eCommerce Accounting 2024

The eCommerce Accounting Guide is the starting point for any start-up looking to scale to success in the exciting eCommerce sector in 2024.

Reading time 10 mins

Craig Pornss

Tanya Christie

Stuart Reynolds

Introduction

Welcome to the Ultimate eCommerce Accounting Guide. We’ve crafted this manual to be a broad yet considered guide to establishing and scaling an eCommerce business.  

In this manual, you’ll find resources on many important aspects of the journey, from tax considerations, marketing, accounting fundamentals, customer relationship management, and exit strategies.  

As advisory and eCommerce accountants, we’ve seen dozens of eCommerce businesses start-up, grow, and thrive to become internationally successful companies.  

Throughout our many decades of combined experience, the team at Fullstack has found there are four key pillars to starting and maintaining a growing eCommerce business: 

Setting up effectively 
Growing and monitoring progress 
Scaling your international business 
Exit strategies and risk management.

If you’re an entrepreneur entering the eCommerce space for the first time, or you’re an established company looking to pivot into eCommerce as part of your offering, you can refer to this as a “how-to” manual giving you real world guidance into building your eCommerce and giving it the best chance for short-term and long-term success. 

Download the Ultimate eCommerce Guide.

If you have any questions or need help your eCommerce accounting, just reach out.

The Fullstack team are great to work with and I would recommend them to any business or high growth startup looking for a responsive and progressive team of professionals to service all your accounting and bookkeeping needs.

Starting Up in Ecommerce

How to Start a Successful eCommerce Business

At the beginning of any business, the case for starting a business must be compelling enough to take to market. 

You may have many different ideas for setting up an eCommerce business – and reasons for doing so.  

You may have heard about the high profit margins for selling certain products over others; perhaps you are a Subject Matter Expert in a product and seeking to leverage your knowledge as a starting point for marketing. You may have developed your own product and are looking for a frictionless way to get your product to market. 

Even so, you and your team must ask the questions: 
Is there a demand for our product? 
Is my product viable for eCommerce? 
What makes our business different?

Is my eCommerce business viable?

Though almost everything can be bought or sold via eCommerce, your product needs to be viable in the marketplace and suitable for eCommerce to turn a consistent profit.

Some preliminary questions to ask are,

Is the product easy and lightweight to ship?
Is the product fragile and prone to breaking?
Is the product considered hazardous or face added restrictions on shipping? (e.g. perfumes, as they contain flammable alcohol)

Write down several ideas – and the one with the least barriers to shipping may be top contenders for your business.

Next, parse your shortlisted products into market-based questions and product-based questions to get a handle on whether they are suitable for your eCommerce business.

Market based questions

Next, parse your shortlisted products into market-based questions and product-based questions to get a handle on whether they are suitable for your eCommerce business.

Market based questions you need to ask are:

What is the estimated market size for this product?
How much competition is there for similar products?
Is the trend emerging, in its early adoption stage, late majority stage, or past the point of saturation?
Can you produce the product locally, or will you need to look overseas?
Who are your ideal customers?

Estimating market size can be difficult. Using SEO or search engine tools such as BuzzSumo or Google Trends can help with gauging interest in certain products – though interest is also a good indicator of market potential.

Product based questions

The next round of questions is about the product itself. According to Shopify, here are some of the product questions you need to consider:

What is your markup or potential profit margin?
What’s your potential selling price?
What is your product’s size and weight?
How durable is your product?
Is your product seasonal?
Does your product serve a passion, relieve a pain, or solve a problem?
How often will you need to turn over inventory?
Is your product consumable or disposable?
Is your product perishable?
Are there any restrictions or regulations on your product?
Is your product scalable?

You will need to sit down and figure out the margins on your ideal products, taking all these factors into account. Though a product may be cheap to manufacture on the surface, a perishable, seasonal, customs restricted product may cost more to warehouse and ship than an evergreen, lightweight, consumable product that costs more per unit to produce.

Unique Selling Proposition

USPs & Business Plans for eCommerce Startups

The most important element in setting up a successful eCommerce business is what sets you apart from competitors – why should customers choose your brand and product over other, similar products? 

You need to find your Unique Selling Proposition or USP. Your USP sets your product apart from the rest of the market, ensuring your product and brand is noticeably different from the competition. 

Finding your USP is a process just like the above. This is helped along by tweaking or changing one of the following: 

Design – look and feel 
Function – how your product works 
Price – the perceived value of the product
Time – when and how long the product is available in the marketplace

Even though your USP is beyond the realm of eCommerce accounting, it greatly enhances your branding, marketing and communication, and even your vision for growing and scaling your business. 

