Inventory for your eCommerce business with A2X

August, 2021
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Have you ever wondered why managing inventory is important? What comes first accounting, cash flow or inventory? What are some top inventory solutions and at what point you should consider an inventory solution? There is a lot to unpack when it comes to the huge topic of inventory. Ellen Main from A2X chats with expert Jeri Wambeek about the tools to help your eCommerce business avoid inventory pain points.

Ellen Main  0:10  

Hey, well, thank you so much for agreeing to be on an episode. How long have I been at A2X, it’s coming up three years? And you knew A2X long before that, like, I remember that you know, everyone’s like, no, yep, use Jeri. And, and you were WhichAddOn at that point, right? You are now WAOConnect. And so what is your background?

 

Jeri Wambeek  0:37  

So essentially, I’m an accountant by background and accountant by trade. I trained at KPMG way back in 2002, which was when I started my accounting career. But really my journey into Xero and add ons and cloud software, and cloud accounting started in 2009. And I discovered Xero.

So at the time, I had my own tax accounting firm and was starting up my own tax firm in Australia. And then Xero was the best way to sort of run, run my business back then as an accountant and help people with training and set up, etc. So from that point, I actually then sold my accounting firm into another sort of gold partner at the time, that was one of the sorts of pioneer Xero partners in Australia. And they purchased my accounting firm, and I went to work with them. So this was back when there was only 30 add ons on the add-on marketplace. Just it’s crazy thinking that now and there’s over 1000 on there now. So that’s sort of how I got thrown back thrown into add-ons as early as 2012. And that sort of concept.

So from there, I also got my first experience with inventory while I was there because Unleashed was one of the add-ons that were around, it was one of the only inventory add-ons. Then from that business, I actually then moved from there to Unleashed. So Unleashed asked me to come and work with them and help them set up the Australian arm of their business. And I spent a year with them as their partner enablement, specialist trainer, I read all the training manuals support, they say anything and everything for, for inventory and Unleashed in Australia. So that’s really, really my love of inventory came from.

So from there that then led to me becoming starting, you know, essentially, WhichAddOn a couple of years later with my husband, it was focused on sales training, and in assisting people with inventory system implementation. So it started out as like helping everybody with all the add-ons because that’s what my experience was prior. But then we were like, Nah, let’s just focus on inventory because there’s so much to that and more inventory solutions to end up on the market. And that was also my husband’s background. He’s a CFO and authority works with franchisees and implementations for big manufacturing companies. So we focused on our strengths and tricks.

So WhichAddOn became then WAOConnect focused on implementations of inventory solutions and their peripheral products like A2X and StarShipIt and, and all of the other automation pieces that come with the product-based business. That’s what we do, and help people transition to those systems smoothly. And there’s a lot of them so we help people pick which one. So yeah, that’s a bit of a background of where we got to from there to here. 

 

Ellen Main  3:19  

Yeah, that’s awesome. And were you ever intimidated by all the add-ons? I guess you’ve kind of always rolled with that, right? By, you know, being in the accounting industry. And then all of a sudden, some people kind of almost fought it for a while, right? They were like, Hey, no, yeah, but you seem to have just like rolled with it. 

 

Jeri Wambeek  3:37  

Yeah, I always like a challenge. And I always love learning new things. Back in the very early days before we started with Xero I had a business coaching course for other Xero advisors called ‘Fast Track your Xero Journey’ and I was actually because I had fast-tracked my Xero journey and gone from, you know, a nobody to becoming a Xero advisor who was then training other people, I started teaching other people how to do that. And I was already teaching them back then how to even pick from the 50 – 100 add ons around you know, in that time, this was the 2014 tax time period. So I was passing on to people the knowledge of what I did, and my biggest motto back then was ‘never stop learning and it still is. Every single day we are learning something new with new clients with new systems, it just never stopped. So it’s insane.

 

Ellen Main  4:29  

Yeah, of course, I mean, I yeah, the integration kind of world and inventory. It’s, it’s almost like just this massive beast, right. And the fact that you’re kind of in there and understand that so much so many of the different add ons and what’s available and what suits different businesses because that’s one thing it’s kind of not. Do you find that it’s not really one size fits all? 

