The Benefits of Selling on eBay

eBay and Amazon were both founded in 1995. Amazon back then specialized in selling
books, and eBay had few other competitors in the ecommerce selling space at first.

As we know, this is no longer the case – by a long shot. eBay is now up against giants
like Amazon and Walmart (whose relatively new marketplace has taken the ecommerce
industry by storm) and Shopify to name a few.

With these kinds of competitors, what could give eBay an edge for sellers, and why
should you consider the platform if you aren’t already using it?

  • The Auction Format: what eBay is known for (although you do have the ‘Buy It
    Now’ option available too). Particularly good for rare or collectible items, the
    auction format allows buyers to bargain for products and may result in higher
    profits. It can also move your inventory quickly, if you need faster sales.
  • Simple and Quick Set-Up: your eBay store can be set up and ready to go in a
    matter of minutes. Great for newer sellers to get started and build on over time.
    Scroll down for a step-by-step on this process.
  • Competitive Fees: there are six subscription options for sellers on eBay, starting
    from as low as $4.95/month. You then have insertion fees (approximately $0.35c
    per listing), final value fees (around 10%) and if you choose, listing upgrade fees.
    These are relatively easy to stay on top of compared to some other platforms.
  • eBay Managed Payments: eBay’s new Managed Payments system eliminates
    the extra fee previously paid to PayPal for a transaction, saving sellers a little in
    the process. It gives buyers more payment options, generates reports on your
    financials, provides tax documentation, and allows direct transfer to your bank
    account, saving you time. Plus, with A2X now able to integrate with Managed
    Payments, you can level up these bookkeeping tools even further – more on this,
    below.
  • Third-party Sellers Only: sellers on eBay escape the added challenge of
    competing with own-brand products like Amazon Essentials for example, being a
    platform for third-party sellers only.
  • More Global Reach: typically, more than half of eBay’s annual sales revenue is
    generated from its 60 million buyers outside the US, setting it apart. Sellers are
    able to choose to list their items on international eBay sites, expanding their
    reach and tapping into that huge overseas customer base.
  • Global Shipping Program: reaching international customers requires
    international fulfillment, and eBay delivers. You will need to meet a few criteria to
    be eligible for the program, including earning a rating of Above Standard or
    higher. If eligible, your items may be covered by eBay’s Money-Back Guarantee,
    and any bad feedback received due to mistakes in the handling will be
    automatically removed from your store.
  • Highest Mobile Reach (for Android): approximately 6.27% of Android users
    can be reached with the eBay app compared to Amazon’s 0.97% and Walmart’s
    1.78%. Those numbers may look small, but with mobile ecommerce sales
    expected to make up around 54% of total ecommerce sales by 2021 – they add
    up. And don’t underestimate the portion of people using android; the number of
    Android smartphone users is forecast to reach 130 million in 2021 and only just
    lost the top spot to iOS at the beginning of 2020.
  • More Room for New Brands and Private Label Sellers: large established
    brands flock to sell on platforms like Amazon, flooding the seller space and
    making things a little tougher for the smaller or younger businesses to cut
    through. Sellers still developing their customer base and brand might have more
    success on eBay, as may private label sellers, due to a few changes in eBay’s
    offering.
  • More Room for the Miscellaneous: eBay has the option for sellers to select
    “does not apply” when they can’t find a product identifier relevant to their listed
    item. There are also no ‘gated categories’ as found on other ecommerce
    platforms (but there are some prohibited and restricted products to be aware of).
  • Diversifies Your Portfolio: diversification is a great step to grow and future-
    proof your ecommerce business. Having all your virtual business eggs in one
    basket is never a good idea. Not only can you sell more stuff by branching out,
    but you can protect yourself from complications if you are suddenly suspended
    on one site. You can also expand your reach and learn more about your
    customers’ buying behavior beyond one platform, and ultimately grow your brand
    awareness and loyalty.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

 

Walmart Marketplace: Pros, Cons and Best Practices for eCommerce Small Businesses

You’ve got options when choosing a platform to sell your products online. Two of the best known are Amazon and Shopify. But there’s another big name player you might not have considered: Walmart.

