Simple and efficient – controlling in eCommerce

In 2021, 45,000 small and medium-sized Amazon sellers from Germany sold 750 million items worldwide.¹ If you want to be successful in this competitive environment, you need not only a popular product and a professional marketing strategy, but also a functioning controlling system. Controlling encompasses all key figures that are needed to manage a company and support sound decision-making. In online business, however, turnover is often the only and “most important” key figure. In this blog, we would like to encourage you to focus more on controlling in future, which is based on data from financial accounting.

From clean accounting to functioning controlling

Although the term accounting only evokes a pained smile from many online retailers, it forms the basis for a functioning controlling system. Due to the legal obligation to keep clean and orderly accounts, it is by far the most precise and best-monitored system in the company. However, we don’t want to talk about laws now, but about how valid figures from accounting in combination with supporting tools lead to a functioning controlling system.

"Gamechanger" evaluation-oriented account assignment

Amazon alone has more than 160 different types of fees. But that’s not all – there are also a variety of transaction types on the revenue side. These range from sales price refunds to residual item sales and compensation for damages. As the business grows, it becomes increasingly challenging to maintain an overview.

To counter this problem, it makes sense to post the most important transaction types separately. Accordingly, the first goal must be to set up an account assignment suitable for evaluation in order to record the large amount of data in granular form. Using appropriate software solutions (e.g. dekodi Nexus) and account assignment rules, a settlement report can be evaluated, the correct fee and revenue types identified and the transactions categorized accordingly. In addition to additional transparency in the context of a tax audit, elementary data for a functioning controlling system is also provided here.

Internal control systems (ICS) in eCommerce

It’s no secret that online business, especially eCommerce on Amazon, is developing so rapidly that it’s a challenge to keep up with the constant changes. This dynamic not only presents online retailers, but also tax consultants with major challenges in the area of accounting.

Fortunately, there are protective mechanisms that, like a firewall, can protect against damage: the internal control systems. They work in the background and monitor whether the accounting data is complete and plausible. As soon as discrepancies occur in the Amazon clearing account, an ICS ensures prompt notification – and this does not even require complex programs. An effective ICS can even be set up using Excel. However, it is crucial that this form of quality assurance is automatically integrated into the accounting process.

The business analysis (BWA) - an underestimated evaluation tool

Many online retailers know that the BWA exists, but only a few actively use it. This is actually a mistake, as it is one of the most effective tools for assessing a company’s earnings situation. The aim must therefore be to include relevant accounting data in the BWA. This is where it pays off to structure the account assignment for evaluation in a much more granular way. In this way, you create the basis for making the BWA the only central source for determining up-to-date key business figures. This holistic view of the company also enables forward-looking decisions to be made at any time.

Data visualization with Power BI

However, the larger a company becomes, the more difficult it is to gain a quick insight from the BWA alone. This is where programs such as Power BI from Microsoft® come into play, which were developed for the analysis and graphical presentation of (mass) data. Data is retrieved in real time from various data sources (also via API) and visualized in an individually designed dashboard. The amount of data sources does not matter.

Amazon sellers can thus evaluate a large number of key figures:

• Net sales
• OSS notifications / Cross Border Sales
• Local reports / Domestic sales
• DB I, DB II, DB III
• Conversion rate
• Origin of the order
• Storage costs
• Other fees
• Marketing costs
• Data from JTL-Wawi
• etc.

This form of real-time analysis identifies significant changes, provides answers to specific questions about the company’s development and thus speeds up the overall decision-making process.

Conclusion: Boring, my ass! Keep an overview with bookkeeping

Many online retailers are annoyed by accounting, but fail to recognize the opportunity to obtain a meaningful BWA from accounting. Evaluation, account assignment, ICS and the BWA supplemented by data visualization are tools that are relatively easy to implement and lead to a functioning overall controlling system. This creates the basis for successful and targeted management of your company, regardless of where you currently stand.