We are living in an
increasingly globalized world, where the internet has broken down many of the
barriers to trade and entry into foreign markets. For merchants and retail
businesses, this provides access to large groups of people that were hard to
reach in the past. It also increases local competition in every area where
eCommerce propagates and provides consumers with more choice.

When you’re starting an
online business, accounting and analytics are probably one of the last things
on your mind. However, it’s important to remember that we’re more reliant on
data than ever before, and the purpose of accounting and analytics is to take
data and turn it into useful, relevant information. By getting your systems set
up properly, and looking at the right details, it is possible to make informed
decisions that are guided by real-world data like never before.

Analytics vs. accounting

Accounting and
analytics are very complementary. They were never meant to replace each other.

“An accounting system is a 50,000 foot view…
but if you wanna zoom in and look at a very narrow part of your business and
try to get detail, granular detail, then that’s where analytics come into it.
So they are very complementary.”
Jeremiah Kovacs, Muse Minded

Analytics tends to
focus on specific metrics. With analytics systems, we have a powerful set of
tools that can be used to help
provide the right information for making
decisions.

Get the right tools and software in place

There are a wide range
of tools that Amazon sellers can use to make life easier. In the context of
accounting,
A2X simplifies the
process of data entry and helps to reduce the chances of human error by
automatically entering transactions and financial information into your cloud
accounting system.
Learn more here.

By having the right
systems in place, and automating away tasks wherever possible, you are future
proofing your business – making it more robust and easier to scale. Here’s what
Scott Scharf from
Catching Clouds recommends:

“For alot of sellers, they could do their
accounting in 30 minutes, an hour a month. Which, a few years ago just wasn’t
possible.”
Jeremiah Kovacs, Muse Minded

In the beginning, you
will need an accounting hub and a revenue recognition side. While you are still
getting established and don’t own large amounts of stock, it probably isn’t
worth using inventory management software. Some of the
analytics tools made for Amazon do a great
job of inventory management.

Ideally, your systems
should free you up to look after more important things.
Like finalizing your ideal tech stack!

Make sure that you’re recording the right
information in your accounts

Once every fortnight,
Amazon pays sellers the amount owing on their account – after fees have been
deducted. FBA merchants often make the mistake of recording this net settlement
amount as gross revenue, which creates problems with understanding the figures
and
analyzing margins.

When sales are made on
Amazon from inventory stored in FBA warehouses, there are lots of different
fees (FBA fees, selling fees, storage fees etc.) that are taken before settlements
are paid out. This creates lots of added complexity in the accounts. To
simplify things, you can use A2X to post summary invoices that record all of
the correct
information without being confusing.

 Things to consider when entering new markets:

Once you have the right
accounting tools and systems in place, and business seems to be going well, you
might consider selling your products on a new sales channel such as
eBay or entering a
new market like Australia.

When you expand to a
new sales channel, you need to recalculate your margins, and alter your
approach to fit the specific needs of the market. Whilst it is important to
diversify into new markets as you grow,
you don’t want to do it too soon either.

In the early days of
any business, getting sales and making things happen is vital to ensure
survival. However, as you grow, it is important to put standard operating
procedures in places to ensure that the basics are still being done properly –
regardless of who is
doing the job.

Rules and regulations
differ widely between different countries. Before expanding your Amazon FBA
business to a new market, make sure that you are fully compliant with the local
regulations. Also consider whether your products are a good fit for the local
market – do you need to change specifications such as power plugs to make your
products suitable,
or are they fine as is?

Tax law is a world unto
itself, with different rules in every jurisdiction on earth. When you’re
expanding into new markets, it can be tempting to continue using your existing
accountant. However, it’s important to find a local accountant that understands
the local laws inside out. They can liaise with your existing accountant if
required. When you’re looking for an accountant, make sure that the person
doing your books really understands the local market

Good luck!

We hope that you’ve
learned some important points on tips and tricks for people getting into FBA.
Although there is a lot to learn, the potential for success in this space is
enormous. Amazon is a monster company, that occupies much of the online retail real
estate. By devoting resources to succeeding in the Amazon marketplace, you are
able to position your products in front of millions of willing buyers and
increase your chances of success.

Our free guide on how to sell
your Amazon FBA business is packed full of insightful knowledge to help with
growing and automating your Amazon FBA business. By beginning with the end in
mind, you are more likely to prioritize what matters over what is easy, and act
with a vision towards the future.

 

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