The power of the world’s largest brick-and-mortar retailer is now expanding to Walmart’s eCommerce operation; and you can reap the benefits, from accounting to customer service.

Pros of Selling on Walmart Marketplace

Let’s start with a rundown of its advantages.

  • No set-up or maintenance fees (unlike Amazon). The only fee Walmart charges is a referral on sales (which other platforms also charge), typically 6% to 20% of the sale price.
  • Share in Walmart’s brand awareness. Customers trust the brand more than they do private Shopify sites and will be more likely to visit when directed by ads.
  • Attract a larger — and different — pool of customers. More than 100 million people visit walmart.com every month. And because of Walmart’s everyday low price guarantee, they aren’t all the same people who visit Amazon.
  • Less competition. Amazon has more than 2.5 million sellers. As of now, Walmart Marketplace has about 33,000. Which group would you rather compete with?
  • Returns to local stores (online return processing is still an option). This gives customers an added convenience and saves you from paying return shipping.

Cons of Selling on Walmart Marketplace

  • Walmart isn’t pie-in-the-sky-perfect. Before you choose this platform for your eCommerce business, decide whether these drawbacks are deal-breakers.
  • Lower margins. That low price guarantee we mentioned above might mean you’ll be making less profit. If you list the same product elsewhere at a higher price, Walmart will unpublish it on their site.
  • Application and approval hoops to jump through. Walmart vets every eCommerce business before they’re allowed to sell on the platform. Thus, they ensure the quality of products and services associated with their name.
  • Order fulfillment, another hoop. You must also be approved to participate in Walmart Fulfillment Services and a 2-day shipping program. If you don’t, you’ll have to handle it all yourself. Also, note that Walmart may penalize you for shipping errors.

Lackluster seller support services. There have been reports that Walmart is slow to respond to seller issues (or never responds at all).

Tips for Maximizing Walmart Marketplace Sales

  • Categorize products correctly when you upload product pages — including filling out all the attributes that customers might be inputting as keywords when they search walmart.com. If you aren’t complete and accurate, your product may never even be seen.
  • Use paid ads to drive site traffic. With a cost-per-click model, you are only charged when a customer actually clicks through to your site. Choose Walmart’s own Media Group or another third-party provider.
  • Price products for the “buy box.” Buyers on walmart.com can view this box to see which seller is offering the lowest price. It may not be a viable strategy for all businesses, but it can definitely amp up your sales volume.
  • Maintain quality fulfillment standards, as spelled out in the seller agreement contract — 99% on-time shipping, etc. You’ll not only be allowed to stay on Walmart Marketplace, you’ll move up in the rankings that customers use to choose a seller.
  • The same goes for customer service — prompt response to customer inquiries, number of complaint escalations, shipping notifications, and tracking.
  • Get favorable reviews. Because many people filter search results by best reviews, it’s worth your while to work for a positive customer experience every time. Also, send a follow-up email after the sale asking for a review — and a chance to fix any issues before the review is written.

Need help setting up your accounting for Walmart Marketplace? Turn to the eCommerce small business specialists at Xendoo. We’ll get you started with a one-month free trial.

 

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

Is Shopify Fulfillment Network a Sales Tax Help or Hindrance?

In June of 2019, Shopify launched its own shipping network, thus making it easier for sellers to fulfill their orders. More recently, it purchased 6 River Systems Inc. — which specializes in AI and robotics — to make the network even more efficient.

Now, merchants using the Shopify platform don’t have to do their own fulfillment or outsource that function to a third-party service. The benefits have been obvious: reducing shipping costs, speeding up order fulfillment, and retaining ownership of customer relationships and data. Sellers can even choose a packaging option that matches their company’s branding.

Does It Change Where You Need to Collect Sales Tax?