What’s your business plan

All businesses need to draft a business plan. Your business plan should include much of the information we’ve discussed previously, but in a format that may attract investors. 

A plan, at its core must be:

An assessment of the current situation 
Identification of where you want to be – vision and objectives 
Action – a plan to achieve that vision and objectives.

The best practice for drafting business plans is as follows:

The executive summary. This provides an overview of the whole concept for your business. It may be best to write it last when you have a clear understanding of the direction of your business, after you’ve developed your USP, products, and other profitable activities. 
Your business profile. Your business name, key people, addresses, etc. 
Your vision. Your vision may include a mission statement, your brand’s values and how you wish to reflect them in your day-to-day operations. Importantly, it’s also where you see your business headed into the future. Your vision can be extrapolated from statements of intent, such as “To capture 30% market share in organic toothpaste in the Oceania region by 2025.” 
Market analysis. This is essentially your “eCommerce Viability” section. You can also include a SWOT (strengths, weaknesses, opportunities and threats) analysis. 
Marketing plans. How you plan to communicate your value and attract new customers. We’ll discuss marketing in a later chapter. 
Operating plans. How will your business operate and make money? This section must detail how your products are made and how you’ll make profit from day to day. 
Legal and risk management. Information about how you’ll comply with regulations, legal requirements, and mitigate any potential risks. This may also include IP arrangements with holding companies and discretionary trusts – more on that in our “Corporate Structure 101” section. 
Financial plans. This is what investors will need to know. How many sales you’ll need to break even, what funding you may require, cash flow projections, and repayment plan scenarios. 
Action plans. How are you going to make it all work? What are your goals and objectives? This should list all the tasks you will accomplish to make everything in your new eCommerce business happen.

Once plans are drafted up, you will need to structure your company in a way that works for your business. An eCommerce accountant can offer you useful advice.

Fullstack engineered a full financial model for us to support our fundraising efforts to scale our business. The process was simple and straight forward and even though our business is complex, they managed to build a model that accurately reflected our structure If you're looking for a reliable outsourced financial department that understands the specific needs of innovation-driven companies like ours, Fullstack comes highly recommended.

Corporate Structures 101

Corporate Structuring eCommerce Businesses

One of the most crucial yet overlooked aspects of starting up a scalable eCommerce business is its corporate structure.  

You and your partners should carefully consider this step before you start selling products, raising investment, or assembling your broader team of employees. 
The aim of setting up a company this way is to: 

Limit liability 
Maximise flexibility 
Reduce tax where possible

Additionally, setting up your company the correct way in the beginning means avoiding costly lawyer or accounting fees when a sole trader or partnership is no longer a feasible method for operating your growing company.  Speak to your eCommerce accountant.

Discretionary Trusts 

A discretionary trust is a corporate structure that a founder can use to own their shares in any company, separate from owning them personally. Owning shares in a trust gives you a measure of protection over those shares, as beneficiaries of a trust are generally not liable for debts incurred by the trust. 

There is also greater flexibility in distributing income and capital when held in a discretionary trust. A trustee has the power to distribute income to beneficiaries with lower marginal tax rates, access to discounts on Capital Gains Tax (if they have held shares for greater than 12 months). This can vary due to tax rates and policies, so talk to your accountant for the most up to date information. 

Make sure you discuss your plans with an eCommerce accountant, like Fullstack.

Appointing Corporate Trustees

Since you may not be a trustee and a sole beneficiary of a trust at the same time, you need to consider whether you wish to appoint an individual or corporate trustee. Appointing a corporate trustee requires additional red tape as you will need to incorporate another company, which increases setup costs. It does afford you greater protections such as limiting liability. Again, you should consult with your accountant to determine whether you should appoint family members (individuals) or corporate trustees as trustees of your discretionary trust. 

Dual Company Structure: Holding Company and Operating Company

A dual company structure is ideal for an eCommerce business as it gives the company an added layer of legal separation between your major assets – the Intellectual Property and cash on hand – and other assets. This does cost more than simply registering an ABN and hoping for the best, but it will yield many benefits when it comes to minimising risk and maximising flexibility. 

In this scenario, a holding company is created which holds 100% of the shares in a subsidiary operating company. The operating company is the company that performs most of the transactions with clients, employees, and suppliers. 

