s Multi all the way: Multi-User, Multi-Company, Multi-Location, Multi-Branch and unlimited transactions.

Zoho Books

Zoho Books is one of the most sought after cloud-based accounting software in India and now globally. Zoho Books provides end to end accounting and also has a very simple and useful mobile application in Android and iOS.

  • The pricing of Zoho Books is very attractive for small businesses The standard edition comes at just Rs. 2,499/- per year with a restriction of 5,000 invoices annually and the premium edition comes at Rs. 19,999/- per year with 25,000 invoices. The pricing steeps up with more number of invoices.

    Ecommerce integrations are limited to sales orders and returns. Payments from marketplaces can be managed through their bank feed integrations. Cons – Single Branch, restriction on the number of transactions, limited users, etc.

NetSuite
  • NetSuite is one of the leading solution providers of cloud-based business management software. NetSuite helps companies manage core business processes with a single, fully integrated system covering ERP/financials, CRM, eCommerce, inventory and more. NetSuite is focused on strong compliance management and designed for large enterprises. If you have a global and large enterprise business with multiple verticals, NetSuite is worth checking out.
  • Pricing of NetSuite may be one major constraint if your business is into early or growth stages. NetSuite’s cost depends on several factors including the selected product configuration, add-on modules required, total user count and contract duration. NetSuite’s base license pricing begins at $999 per month with general user access listed at $99 per month.

NetSuite comes with a basic integration with eVanik OneWorld Suite.

Xero

Xero is another popular online accounting software. Right from the Xero login page, the overall experience of the web and mobile version is fantastic.

Xero comes with integration with over 800 third party apps and a very hands-on expense management module. Xero boasts of over 2 million subscribers. The UI of Xero is one of the most beautiful in this segment.

Xero also claims to provide a reconciliation of Amazon FBA transactions and the Amazon Seller Central can get integrated with Xero. Besides Amazon, integrations with Alibaba, Etsy, and eBay are also available.