The short answer is probably yes. For one thing, the old rules about “physical nexus” in a state — such as a brick-and-mortar location, employee or stored inventory — are still in effect. With your merchandise now being shipped from any of Shopify’s Fulfillment Network centers in various states around the country, you will trigger physical nexus in those states, instead of just your home state if you were doing your own fulfillment before. So you will need to stay aware of where your inventory is being stored. Another complication is the new “economic nexus” rules which more than 40 states have set up following the 2018 Supreme Court ruling in the case of South Dakota v. Wayfair. That ruling gave states the right to collect sales tax from any business with economic activity in the state — such as selling and shipping orders there. If you’re a very small business with minimal annual revenues and/or a number of transactions within a state, you may be exempt from this. Most — but not all — states have thresholds that must be crossed before you need to collect sales tax on those purchases. In Florida, for example, the minimums are 200 separate retail transactions or $100,000 of retail sales of personal property or taxable services that are delivered within the state.

Does It Change Who Collects and Remits Sales Tax?

For now, the answer is probably no. You may have heard about “marketplace facilitator laws” which some states have created to ease the sales tax accounting burden on small e-commerce businesses. These laws assign responsibility to the marketplaces — such as Amazon’s FBA — to collect and remit state sales tax on behalf of their third-party sellers. However, currently, Shopify sellers don’t operate as third-party sellers. They are independent retailers who manage their own branding and marketing and own direct relationships with their customers. Therefore, for the time being, marketplace facilitator laws don’t apply to them, or to Shopify. It’s entirely possible that states will change their determination of Shopify as a marketplace of third-party sellers. We’ll have to wait and see what happens.

Help Is at Hand

Need someone to guide you through the sales tax jungle? Xendoo’s e-commerce experts, using top-flight professional accounting software, will keep you up to date with the latest regulation changes with regard to Shopify Fulfillment Network. Even better, we’ll set you free from all the paperwork — from sales tax permit registration to remittances to records maintenance. Best of all, our flat monthly rate packages are easily affordable by small businesses. Find out for yourself with a one-month free trial.

 

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

What Amazon FBA Sellers Need to Know about the Shipment freeze of Non-Essential-Products

On Tuesday, March 17, Amazon notified its US and EU sellers that it would no longer be receiving non-essential shipments of Fulfilled-by-Amazon (FBA) inventory. As of today, 3/18/20, the freeze for those marketplaces runs through April 5, 2020.

This is in response to the COVID-19 pandemic and will presumably allow Amazon to focus on fulfilling the essential health, safety, and household products consumers are demanding.

Amazon sent the following notification:

Temporarily prioritizing products coming into our fulfillment centers

We are closely monitoring the developments of COVID-19 and its impact on our customers, selling partners, and employees.

We are seeing increased online shopping, and as a result, some products such as household staples and medical supplies are out of stock. With this in mind, we are temporarily prioritizing household staples, medical supplies, and other high-demand products coming into our fulfillment centers so that we can more quickly receive, restock, and deliver these products to customers.

For products other than these, we have temporarily disabled shipment creation. We are taking a similar approach to retail vendors.

This will be in effect today through April 5, 2020, and we will let you know once we resume regular operations. Shipments created before today will be received at fulfillment centers.

You can learn more about this on this Help page. Please note that Selling Partner Support does not have further guidance.

We understand this is a change to your business, and we did not take this decision lightly. We are working around the clock to increase capacity and yesterday announced that we are opening 100,000 new full- and part-time positions in our fulfillment center across the US.

We appreciate your understanding as we prioritize the above products for our customers.

Thank you for your patience, and for participating in FBA.

What does this mean for US and EU Amazon FBA sellers?

As of this writing, Amazon FBA sellers will not be able to create shipments to be received at Amazon’s fulfillment centers through Seller Central. Until April 6, Amazon will only accept essential items such as household staples and medical supplies.