If your business is ever taken to court, legal action will most likely be taken against your subsidiary operating company. This affords your asset holding company at an arm’s reach and protects your most valuable assets. Of course, there are some limited instances where a holding company may be liable for an operating company’s action or lack thereof – such as fraud or negligence, or if the companies are found not to be under separate management in the event of liquidation. 

Top-talented team that really are "full stack" in covering bookkeeping, tax, employee management and grants. The team are very helpful and friendly to work with. COO If you're looking for a reliable outsourced financial department that understands the specific needs of innovation-driven companies like ours, Fullstack comes highly recommended.

Accounting Fundamentals

Get the eCommerce Accounting Basics Right

With your company structure sorted, the next item on your to-do list is to set up your eCommerce accounting and bookkeeping.  

Using pre-defined and easy-to-follow processes and procedures using relevant accounting software not only improves productivity, but gives your business opportunities to leverage insights, become more scalable, and enhance profitability. Having good processes reduces reliance on key personnel and external accounting or bookkeeping fees.  

Fullstack has a comprehensive guide to accounting for start-up companies including eCommerce businesses. Click here to view.

The Right Software for eCommerce Accounting

Having the right software in place is crucial to establishing a streamlined, repeatable process you and your employees can follow when it comes to accounting and bookkeeping. There are many software packages available – however Fullstack uses and recommends Xero cloud accounting software for an eCommerce business. We recommend it as it is: 

Simple to use 
Scalable – will scale up as your business does 
Available on many platforms 
Integrates into your app stack (more on that later.)

Rolling Processes - Weekly, Monthly, Quarterly, Yearly

You should have turn-key rolling processes that the entire company should use to make your accounting easy and streamlined. Automating these processes will save you a lot of time and money. 

Weekly 
Weekly processes may be reconciling cash and receipts and transactions. You may want to send out invoices to major customers on a certain day each week. A day could be nominated to review employee timesheets. 

Monthly 
Paying vendors or suppliers, or schedule and/or review bills for payment. Track your budgets and any variances. Create manual/off-site backups of your cloud data. 

Quarterly 
Prepare your Quarterly Activity Statements for review and lodgement.  

Yearly 
Complete an audit and prepare your end of financial year Profit and Loss statements and Balance Sheets. Prepare for your annual corporate tax lodgement if applicable. Different jurisdictions have different timing: the end of the financial year in Australia is June 30; in the United States, it is December 31; in the United Kingdom it is April 5. 

Fullstack have been of great help in our business and understanding not only our accounting needs but also incorporating that with our growth strategies, helping us make better decisions. They are incredibly responsive and easy to work with. Couldn't recommend them highly enough! If you're looking for a reliable outsourced financial department that understands the specific needs of innovation-driven companies like ours, Fullstack comes highly recommended.

App Stack

The Ideal eCommerce App Stack – Core Stack

eCommerce is an application-led business. Information is how an eCommerce business runs from day to day. Having the best app stack will allow your business not only to start immediately, but scale quickly, and maintain growth.  

Your stack should have a good balance of features, accessibility, APIs that enable it to “talk” to other apps, and technical support if and when things go wrong. Of course, price should be a factor – and many apps allow you to scale up to more “seats” (users) and/or feature sets as you need them. 

Your core app stack lies at the heart of your business operations and are minimum system requirements to make your business run. These apps are used to make money for your business – known in accounting as “performing assets” – these apps contribute to the bottom line. 

Customer Relationship Management (CRM) 

At the outset, your business will need a cloud-based CRM suite that tracks customer relationships: potential customers, existing customers, and post-sales support requests – apps such as Salesforce, Microsoft Dynamics, Zoho, HubSpot, and others.  

CRM systems help process and give insights to your business by highlighting prospect contact information, identifying sales opportunities, recording service issues, and managing marketing campaigns all from within the app.  

Marketing and Analytics 

Every website that transacts needs to have some kind of marketing application and analytics. The most obvious analytics being Meta Business Suite (Facebook and Instagram), Google Search Console (for SEO) and Google Analytics. The last two can be fed into your advertising dashboards such as Google Ads (formerly Google AdWords) to refine your Pay Per Click (PPC) campaigns.  

Other marketing apps you should consider are: 

Email marketing and automation (MailChimp, Constant Contact, Klayvio, etc.) 
Social media marketing and automation
Behaviour tracking and scaling marketing campaigns 
Business Intelligence and analysis – gleaning data from all your interactions 
Generative AI applications to streamline administrative and creative processes, your digital “co-pilot”

Inventory Management 

An eCommerce business lives or dies based on its ability to track and fulfil inventory. Inventory management should be able to track stock in your warehouse or along your supply chain, order management and purchasing capabilities that streamline supply chain processes and integrate with your marketing and financial channels. NetSuite, JIRA, Katana, Odoo and others are systems that can perform these tasks and integrate into your app stack.  A proper eCommerce accountant can be of great help.