 

Jeri Wambeek  4:53  

Totally, especially one size fits all is not an option with inventory, especially because the different solutions have been bought and created out of different needs. And they’ve come from different founders who have different focuses. And the solutions, some are very focused on integrations and light on other features. Some are really focused on the heavy features inside the system and not worrying too much about the integrations and, and others will be manufacturing focus versus inventory focused or eCommerce focus versus wholesale focus. Like there are so many different elements to the inventory solutions, and some are the small business focus, or a bigger business focus, there’s certainly not one size fits all. The devils in the detail. 

 

Ellen Main  5:36  

Yeah, for sure. Cool. Hey, well, let’s I just had like a few questions that I thought we could I could just ask you today and we can have a chat. Yeah, I want these to kind of, you know, people to listen to these. And actually, like, we had to learn something. Again, you know, there’s no eCommerce business that is the same. And some people might be managing the inventory from the garage, some might have moved on, you know, using Amazon FBA. There’s so many, you know, different things to kind of consider. But what do you do, first of all, let’s just start with the basics? Why is managing inventory important? I mean, some, I don’t know if it’s kind of like accounting where people avoid it. 

 

Jeri Wambeek  6:13  

Yeah. I think people need to manage it becomes a necessity, I guess, with inventory, otherwise, you as with all accounting and cash flow and money, but generally, it’s you start getting customer problems if you don’t manage inventory, right. So managing inventory. First of all, I think the most important thing is to review your inventory is money. It’s just like, you’re literally buying something. And you might as well be wrapping up piles of cash and sticking it on the warehouse shelf, right. So first of all, think to make it important and make it you know, much more valuable for you to spend your time on is to actually first of all just go I’m going to choose to look at it as money. And that’s not to scare you. But just to get your focus and go right. This is why it’s important it’s because it’s my money that I’m not using somewhere else that I’m putting on the shelf, right. So that’s the first thing. The second thing is that if people don’t actually manage their inventory correctly, they are not going to give their customers a great experience. And not going to be able to give the customers what they want, they’re not going to be able to fulfil an order that’s come in, they’re going to run out of stock over the good stuff that they have. There are so many different elements to that. So essentially, inventory is about actually customer service and making sure that they can actually make a successful business, a profitable business, and there are many layers to that, but a profitable business that can actually please the customers that are wanting to find their products and inventory is the foundation of being able to do that successfully.

 

Ellen Main  7:42  

Yeah, okay, cool. And when it comes to the kind of I mean, obviously, as an integrator, you are working with businesses that have all kinds of steps and their journey. Where do you find like, what comes first, you know, people sorting out their accounting, or like sorting out their tech solutions or their inventory solutions? Do you have a kind of roadmap for how long will it take?

 

Jeri Wambeek  8:06  

Where would you begin? Definitely. So the biggest thing we see is and, we’re just focusing on eCommerce, is that someone comes up with a fantastic idea of a product they want to sell. And more and more these days, there’s the website with the one or two products on it, maybe 10, and then those obviously sites that have 100s of 1000s of products. So either way, it starts off with an idea. And that idea then will turn into a website. So people are going to start with a website, they’re going to start with something like Shopify, or with a product on Amazon. And that’s the start. Usually, if they don’t have enough products that they haven’t actually, or they don’t have enough sales initially, they don’t have an inventory pane straight up because they just stand in the business started.

They’re understanding what’s going on, right. So in that particular case, if the product doesn’t take off straight away, they’re going to need the accounting sorted first and the cash flow and accounting come hand in hand. Accounting is just a reporting of what’s happened. So you can predict your cash flow and reporting of what you’ve committed to so you can work out what you need to pay for in the future. So that whole process of accounting and cash flow is essentially tied together. The inventory management can then often come after for that type of business. We’ve dealt with our tax obligations because we’ve made money it worked. But now they need to make sure that the accounting and the tax are all sorted. Okay, now they need to look at the inventory. That’s a very common graph.