Currently, the categories Amazon is currently accepting are as follows:

  • Baby
  • Health & Household
  • Beauty & Personal Care (including personal care appliances)
  • Grocery
  • Industrial & Scientific
  • Pet Supplies

Note: Not all products in these categories qualify as essential.

However, if FBA sellers correctly classify a product but still can’t make a shipping order, then Amazon is not prioritizing the product in question.

And while many Amazon sellers sell in multiple of Amazon’s 27 physical product categories, many will still be out of luck for not selling in the six allowed.

How many Amazon sellers sell in the allowed product categories?

  • Baby – 17%
  • Health & Household – 20%
  • Beauty & Personal Care – 20%
  • Grocery – 12%
  • Industrial & Scientific – 9%
  • Pet Supplies – 15%

Still receiving and shipping “grandfathered-in” inventory as planned

If you created your replenishment order before March 17, Amazon will still receive it. And while essential items will be given priority, Amazon will still pick, pack, and ship non-essentials.

However, non-essential orders may ship more slowly than normal, especially as shipping carriers feel the strain of increased shipping during the coronavirus outbreak.

Amazon FBA sellers can still use other methods of fulfillment

Amazon encourages sellers who typically sell FBA to use their own resources and carriers for shipping products and to sell Fulfilled by Merchant (FBM).

Fulfillment by Merchant (FBM) is a method of selling on Amazon in which a seller lists their products on Amazon, but manages all storage, shipping, and customer support themselves (or through another third party).

Approximately 94% of all third-party Amazon sellers sell through FBA; 66% sell only through FBA, while 29% sell through both FBA and FBM.

How will this affect Fulfillment by Merchant (FBM) sales and sellers?

So far, there is no change for Fulfillment by Merchant (FBM) sellers who pick, pack and ship their own goods for orders sold on Amazon. Amazon sellers are still able to create and list products.

FBM-only sellers account for just 6% of Amazon’s third-party sellers.

Can sellers still sell non-essential products?

Yes, both FBA and FBM sellers can still sell products that are non-essential. The only change is that FBA sellers cannot send non-essential inventory into Amazon’s fulfillment network.

Therefore, sellers must ship any inventory that is not already a part of Amazon’s FBA supply chain themselves or use another third-party fulfillment network.

Can sellers sell essential products?

Sellers can still sell essential products as long as they are able to create listings for it. But, sellers looking to list products in one of the six essential categories may need Amazon’s approval. Amazon has “gated” some of the categories.

Furthermore, Amazon has started to crack down on price gouging practices for essential goods like hand sanitizer, toilet paper, and protective face masks. Listings with high prices are being taken down and in some cases, Amazon is even threatening prosecution.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

Ready to Sell Your Shopify Store? Here’s How to Get Started

There are many reasons why people decide to sell their Shopify or other eCommerce stores — personal or professional. What they all have in common, though, are the worries that come with that decision:

  • What if I can’t get a fair price?
  • What if I can’t find a buyer?

These tips will help steer you through the valuation and marketing process of transitioning your business to a new owner.

Put a Price on Your Business

There’s no point in starting negotiations unless you have a definite number that shows how much your business is worth — one that will pass muster with bankers, accountants, and financial consultants, not just something you pulled out of the air.

There are three valuation methods used for eCommerce websites:

  • Discounted cash flow analysis – make a projection based on future cash flows
  • Asset value – subtract your liabilities (such as debts) from your assets (such as inventory)
  • Multiple of revenue – multiply net profit times a specific number of years

The third way is the most common, so we’ll discuss that in a bit more detail.

Determine Multiple of Revenue

First, you must figure out your net profit for the year. If your accountant provides you with a profit and loss statement, just look at that. If not, you’ll have to fill one out; free P&L templates are available on the internet.

Next, figure out the multiple — number of years the business can expect the same or similar net profit. This multiple is generally considered the amount of time it will take the new owner to make back their initial investment.
The multiple is dependent on a variety of factors which assign more or less risk to a business. So, the less risky your business, the higher your multiple. These factors include:

  • Growth in net profits year-over-year shows less risk, therefore, gives you a higher multiple
  • Growth opportunities, though not guaranteed, should be considered part of the value of your business
  • Type of business model — some are riskier than others

Doing the math, you can see that a higher multiple will result in a higher price for your business.

$100,000 net profit x2 multiple = $200,000 value of business
$100,000 net profit x3 multiple = $300,000 value of business

Analyze Your Business and Market for Ways to Add Value

Your Shopify business should also be evaluated for its strength, sustainability, and growth potential. It’s a good idea to get concrete numbers to support the following factors:

  • Overview – age of business, business model, performance over the last 12 months
  • Financials – current and projected growth rate, whether growth is trending up or down
  • Customers – major traffic sources (such as Shopify), lifetime value of customers, customer engagement
  • Operations – number of employees, the value of inventory, list of suppliers
  • Vertical – how the business performance compares to competitors, and how saturated is its niche
  • Market — what price similar e-commerce businesses have sold for in the past and what’s currently on the market (check flippa.com for these sales records)

Clean Up Your Act to Impress Potential Buyers

Here are some steps you can take to present the most favorable picture of your business.

  • Because buyers are most interested in recent sales, wait — if you can — until sales are at their yearly peak. Or make extra efforts to increase sales for a few months.
  • Organize and update your financial accounts, including receipts, categorized expenses, Shopify refunds or other adjustments, bank reconciliations, and taxes. Buyers want to see accurate, summarized statements, not a big mess.

List Your Business for Sale

Here are some of your options.

  • Exchange Marketplace is especially for selling Shopify businesses. You do have to meet some eligibility requirements, such as your account is in good standing and you don’t have active financing from Shopify Capital. Transferring the business and receiving payment is super simple.
  • Flippa is widely regarded as the best platform for buying and selling online businesses. This is an auction format, so you’ll have to set a reserve price, auction time, and so on. Verify that the buyer has placed their payment in the escrow account or sent it via Paypal before you transfer ownership.
  • Website broker: If you’re not sure you’ve evaluated your business correctly, consult with a professional website broker. Brokers do charge a fee, but they can be a big help in maximizing your price and avoiding mistakes.

Get Help with Your Financials

Whether you’ve got a bookkeeping backlog to clean up fast or need reliable P&L statements every month, Xendoo’s got you covered. Our eCommerce experts use Xero, the world-leading professional accounting software, to help get your business ready for a successful sale.

Xendoo’s flat-rate packages are easily affordable by small businesses. Find out for yourself with a one-month free trial.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

eCommerce Trend Report: 2019 Recap & Future Forecasts

The good news: Last year achieved significant growth in online shopping, and there’s no sign that the train will slow down anytime soon. The bad news: Changes in sales tax laws had e-sellers scrambling to understand and comply.

Consumer Migration to eCommerce

Trust in online shopping as a convenient, secure alternative to brick-and-mortar continues to grow by leaps and bounds. In 2019 we saw:

• Record-breaking Black Friday and Cyber Monday online sales — 19.4% and 16.5% growth over 2018 respectively

• $72.1 billion in online sales from Nov. 1 to Dec. 1, 2019 — a 16.3% increase over 2018

What does the future picture look like?

• By 2023, U.S. business-to-consumer eCommerce is projected to grow 47.8%

• New technologies such as augmented reality (AR) and artificial intelligence (AI) will play a bigger role

• Automated marketing tactics such as targeting and personalization will drive online shoppers’ choices

Hottest Shopping Channels

Two e-commerce channels, in particular, emerged as the big winners in 2019.

1. Sales via smartphones

• 54% of visits to retail sites — 19% growth over 2018

• 33% of all Cyber Monday sales — 46% growth over 2018

• Projected 72.9% of eCommerce sales by December 31, 2021

2. BOPIS (buy online, pick up in-store/curbside)

• 43% growth over 2018

Sales Tax Headaches

The 2018 U.S. Supreme Court ruling (South Dakota v. Wayfair) basically gave each U.S. state the power to set its own economic nexus thresholds. That made 2019 the year of tax law changes throughout the land.