Supporting app stack

Your Supporting App Stack

Your supporting app stack assists your business with ancillary yet critical functions such as customer service, accounting, and workflow management. These are key apps that do not directly contribute to your business making money, but are essential for a smooth and streamlined business operation.

Knowledge Base

A knowledge base is crucial to interacting with your customers when things go wrong (and in eCommerce, many things can go wrong such as lost orders, broken items, etc.) A knowledge base like ZenDesk, Help Scout, or Groove can give answers to commonly asked questions instead of using manual handling of customer complaints. These applications can also handle complaints with a ticket system, which enables your business to handle complaints as a matter of urgency, elevating it to higher management levels if required. Many knowledge bases can use closed tickets as a basis for the FAQs. 

Cloud eCommerce Accounting / VCFO

Using cloud accounting suites such as Xero or Quickbooks, coupled with Virtual CFOs like the ones at Fullstack are essential to streamlining your financials from the day to day turnover and accounts to reconciling tax, income, expenditure, payroll, and other financial requirements monthly, quarterly, or yearly. A cloud accounting system also gives your business crucial business intelligence you can use to scale your business over time.  Don’t forget to ask your VCFO if they clearly understand the nuances of eCommerce accounting.

APIs, Triggers, and Automation 

Your app stack should be interoperable and ready for automation using Application Programming Interfaces (APIs). APIs can be used to trigger workflows automatically – for example when a customer registers their details on your website, the API could trigger your email software to send a customised welcome message with a special one-time coupon.  

Using IFTTT (If This Then That) or Zapier can connect different apps to one another and create daisy chains of automated workflows. You can also monitor these chains using communication apps like Slack or Teams. It all ensures your eCommerce business can run without manual input or handling most, if not all the time. 

Marketing Fundamentals

Marketing Fundamentals for eCommerce

eCommerce is just like old school commerce – you cannot just “build it and wait for people to come” – you will need to market and advertise your business. With so many avenues for advertising and marketing, sticking to what works gives your business the best chance for success. 

Building an Audience

You can build an audience for your brand before you even launch. This requires the “Three C’s of Community” – Content, Collaboration, and Consistency. 
That means: 

Providing useful and engaging content 
Collaborating with larger accounts and influencers 
Posting regularly – ideally with set times and in consistent formats

The best way to approach this is to create your own content strategy. 

How To Create a Content Strategy

Your strategy requires a broad goal to start with – something that’s SMART: specific, measurable, achievable, reasonable, and time-limited. It may be as simple as “Get 1,000 signups to our email list within three months.”  

The steps toward creating a content strategy is to: 

Know your audience – who is your target market? What do they look like? What do they respond to? Can you create an avatar of this ideal customer and speak to them? 
Create a style guide – What does your brand sound like? What does it say? What does it never say? 
Choosing Content Channels – Are you selling B2B? B2C? Businesses live on LinkedIn. Customers are on Instagram, Facebook, Twitter, etc. Don’t just create content and expect people to love it – tailor it for the personas you are trying to target. 
Setting Up Analytics – This may be Meta Business Suite, Google Analytics, Google Search Console, and other data gathering tools. This allows you to conduct keyword research, find when your most traffic is active, and see what kind of content sticks. 
Message Intent Planning – Your content should have themes: brand awareness, product highlights, community stories, collab shoutouts, insights & tips, “hard sales,” etc.  
Setting Up Workflows – Who does what, when? Do you have a Marketing Unicorn who does everything? Are you writing copy while an outsourced designer makes creative (images/videos?) Are you using scheduling software? 
Re-Evaluation – After a couple of months, gather your data and re-evaluate your strategy. What’s working? What’s not working? What is your community telling you? What do you want them to say, but they haven’t said already?

Content Curation

Not all content need be original – the “hypertext” and “remix” nature of the internet means you can take from other sources and re-brand it as your own (as long as you acknowledge the original creators where possible.) Shopify has a step-by-step guide to content creation. Remember: the curated content needs to fit your strategy, not the other way around. 

Content Funnels

A content funnel is how you can visualise the buyer journey. First, they become aware of your product; then they may evaluate the product further; and if all goes well, they are in a position to buy.