Sometimes people want to have so many products and so much going on but won’t be able to keep up with customer demand. They want to be able to spread their product lines out further and add further products. Those guys end up with an inventory problem pretty quickly because they are actually just growing so fast. There are so many things to manage that they need something to help them early on. But generally, the accounting will come first and then the inventory.

 

Ellen Main  10:09  

Right. It’s super interesting because I guess as well if they are making the products as well. So if they’re making, say it’s a cream, and they’ve got to add different oils and essences. So that’s a whole other case. And that wasn’t even what sparked problems even earlier on.

 

Jeri Wambeek  10:32  

No, say that’s a really common need that people have. So in eCommerce, people are not usually manufacturing it themselves the majority of the time, unless they’re piecing together particular items in the garage. I was even speaking to a client this week, they make a special electronic trailer part. And I was speaking to these two owners about their stuff in their warehouse with all the different warehouse operations. And these guys started out making it themselves, you know, they’re like, Oh, we don’t actually make it in-house anymore. The husband and wife used to make it in their garage many years ago. So anyway, it’s amazing seeing how everyone grows and progresses. But with eCommerce people are contract manufacturing.

What that means is that they’ve got the product idea, and sometimes contract to manufacture, or purchasing the product already made. So that’s obviously just importing or buying. But then there’s the next level of the product where exactly what you said they might have, they might be buying the product from the manufacturer, but they actually have to also buy the supplies and send them to the manufacturer, so the manufacturer can make it.

So an example of a client that I’m working with at the moment, they make handbags, and there’s a particular special rope that they use that’s unique to their handbags. They have to get the special rope from Europe, and then get it to China to finish the manufacturing. So they’re purely they’re an eCommerce business, but then they have this extra complexity of contract manufacturing. Another one is a client that does pet supplements, and they buy the pet supplements, in bags. They have to buy the labels and the lids on the jars. They have five products, but they have got a massive inventory problem with these five products because of all these different pieces. So there are different tools for different needs, based on how complex those things are. So it can get complicated pretty quickly, if they’re in those particular scenarios, and not just buying and selling products singularly.

 

Ellen Main  12:42  

Yeah, of course. How many clients have you had that have come to you at WAOConnect and they’ve not done anything? So they’re just like, Look, we’ve got this with this idea, and it’s flying off the shelf, you know, with, and they’ve not got anything sorted and it’s kind of like the wheels are going to fall off any moment or they have fallen off. And is it common?

 

Jeri Wambeek  13:06  

People that find us to generally have an established system, and they’re moving from an established system right to onto a new system. That is more common than not, but when saying that they have systems don’t necessarily mean that they have an inventory system in place, they just might have a really sophisticated spreadsheet system in place. So that’s really common to see people still managing their inventory, and their manufacturing on spreadsheets and then needing to bring it into that next level.

So yeah, it’s not. I often see big websites, you know, doing a lot of sales and you know like those fidget spinners or yo-yos or whatever the new craze is, and I often sit there laughing watching my kids play with these things and be like, bet you those guys have some serious inventory problems right now. Like how do they do it? Because every kid in the world has that thing right now or in Australia has that thing right now? Yeah. So yeah, I did not particularly but I often think about those guys, and one of the pain they must be in.

 

Ellen Main  14:01  

Yeah, I do actually wonder what people do without that using an inventory system or an accounting system or things that are going to help automate those tasks that are really time-consuming and error-prone. Is there a step in the way? Is there a certain kind of step where businesses should be kind of looking to use an integrator for inventory? Do you only work with large businesses? Or do you find that smaller businesses benefit from this as well, and it’s something they should kind of invest their money in?

 

Jeri Wambeek  14:36  

Sure. I think it’s pretty hard to sort of pinpoint in terms of the clients we work with as to their particular size, because, you know, we’ve got a client at the moment that has 80 users and 80 people across the whole business, but they are a large manufacturing business. Obviously, most eCommerce businesses, they’re not like that.

So if we focus just on eCommerce, you’ve got the ability to use these automation tools there and use software to be able to essentially stop you from having to get stuff. In the past, if we didn’t have these tools, the staff would have to be doing it for you. Even, for example, the bookkeeping requirements that it takes to do what A2X does, it’s a person’s job usually that we’ve automated through the system, managing fulfilment that can be automated. For that, there are many areas of the business that can be automated through these different tools. So for an eCommerce business, we can work with businesses that have 10 people, and we can work with businesses that have one person. There are massive businesses in America, that I meet that have huge amounts of turnover, not that many products and one guy’s running it from his loungeroom selling to every state in the country. It’s really common that I get to see the people like that.

So it’s not nearly the size of the business in terms of the people that are working in it or even the types of things that that business does. It really, for those people listening, comes down to what pain points do you have in your business? And what problems do you have now, what do you foresee, and I think probably one of the largest gaps where people really get stuck, it’s they get stuck on focusing on the inventory. They try to solve the inventory problem and just get the correct inventory numbers. And then they stop there. And then they don’t go to the next step and automate their forecasting.

What I mean by that is: the biggest sort of the purpose of an inventory system is to give you the right information to be able to make the right decisions that you need to make next right. Forecasting is one of those ones, you need your past sales history to be able to predict your forward sales history. You need to know how much stock you have, and how much stock you’ve already ordered to then work out how much more stock you need to go buy. And this is relevant to any product selling business. So for those guys that are wondering, do I need a system or not? It’s are you doing those things now, manually? And are they taking you a lot of time and causing a lot of pain, there are there systems out there that can help you do it. And sometimes people might even just need a forecasting system without an inventory system because they’ll have a 3PL, we haven’t really touched on that. But they’ve got a third party warehouse, and don’t actually have to manage the stock themselves. People think, oh, they don’t have an inventory problem. But your actual inventory problem is working out what you need to buy next. And there are tools that can, like Inventory Planner, that can even solve those problems. Even without an inventory system, if you don’t need it because the 3PL is your system. So yeah, there are lots of areas to sort of look at, but I think it really comes down to forecasting and then working backwards from there.

 

Ellen Main  17:33  

Okay, that’s so interesting. Obviously, we’re not going to be able to cover everything today. You know, I want people to be thinking about inventory. And not feel alone, a lot of businesses kind of reached this point in the road where they need to work out what tools they’re going to use. Do you say someone isn’t going to use an integrator because it’s just not in the budget for the business? I know a lot of inventory solutions do have a kind of onboarding experience. And you can kind of go into different marketplaces and compare what’s right for your business? And do you have some top inventory solutions that you would recommend, depending on size and or what they’re trying to achieve?

 

Jeri Wambeek  18:25  

Yes, so we use a lot of the inventory solutions that are in the Xero ecosystem. So our top three at the moment, DEAR Inventory, and LOCATE inventory, there are two major ones. DEAR Inventory is an Australian product, and LOCATE inventory is a US product. We also use Cin7 and Unleashed, we don’t use implement those as much as the other solutions, we just find that DEAR and LOCATE suit people a lot more across the different features that they have. I won’t go into the different reasons why because that’s a whole other conversation on its own. But they’re the two major solutions. When people have outgrown Xero, and that is something that you can do, it’s more something to do with wholesalers.

So this is probably an important point for eCommerce people because I see this happening all the time, is if you’re an eCommerce business, and you don’t have an inventory system, and you don’t have A2X yet, what a lot of people do is they connect up the eCommerce site with Xero. And they actually push every single transaction from Shopify or the website into Xero. And what this does is if you have more than 1000 invoices per month pushing into Xero. One day your Xero file will just stop working. I don’t know if you guys see this very often with your customers but essentially A2X solves that. A2X will batch your transactions for the whole day, based on your payout. So the detailed sales don’t come across into Xero one by one anymore.