As a result, eCommerce sellers face an astronomically more complex task in filing state sales tax returns. In fact, there are now more than 40 different state nexus laws to determine if and where you must register and collect sales tax.

The amount of time, labor, and expertise needed to stay on top of sales tax compliance has reached the point where many eCommerce businesses are choosing to outsource the work as a more cost-effective solution.

Sales Tax Software Moves

eCommerce businesses are flocking to software solutions, for all the reasons we discussed above.

• Rising sales volumes require scalable applications that can handle high traffic, provide reliable security and protect against downtime

• Sales tax calculations must stay current with the new complexities

In addition, eCommerce customers expect convenience and transparency as they check out at their favorite online store. A 2019 study showed that 95% of consumers want to see the total of all fees and taxes before they click “Buy”. Failure to meet this expectation can cost you in sales as well as brand loyalty.

Sales tax processing is just one of the accounting services Xendoo provides to its small business customers. Our comprehensive, affordable packages can take a whole load of bookkeeping hassles off your shoulders.

 

Experience the Xendoo difference with a one-month free trial.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

7 Don’t-Miss Tax Deductions for eCommerce Businesses

Why settle for standard business deductions, when there are more opportunities to lower your tax bill, some of them seemingly tailor-made for eCommerce businesses? Before you prepare your return this year, check out this list of possible deductions.

1. Home office.

In order to qualify for this one, you must use at least one room in your home exclusively for business; working on your laptop in the living room doesn’t count. If you meet that requirement, you can deduct a percentage of nearly every house-related expense you can think of, including rent/mortgage, utilities, repairs/maintenance, and insurance premiums. (The percentage deducted is based on the percentage of the house’s total square footage that your office occupies.)

2. Office supplies, equipment, and software.

Furniture, computer, printer, camera gear (if used for photographing your merchandise), postage meter, inventory management software, paper clips — if it’s used in your office it’s usually 100% deductible.

3. Phone/internet.

You can deduct a portion of your phone and internet charges based on the percentage of time that you use them for business.

4. Transportation and travel.

Any car used for business purposes is eligible for deductions; even if it’s also your personal vehicle you can still deduct a percentage. There are 2 deduction options: a flat amount per mile or a total of actual costs such as gas and parking fees.

Other travel-related deductions include airfare, cab fare, tips, meals, and conference tickets.

5. Fulfillment costs.

You can deduct the costs of packaging materials and shipping to customers.

6. Subcontractors.

Whenever you use independent web developers, graphic designers, photographers, content writers, bookkeepers, temporary office staff — anyone not on your payroll — their fees are 100% deductible.

7. Merchant processing fees.

You probably use one or more credit card processors such as PayPal, Stripe, or Square. But did you know you can deduct their fees?

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

Inventory Control for eCommerce: Getting the Balance Right

As an eCommerce retailer, you may not have a brick-and-mortar store, or even your own warehouse and fulfillment facility. But that doesn’t mean inventory control has to be more difficult. With the right mix of tools and strategies, you can manage your merchandise supplies and turnover efficiently and cost-effectively.

Decide how much stock to keep on hand.

Your goal is to strike a balance between too little and too much. In most cases, a one-month supply will be enough to meet any unexpected increases in customer demand, without tying up unnecessary working capital or warehouse space.

To calculate your one-month supply, analyze sales and fulfillment information from previous years. If you’re a new startup, research the performance of your product category as a whole.

Allow for variables in your stock-on-hand plan.

Depending on your business, you may need to adjust inventory levels for:

  • Seasonal fluctuations, such as the Q4 holiday shopping season
  • Shipping time from the manufacturer to your warehouse, import delays, etc.
  • Store promotions such as an annual sale

Apply the same variables to fulfillment planning.

During periods of higher sales volumes, you will also need more packaging materials as well as additional employees to do the order processing, packing, and shipping.