Awareness is built on posting content according to your content strategy. Getting the message out there. This is as broad as possible, to catch the most amount of people. 
Evaluation speaks directly to customers. This may come in the form of testimonials, reviews, social proof, and demo reels or videos. At this stage, your prospects may be followers. 
Purchase is the “hard sell” – offers and discounts sent directly to prospects via personalised channels such as email marketing or SMS marketing.

Don’t put the horse before the cart – customers need to be nurtured along the funnel before they buy. 

You can read about advanced marketing techniques in our later section of the manual here.

Scalable Systems

Growth and Scalable Systems

Even if your eCommerce business is niche, all businesses want to grow as fast and as large as possible. Ideally, this growth should be sustainable and scalable – there should be as few – or no – bottlenecks along the path towards growth as possible.  

Though we’ve discussed your product (the what) and your app stack (the how) we need to focus on the where and when – how you’ll be getting your products to customers; and what happens when demand starts ramping up. The three main ways are to use drop shipping, a scalable capacity manufacturing partner, or using fulfilment and distribution partners. 

Using Drop Shipping

Drop Shipping is arguably the most scalable eCommerce solution for customer fulfilment in the marketplace – once an order is placed a drop shipping partner will take care of, fulfilment, shipping, and returns – for a small fee in return.  

In essence, a customer places an order at your eCommerce store and your drop shipping partner “does the rest.” 
Your drop shipping partner should at a minimum integrate into your eCommerce platform, CRM, etc.  

Scalable Capacity Partners

If you have decided against drop shipping, you will need to choose a capacity partner that has the definite capacity to scale up as your demand increases.  

You should do your research into manufacturing partners to ensure that they can fulfil their stated production quotas now and into the future. Many manufacturing partners available on Alibaba may state their maximum or usual output, expressed in units per day, week, month, etc.  

Operating an International Warehouse

If your business is planning to ship large volumes to a single country, buying or leasing an international warehouse gives you finer control over the entire fulfilment process. You may want to base your warehouse in a location that’s closest to that country while remaining cost-efficient, i.e. leasing a warehouse in Indonesia due to its relative proximity to Australia.

The International Warehouse Logistics Association can provide information on leasing or buying a warehouse in various countries.

Using Fulfilment and Distribution Partners

Using third-party logistics (3PL) that connects your manufactured product with the consumer is a popular and cost-effective option that outsources part or even all the distribution and fulfilment services for your business. This allows you to concentrate on other parts of the business. According to Shopify, approximately 50% of eCommerce businesses use 3PL to drive their international commerce. 

Remember: if there are delays or damage to the items your customers have ordered, they will turn to your company for restitution. Ensure that your customer service and complaint handling is in place to deal with these issues.  

Near-Sourcing

Throughout the COVID-19 pandemic, we were shown first hand how global supply chains can be interrupted overnight if over-reliance on one location or manufacturer are shut down or disrupted for reasons beyond your control.  

Though your eCommerce business may use drop shipping or manufacturing partners overseas to reduce costs, “near-sourcing” or using a back-up local manufacturer with specialist skills can compliment your offering – or be an alternative to establishing a similar manufacturing operation overseas, which is a significant cost and time investment – which may take months or years to see any return. A shorter supply chain also means faster deliveries, greater control, and faster to adapt to changing market conditions. 

Establishing KPIs

In business, you cannot grow unless you have a baseline first. You must establish Key Performance Indicators in terms of sales, revenue, profits, and other business metrics such as: 

Order processing time 
Fulfilled orders 
Social engagements 
Complaint resolution time 
Revenue and net profit 
Conversions from PPC vs Social Marketing vs
Organic Search Traffic 
Keyword search volume 
Email list growth 
Establishing growth-oriented KPIs or leading

KPIs require setting SMART goals, as we’ve discussed earlier. You can use insights from your app stack to track KPIs and compare them month by month, quarter by quarter, and year by year.

Cannot speak highly enough of their service. The Fullstack team provide regular accurate reporting that allows us to have a clear view of the company's financial position at all times. If you're looking for a reliable outsourced financial department that understands the specific needs of innovation-driven companies like ours, Fullstack comes highly recommended.

Customer Traffic

Managing Customer Traffic

As your eCommerce business grows, you will have to manage ever increasing flows of customer traffic. This brings with it new business but new members of your community in terms of social media engagement; but will also require greater resources dedicated to customer service and support. eCommerce – like any business – things can and will go wrong. Shipments may be delayed, arrive damaged, or not at all. 

