Banner image for Scaling New Heights 2024, the premier accounting technology conference in the United States. The image features the conference theme and dates.
 

Adventures in e-Commerce Inventory, Part 2

Rachel Dauchy
Posted by Rachel Dauchy on Mar 16, 2023 3:15:35 PM

This is a follow-up to an article previously published in the Woodard Report. Read part 1 here.

One of the reasons I enjoy working with e-commerce sellers is that I have a slight obsession with online shopping.  I think because I am genuinely interested in the mechanics of moving products, I enjoy working with different sellers.  I enjoy it so much that I created my own Shopify store:  more about that later.

Although I do have a background in inventory accounting in my previous life, we did not use QuickBooks Desktop Enterprise (QBES).  When I became a QuickBooks Online Advanced ProAdvisor, I thought about servicing clients in QBES, but I was pretty adamant about wanting to use cloud-based solutions. My husband works in an industry in which we have moved pretty often, and it was (and is still) likely that we may have to move again.  I wanted to design a completely cloud-based setup that I can access from anywhere.  Part of the benefit of working remotely is that I can work from anywhere, and that was one of the things I wanted to do when I entered the QuickBooks Online world.  

Cloud-based inventory solutions

One of the most exciting things about the advent of cloud accounting is the availability of cloud-based inventory solutions.  You can find full-blown ERP (Enterprise Resource Planning) software such as Cin7 Omni/Core and Fishbowl, which both allow you to run day-to-day inventory operations and then send the accounting entries to QuickBooks Online, to simple free solutions found in e-commerce platform app stores. Have a simple enough situation that you can manage the inventory right in QuickBooks Online? Great! I am not opposed to that either. 

Find the right inventory solution for specific client needs

It takes some time to learn about the differences between the vast number of available inventory products on the market. Some of the solutions are incredibly complex and are capable of supporting a multi-national manufacturing, supply chain-to-consumer operation, while others simply help small sellers organize an inventory that they previously tracked in an excel spreadsheet.  I believe that as a ProAdvisor that consults with many different sellers, I need to be able to assess my clients’ needs to suggest the best solution for their situation. 

I have come across sellers that have a brick-and-mortar store and are only interested in selling products on their own website rather than marketplace solutions like Amazon or eBay. In that situation, I always recommend Shopify, as I am an authorized Shopify Affiliate.  Shopify has done some amazing things with their Shopify POS (point of sale) Pro product, which allows you to sell on a Shopify e-commerce store and run one (or more) brick-and-mortar stores while maintaining ONE centralized inventory.  You can NOT, however, plug in additional e-commerce marketplaces such as eBay and Amazon into the Shopify POS Pro platform.

I quickly realized that if I had clients that are looking to expand into different channels outside of Shopify, I needed something more complex. Shopify POS Pro is great for businesses that sell directly to the consumer through their own channels using a single platform, but if I have a client that would also like to sell on Amazon, eBay, or Walmart Marketplace, they need a solution that allows them to plug their central inventory system into the various cart connections and marketplaces they use.  

Let’s look at an example: imagine a client who sells via their direct channels (store and website) but also sells products on Amazon and eBay. They use a central inventory system that connects to all platforms. When an item is sold on Amazon, the item quantity on hand is updated in the central inventory system, and stock levels are subsequently updated on ALL platforms. I.e., if a seller has 100 widgets and sells one on Amazon, the stock levels on ALL their channels are automatically updated to 99 available widgets.

Explore the capabilities of Katana

As I learned more about the different configurations of online sellers face, I started looking for solutions. One product I came across and started to like is Katana. Katana allows for one central inventory that connects to many different platforms and updates levels universally. It also features a fantastic interface for manufacturers and resellers.  My client base has quite a bit of variety - some have simple or advanced manufacturing, some only buy and resell goods, and some do a combination of both.  Katana works well for all of it. 

But then I discovered, what if I have a client that needs to allocate landed costs on the balance sheet?  Katana is great for managing an inventory of manufactured goods but isn’t so great with the advanced inventory accounting functions that QuickBooks Desktop Enterprise does really well. Another limitation…..Katana also only transmits individual sales receipts/invoices over to QuickBooks Online rather than one summarized journal entry per day to hit inventory and cost of goods sold. This is something I really need for high-volume sellers. 

Sigh. I realized that maybe I did need to lean back on remote-hosted QuickBooks Desktop Enterprise.  I felt like I was back to the drawing board…..but I kept looking. 

Cin-7 Core: strong for advanced mfg, inventory costing, and syncing to QuickBooks Online

I recently came across what I believe is the strongest product for advanced manufacturing, inventory costing, and transmittal to QuickBooks Online; Cin7 Core (formerly DEAR Inventory).  I even traveled to Denver, attended an implementation training, and did a DEEP dive into its functionality.  It was quite impressive.  

Cin7 Core is not for the beginner, however. If you’re just getting started, you can find an implementation partner to help you onboard and implement your client, or you can take the training courses, get certified and do it yourself.  I ultimately decided I don’t want to allocate the time for implementation and chose to resell it under an implementation partner and focus on the integration of the accounting and the flow of information to QuickBooks Online. 

I HIGHLY recommend learning as much as you can about Cin7 Core if you are looking to recommend an ERP partner, as Cin7 Core does everything from sourcing materials, advanced manufacturing, lot tracking for goods that need it, connectivity to EDI (required by MOST chain stores if you supply to them), connectivity to a 3PL, and more.  Cin7 Core becomes the center of all operations, and everything else orbits around it.  It’s a lot to know. 

Ultimately, you can spend endless amounts of time researching and vetting different solutions.  I am the type of person that needs to work out things in a sandbox account, and for that reason, a couple of years ago, I created my own Shopify store, The Whole Brained Child. 

Learn to speak your client's language and offer them options

The most important thing I learned:  Don’t ever think you can throw some things online and expect to move product. It requires ungodly amounts of work, but I NEEDED to understand how an online store worked from every angle because I wanted to be able to understand my client’s language, recommend the right solutions, and be able to not just do their books but grow my advisory practice to a level of expertise.  

I have connected my store to free Shopify inventory apps (Multi-Source Inventory), upgraded to Shopify POS Pro to access Stocky, tried out a few other solutions, and ultimately settled on Katana. Katana meets my needs because it handles my purchasing needs perfectly, and I prefer the moving average method of inventory costing. Need FIFO?  I would HIGHLY recommend SOS inventory

If you need FIFO with an advanced landed cost function, including additional shipping costs not associated with the PO, I recommend Cin7 Core all the way.  Need to move your basic buy/sell inventory out of a spreadsheet, and FIFO costing is just fine?  You can try managing it in QuickBooks Online. 

Ultimately, I wanted to become a trusted and valuable partner who deeply understands the complexities of inventory management and WHY to choose certain solutions to recommend.  And after all this, I’m not done! I will keep looking, and with the constant advent of more and more cloud-based inventory solutions, it doesn’t look like I will be stopping any time soon!

Please see Part 1 here: Adventures in eCommerce Inventory Accounting


-Rachel Dauchy is an advanced ProAdvisor who lives near Detroit, MI, with her husband, who works in the automotive industry, and their two children, who are 12 and 9.  She enjoys her two new adoptive cats, traveling, watching Christmas movies on Netflix, and coffee!

Topics: Business Technology


 

Sign up and stay plugged into the education, news pieces and information relevant to you.

Subscribe to The Woodard Report today! 


Do you have questions about this article? Email us and let us know > info@woodard.com

Comments: