eCommerce – The Big Buzz in Retail
What’s So New, You Ask?
Nothing is new, except the Retail market has a new look as ecommerce is booming (aka: online sales are up!) What hasn’t changed is the need for strategy and accounting.
Years ago, we thought this was the wave to come and it certainly hasn’t disappointed. Unless you like to shop in store, try to find your size and wait on checkout lines, that is still going on and the lines are much shorter thanks to online shoppers. A significant change however, is how to pay for that overhead. Retailers are closing down store fronts for this new wave of online shoppers. No doubt that retail costs will be trimmed and hopefully will share some of the effects of the reduced overhead as a result of online shopping demands. Retailers however, still need to keep a watch on financial analytics and inventory turn and plan for distribution needs and keep competitive with delivery. Amazon has made the one-day turn around a hard statistic to compete with. So, if you are going to compete online and become an ecommerce retailer make sure you can keep pace and, most importantly, keep on top of your key metrics. Measuring performance is more important than ever. Costs may still rise, as IT talent needs increase. You need to keep up the website and traffic and distribution requirements. These can be costly and, therefore, need to be closely monitored.
Key Points
A few key points – as you shift with the market demands –do the following (and don’t forget to include your accountant in the process):
- Update your strategic plan to include eCommerce as part of your marketing and sales strategy. Don’t get left behind!
- Pricing models should be formally documented and support your sales and marketing strategy. Your finance and sales teams should put their heads together on this to produce the most accurate plan (in store and online pricing models should vary)
- Plan your technology needs and know what your needs really are; whether it be for sustaining your technology or planning for growth, and do consider outsourcing
- Count on warehouse and distribution costs trending upward with demand.Don’t give away the store with your cyber deals
- Don’t forget about bringing your fulfillment center business to locations that offer significant savings on taxes or lease deals
- Make sure you have defined what metrics are important to you, such as profit margin, liquidity, and turnover ratios. Create a system to measure and track key metrics formally to make sure they are trending in the right direction
- Schedule your financial checks up with your accounting and tax advisor more than once a year to ensure that you are capturing the relevant and most accurate data
- Physical inventory plays a key role in knowing your true profit margin so this should be a semi-annual event and occur prior to meeting with your advisor
WithumSmith+Brown has seasoned professionals ready to help you navigate the online marketplace and become a successful eCommerce retailer.
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Maureen DeCicco 732-828-1614 [email protected] |
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