Customer traffic can be easily managed with the right platforms in place. Using a Content Distribution Network like Cloudflare or AWS CloudFront brings your website’s edge server closer to the customer, which also means shorter loading times. 

Customer Feedback and Support

As mentioned, your app stack should include a customer helpdesk application such as Zendesk or Front. These applications enable your business to resolve customer queries without direct intervention through the ongoing addition of answered questions as part of your Knowledge Base. 

If your workforce is global, cloud-based customer service apps add “tickets” to a queue where representatives may attend to queries based on their availability and expertise. They may also be able to escalate urgent or complex requests to management or subject matter experts as required. 

Machine Learning

Many of these tasks can be automated using apps in your stack. Chatbots that can parse natural language and direct customers to knowledge base articles, retrieve order information, or conduct other routine customer service tasks can save many hours of work per day for your employees. Machine learning can speed up these tasks and even take on more complex tasks as time goes on. 

Your Email List: Crisis Communication

Occasionally, things in eCommerce can go catastrophically wrong. Entire containers with thousands of orders can go missing or be damaged; hackers can steal customer information; warehouses can catch on fire and wipe out your entire inventory. Though we sincerely hope this never ever happens, you must be prepared for the possibility of such occurrences. 
Your email list and social media channels are your avenues to mitigate potential public relations damage.  

When engaging your audience in crisis communication, you must 

Acknowledge the problem. Do not deflect blame. Even if you outsource your logistics or the bulk of your operation with drop shipping, do not shift blame on to third parties.  
Apologise for the inconvenience.  
Outline the steps you are making to rectify the situation. Use as much detail as possible. 
Use empathy. Put yourself in their position. 
For example, if your business inadvertently revealed customer information, give your customers an out. E.g. “We understand this is a breach of your privacy, and we are sorry. If you no longer wish to receive communications from us, we understand – and you can unsubscribe using this link.” 
Offer some kind of compensation. Offer to send them a new item free of charge or to refund their money.
Offer them free items, discounts, or other incentives to remain on your list. Use everything at your disposal to make it up to your customers.

Though your business may take a temporary hit to sales or revenue, the long-term objective is to keep your brand image intact and as viewed as positively as possible.

Advanced Marketing

Advanced Marketing Strategies for eCommerce

Marketing in the age of “Generation Like” as futurist Douglas Rushkoff calls it is a hard sell – by the time a new technique reaches saturation, audiences are already wise to it and switch off. 

However, according to the Digital Marketing Institute, 49% of consumers depend on influencer recommendations. Influencer marketing is about value reciprocity more than attracting a spokesperson for your eCommerce brand or products. 

How to build reciprocity

You need to focus on what’s going to add value to your audience. At this stage, you should already have your persona or avatar of target customers. What have they been responding to the most?  

What can you give to them that adds value in their own way – remember, value is subjective. A “shoutout” on your Instagram that gives one avatar a chance at being shown to thousands of followers may be worthless to another avatar. 

You should also be active on social media to follow trends. 

Four Key Goals

Your influencer marketing should be clustered around four key goals: 

Content generation – can you leverage your audience to give you content that adds value to other consumers? 
Increasing brand awareness – can you penetrate other social circles or markets? 
Growing your followers – can you leverage influencers to help increase your follower count? 
Driving sales – will this influencer actually increase sales?

Influencers can drive sales in the following ways:

Free products for posts 
Giveaways through the influencer’s channels 
Personalised discount codes 
Products given for review as part of influencer’s usual content – i.e. using the watch review channels to review your new timepiece.

The Influencer Checklist 

When picking influencers for your shortlist, you need to ask:

Do they have sufficient reach?
Do they have a good relationship with their followers? E.g. are they interactive with their followers?
Are they regarded as experts in their field?
Do they have high quality content?
What does their back catalogue of content look like?
Are they persuasive? Can you pinpoint their influence on growing other brands?
Is their content on brand with yours? E.g. targeting polo shirts at a punk rock channel is definitely not on brand!
Is the influencer even a person? Sometimes, as Neil Patel says in his guide, influencers can be animals such as dogs and cats!  AI is also creating influencer avatars audiences enjoy

SMART Goals

Like all marketing campaigns, you also need to create SMART goals – these may be clustered around one of the four key goals as described above. “We want to use influencers to increase our follower count by 20% within three months.” 