Keep a close eye on your inventory — digitally.

Real-time inventory software can save a ton of time and effort. By using bar code identification, it automatically updates your stock levels whenever an item is sold, alerts you, and website visitors when an item is out of stock and tracks delivery to customers.

Keep a close eye on your inventory — manually.

It may seem old-fashioned, but a physical stock count is the only sure way to know what’s in your warehouse. Do it weekly, monthly, quarterly, or annually, whatever makes sense for your business.

Have a plan for out-of-stock incidents.

Your software should notify you in time to replenish stock before it runs out. But in case there are snafus at the manufacturer or in transit, be prepared to respond and keep customers happy:

  • Remove the product page from your website, or add an “out of stock” message letting customers know when it will be available again
  • Take backorders
  • Pay extra attention to stock levels of fast-moving products and reorder them farther in advance

Choose the right business management system.

A system that’s specifically designed for eCommerce is an invaluable asset. For example, it can show order processing and shipping costs in relation to revenues. Even better, it can link inventory management to other operating systems within your business, such as accounting and payroll, greatly reducing administration time and duplication of effort.

Organize your warehouse for a fast response.

Keep your best-selling items on the shelves that are easiest to reach. Slower moving merchandise can go in less accessible areas.

Consider off-site warehousing options.

The advantages of storing some or all of your inventory in other locations include reduced shipping time to your customers and saving on overhead. Check out:

  • Adding regional warehouse locations
  • Renting warehouse space from a national retail chain or postal service
  • Using Amazon FBA (Fulfillment by Amazon) — you advertise your product on Amazon and they handle merchandise storage, order processing, shipping, and customer service

Stay on top of record keeping.

For both current decision-making and long-term planning, “knowing your numbers” is essential. So checking them at the same time every day or week is a great habit to get into. (It only takes a couple of seconds with the right software, just press a button to see inventory status, turnover, and associated costs.) You’ll always have a clear picture of your inventory … and your business.

For successful inventory management, every eCommerce business must find the right balance between too much or too little stock, online and hands-on tools, and on-site or off-site locations. Most important of all, accurate records will reveal what’s working and what isn’t, so that the future will be even more rewarding than the past.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

New Sales Tax Relief for Amazon Third Party Sellers: Marketplace Facilitator Laws

If you’re an Amazon FBA eCommerce business — or you sell through other third-party platforms such as Walmart or eBay Global Shipping — you’re all too aware of what a complicated mess sales tax has become.

How We Got in This Mess

Beginning a few years ago, most states have made efforts to cash in on the online shopping boom with revised tax laws that terminate out-of-state shipping exceptions. These moves were supported by the United States Supreme Court with its June 2018 ruling in favor of South Dakota in the case of South Dakota v. Wayfair.

Previously, physical presence in a state was one of the criteria for sellers’ tax nexus. The Supreme Court judgment disallows the necessity for physical presence, opening the way for states to require that all sellers — wherever they’re located — register, collect and remit sales tax on purchases shipped to the state.

Because each state’s tax code has its own variations — for example, the minimum dollar amount of sales or number of orders required for sellers to be subject to the law — compliance became a headache multiplied times however many states you have customers in.

The State of California, in particular, has been aggressively pursuing Amazon FBA sellers. After Amazon released its third-party seller data to the state, letters were sent directly from the California tax authority to the sellers, demanding that they register to collect sales tax. (Other states, such as Massachusetts, North Carolina, New York, Pennsylvania, and Rhode Island, have also obtained Amazon seller info. But they seem to be using the info only to verify that registered sellers are actually remitting all the tax they collect.)

The Good News

Recognizing that they have put an onerous burden on small businesses (thus possibly reducing their own tax revenues), more than 30 states have now passed Marketplace Facilitator Laws; and additional states have similar bills in the works.