Your Email List

Your marketing should be geared toward gathering as many people on to your email list as a matter of priority. According to Campaign Monitor, email marketing is the “king” of ROI, generating an average of $44 for each $1 spent on advertising through email.

Informing customers of new sales, products, and other events that are tailored and personalised to their tastes can drive that ROI – and are opened at rates six times higher than non-personalised emails.

As a part of your marketing, you must also leverage influencers and other media to build your email list. Tried-and-true methods of incentivising email list take-up include:

Instant welcome offers, e.g. 5% off first orders when signing up to the email list
Exclusive sales, e.g. email subscribers get coupons to sales before they begin, ensuring they are served first
Competitions, e.g. signing up for the email list puts them in a draw for a gift voucher, hamper, cash, etc.
Cart abandonment prompts – nudge your customers into purchasing by offering a discount on their abandoned cart.

Email lists can also be useful for crisis communications, as we’ve discussed earlier.

Scaling

Scaling Your International eCommerce Business

if you’ve had a successful run domestically, the next frontier is running your business internationally.  

With your app stack, financials, and marketing in place, you are in a good place to scale your business internationally. This requires layering in some additional logistical and financial operations into your business, such as handling international returns and adjusting your store to handle international tax obligations. 

Reverse Supply Chains

According to Netsuite, online consumers return products three times more often than bricks and mortar stores. Most consumers want their complaints or returns handled within three to five days.

By setting up a reverse supply chain or using a cross-border Third Party Logistics (3PL), you can attend to international returns and keep labour and packaging costs low.

Reverse Supply Chains begin working when customers tell you they require a return. They can then deal with returns, forward returns to repair partners or recycle the goods if they are unable to be refurbished or resold. They can also deal with replacement goods in that instance.

When choosing 3PL Reverse Supply Chain partners, their apps or APIs should be able to integrate into your existing app stack and achieve the same level of automation and throughput as your distribution supply chain.

Fullstack can offer important insights into your reverse supply chains and many other eCommerce accounting best-practices.

Localised Support 

Having local support in customers’ native language is crucial to success in eCommerce internationally.

Using real-time chat support can mean customers are 72% more likely to buy from your store if you can respond in their native language.

Be wary of using multi-language chatbots, as they may return imperfect translations that take time to parse. You may want to consider expanding your international workforce to handle customer complaints in local languages – language barriers can make returns and complaints harder to resolve and tarnish your reputation.

Consider having your knowledge base translated into the most spoken foreign languages as a matter of course, even before you launch a globalised business.

Other Localisation Considerations

Clothing and shoe sizes; EUR sizes vs UK vs US vs Japanese sizes. 
Address localisation. Italy and Mexico place house numbers after streets, for example. 
Left to right or right to left reading, e.g. Arabic or Hebrew.
Bundling step-up or step-down voltage converters for 110V (North America) or 240V (Europe and Australia) 
Localising advertising in your target market native language and using local stock images/footage 
GDPR cookie opt-out – crucial for operating in the European Union

eCommerce Accounting: Taxes

Tax Considerations 

Different jurisdictions will have various tax obligations and requirements that you need to be aware of before selling to that market.

In the European Union, your business will pay taxes based on where the customer is located, not where your business is located. You’ll pay Value Added Tax (VAT) to all EU countries on shipments below €150 or below using the OSS (One Stop Shop) system. You will have to register with an individual EU country using their import branch of the OSS and complete your filing with that country’s tax department.

Registering for VAT through the OSS is optional, but your customers will be stuck with paying your VAT and that may hurt sales.

In Australia, low-value imports are subject to the 10% Goods and Services Tax, which are paid by the customer. Businesses that make over $75,000 in a Financial Year are required to register for GST at the Australian Taxation Office and pay GST annually in a GST return. The ATO has more information here.

In the United States, your goods may be subject to tariffs or sales tax provided on where your customers are located. The concept of “nexus” comes into play.

“Nexus” is a term used to designate that a company legally has a presence in that state – that is, they are determined to be doing business in the state.

Using a dedicated eCommerce accountant is crucial to understanding your international tax obligations – and that’s why Fullstack is here to help. Set up a call with our international tax team here.

Exit Strategies

Exiting a Successful eCommerce Business

if you’re a serial entrepreneur or investor and are no longer interested in running the day to day operations of your now internationally successful eCommerce business, you may be considering an exit from the business to retire, focus on family, or start a new venture. 

Handing over the business 

A simple way of exiting the business is handing it over to someone else to run day-to-day. You may want to pay them a salary or give them shares in the holding company or operating company. Make sure it’s someone you trust to keep the company thriving and growing indefinitely. 

Selling the business

When you decide to sell the business, you must spend a significant amount of time prepping the books, listing it on the market, and potentially doing “roadshows” to show the returns one could theoretically earn in the business. 

If your eCommerce business does less than $1m in turnover, it will usually sell according to the Seller’s Discretionary Earnings.  

This comprises the profit before tax and interest of a business before the owner’s benefits, non-cash expenses, extraordinary one-time investments, and other non-related business incomes and expenses. It shows would-be buyers how the business is doing financially. 

You’ll also have to value the inventory as part of the sale – which should be straightforward if your app stack is in order. 

Since your eCommerce business is set up using a dual company structure (as discussed earlier) you will be selling all your shares in the operating company – you may have to negotiate with potential buyers on matters of intellectual property. 

Mergers and Acquisitions

If your eCommerce business is doing well enough to be listed as a public company, you may want to attract larger businesses to merge or acquire the company through an M&A. This requires expert knowledge of tax and corporate structures, which is something an established eCommerce accountant like Fullstack can assist with.

The Fullstack Difference

We Are eCommerce Accounting Experts!

With decades of collective experience and expertise on our side, Fullstack has assisted hundreds of founders and startups with their best practice eCommerce accounting and bookkeeping, ensuring their continued growth and success while maintaining compliance with tax and other financial obligations, including reporting for stakeholders.

As passionate enthusiasts for the Australian and broader eCommerce industry, we champion eCommerce founders with our innovative approaches to accounting and reporting. This including a comprehensive membership plan, which streamlines and outsources your entire tax, accounting, due diligence, and other financial reporting at a fraction of the cost of hiring a full-time equivalent finance professional.

Mutually Assured Success – The Fullstack Way

What Clients Say

Very responsive and fast turn-around, the Fullstack team have been amazing.

If you need help with managing your stakeholders and keeping a high level of quality reporting for your eCommerce finance operation contact Fullstack.

Download the ultimate guide for eCommerce Founders

eCommerce Accounting 2024

Introduction

Starting Up in Ecommerce

How to Start a Successful eCommerce Business

Is my eCommerce business viable?

Market based questions

Unique Selling Proposition

USPs & Business Plans for eCommerce Startups

What’s your business plan

Corporate Structures 101

Corporate Structuring eCommerce Businesses

Discretionary Trusts

Appointing Corporate Trustees

Dual Company Structure: Holding Company and Operating Company

Accounting Fundamentals

Get the eCommerce Accounting Basics Right

The Right Software for eCommerce Accounting

Rolling Processes - Weekly, Monthly, Quarterly, Yearly

App Stack

The Ideal eCommerce App Stack – Core Stack

Customer Relationship Management (CRM)

Marketing and Analytics

Inventory Management

Supporting app stack

Your Supporting App Stack

Knowledge Base

Cloud eCommerce Accounting / VCFO

APIs, Triggers, and Automation

Marketing Fundamentals

Marketing Fundamentals for eCommerce

Building an Audience

How To Create a Content Strategy

Content Curation

Content Funnels

Scalable Systems

Growth and Scalable Systems

Using Drop Shipping

Scalable Capacity Partners

Operating an International Warehouse

Using Fulfilment and Distribution Partners

Near-Sourcing

Establishing KPIs

Customer Traffic

Managing Customer Traffic

Customer Feedback and Support

Machine Learning

Your Email List: Crisis Communication

Advanced Marketing

Advanced Marketing Strategies for eCommerce

How to build reciprocity

Four Key Goals

The Influencer Checklist

SMART Goals

Your Email List

Scaling

Scaling Your International eCommerce Business

Reverse Supply Chains

Localised Support

Other Localisation Considerations

eCommerce Accounting: Taxes

Tax Considerations

Exit Strategies

Exiting a Successful eCommerce Business

Handing over the business

Selling the business

Mergers and Acquisitions

The Fullstack Difference

We Are eCommerce Accounting Experts!

Mutually Assured Success – The Fullstack Way

Scalable service

Industry experience

Complete funding resource

All under one roof

What Clients Say

Table of Contents

MAIN SOLUTIONS

CUSTOMER FAVES

COMMUNITY

GET TO KNOW US

CONTACT US

Discretionary Trusts 

Customer Relationship Management (CRM) 

Marketing and Analytics 

Inventory Management 

APIs, Triggers, and Automation 

The Influencer Checklist 

Localised Support 

Tax Considerations 

Handing over the business 