Simply put, the Marketplace Facilitator Law throws the responsibility back on the platform that “facilitates” sales (Amazon, Walmart, eBay, etc.) to collect and remit sales tax on transactions that take place on their platform. According to the letter of the law, sellers are not required to register with the tax authority in those states.

As of October 2019, the states that DON’T has a Marketplace Facilitator Law are Florida, Georgia, Kansas, Louisiana, Massachusetts, Michigan, Mississippi, Missouri, North Carolina, Ohio, Tennessee, and Wisconsin.

The Not-So-Good News

Unfortunately, platforms may be able to “opt-out” of complying with the Marketplace Facilitator Law if they meet the state’s non-collecting seller use tax reporting requirements.

Amazon, for example, only recognizes its collection requirements in these states (less than half of those that have a Marketplace Facilitator Law): District of Columbia, Alabama, Connecticut, Idaho, Iowa, Minnesota, Nebraska, New Jersey, New York, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont, and Washington.

Note that California is not on that list. We understand they’re still sending out letters to Amazon third-party sellers — without mentioning that the state does have a Marketplace Facilitator Law.

Stay Tuned

This is obviously a very fluid and evolving situation. Some states are already in the process of revising their Marketplace Facilitator Law to eliminate the “opt-out” for Amazon and other platforms.

We strongly suggest that you keep in touch with your sales tax consultant, as your responsibilities could be changing faster than the weather. Better yet, let Xendoo handle all the sales tax compliance hassles for you, from registering to reporting to remitting. You’ve got better things to think about — like growing your business!

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

Choosing the Right Accounting System for Your Shopify Business

Whether you’re just starting up your e-commerce business or you’ve reached the point where your DIY accounting doesn’t work anymore, here’s what you need to get your back office running smoothly.

Xero for E-Commerce

Here at Xendoo, we have chosen Xero as the accounting software with the most to offer Shopify online sellers. Xero offers eCommerce stores the ability to easily sync with third-party apps for inventory, point of sale, and more. From directly within the Xero software sellers can manage AP, AR, budgets, and category or division tracking.

  • Cloud-based
  • Customizable dashboard
  • Extensive reporting options
  • Inventory tracking
  • Accounts payable function
  • The stable framework allows the business to scale up

A2X for Shopify

This “connector” app saves you hours of work per week by integrating your Shopify store with your accounting system.

  • Automatic importing of store data into the books
  • Automatic bank reconciliation
  • Automatic adjustments for fees, refunds, etc.
  • Prevents mistakes caused by manual data entry
  • Summarized statements

TaxJar for Sales Tax

Another major time suck for e-commerce businesses is calculating, reporting, and remitting sales tax for every state where you have customers. (And it will only get worse in the years ahead as state tax codes tighten up.) TaxJar links with Xero to do all that for you.

  • Calculates sales tax based on each state’s nexus
  • Daily updates enable the timely filing
  • Automated filing option with AutoFile
  • Displays fines and penalties for delinquent filing
  • Shows what you should have collected and what you really collected

Shopify Apps

In addition to this accounting system set-up, Shopify offers more than 1,000 apps to help you with inventory, shipping, reporting, and much more. We suggest, however, that you fully explore the capabilities of Xero, a2X, and TaxJar before choosing additional apps, to avoid duplicating functions.

Another great feature of Shopify is its profit margin calculator. Simply plug in the gross cost of your product and a markup percentage, and it will figure out:

  • The sale price
  • Your profit in dollars
  • Gross margin

Outsourcing your Bookkeeping & Accounting

Although the currently available software makes life much simpler for e-commerce businesses than it was even five or ten years ago, you may still feel like you’re in over your head when it comes to bookkeeping and accounting. In that case, outsourcing to an online bookkeeper and online accountant should be considered — and it’s more affordable than you might think.

Xendoo offers in-depth knowledge of the accounting needs of e-commerce small businesses, from weekly bookkeeping to business taxes. And our flat monthly fee is less than half what you’d likely pay an hourly accountant. It’s our mission to give you the time and peace of mind to focus on making your business grow.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.