If you have an inventory system with A2X, and again a whole other conversation as to how that works. But an inventory system needs all the individual orders in order to be able to get you to fulfil it and record what you’ve sold and what’s going on. But then you can stop the inventory system from pushing individual orders across into Xero. And that is essentially batching it in a similar way to A2X. If you use A2X you actually don’t have to push that information across. And you end up with fewer transactions inside Xero. So I’ve seen quite a number of people that come to me that want an inventory system and they’re coming to us for the inventory system reason, but when we realize how many transactions they’re putting into Xero, literally what happens is you can’t run a report anymore. I’ve had people not be able to do their BAS because the system just can’t handle that many transactions. So just be aware, when you’re starting out with eCommerce or starting out with Xero you need tools like A2X or an inventory system or both to be able to take the brunt of your data not end up with every individual transaction in Xero.

The only time you want every individual transaction in Xero is when there are wholesale orders. So you might have lots of eCommerce orders and then decide to dabble a bit in wholesale, those ones you want to land in Xero because they’re accounts receivable. They’re people you got to chase money from. Anything that is paid, don’t let it go into Xero because it will literally break the Xero file eventually or your QuickBooks file eventually. That’s something just to be aware of, for people that haven’t reached that point yet.

But back to the solutions DEAR inventory and LOCATE are two major solutions, both are very suitable for eCommerce customers and have a great connection process, I would say Cin7 as well as another one that is very good for eCommerce customers, and they have a lot of other integrations as well. It just depends on the size of your business and the complexity of your business as to which one of those suits you best.

 

Ellen Main  22:07  

I know we kind of touched on this before and you said it just depends when are you reaching these pain points. I always like the idea that you set your systems up before it becomes a mess. You’ve got everything, you’ve got all your ducks in a row so then when you do scale, and then when you do start to build everything? Then you’re not actually trying to fix all of these problems and put fires out. Do you see people that set them all at the same time when they actually open on Shopify? Do you think that you can manage and then maybe six months down the track setup your systems? What would you kind of recommend there?

 

Jeri Wambeek  22:46  

Yeah, very rarely do we see people coming to us from scratch and want to get everything sorted. It’s usually always from a pain point of view, and that they’ve started having problems within. So one of the reasons for that is inventory solutions are not cheap. I think the cheapest on the market is around $200 a month. For solutions where you’re actually managing inventory, there are order management solutions, which when you have a 3PL they can sort of push your data in and push it back out again and manage those connections.

But if you’re actually trying to manage your inventory, manage purchase orders, manage forecasting, etc, you’re looking at between $200 – $300 a month minimum for an inventory management solution. Even if you’ve only got one or two uses, and a lot of the light versions of the solutions are pretty much useless. If so it’s usually the second one up from the light like the next that is helpful. That’s probably one thing to be aware of: another major reason why you don’t see startups going and forking out $200 – $300 a month on an inventory solution is that they don’t feel any need to yet. So that would be the first thing.

The second thing is if you just have one sales channel, you don’t have a warehouse, you don’t really have that many problems. As soon as you add on 2 sales channels, you’re now having to manage that. And that might just be Shopify and Amazon. And if you’ve got two sales channels, you’ve now got two different sets of data that you’re trying to work out. You don’t want to have to go into Shopify and get your sales report and go into Amazon and get your sales reports and try and work out what you’ve sold. Your best off having one place to filter all that information in. So we’ve had people in the past that only have a handful of products, but they sell on two different platforms. And they’re already in trouble because of that.

The third reason I already touched on was contract manufacturing. So if you got any kind of level of manufacturing, even if it’s just you sourcing some products and sending them to your supplier that can really cause some problems and cause delays in your products. So there’s that and then just gross. Any gross you’re going to hit it you’re going to know when you start causing those have started having those problems. And sometimes people don’t realize they have inventory problems. They think that other problems in the business like customer service, not charging enough.

That’s probably one thing to make clear about an inventory management system, it’s not just about inventory and like physical stock levels, it’s always also about stock values and landed costs and truly understanding what your profit margins are. And which products are making the best margins and which ones aren’t. And your rate of selling them all of that stuff. An inventory system does much more than just track stock levels. It’s all about the profitability of your business through looking at your core products or your base with your core business, which is products.

 

Ellen Main  25:39  

Yeah, totally. You’re saying they’re not cheap, $200 to $300 a month. But if you are using them properly, you should see using them to your benefit. You’re going to get that money back, and more.

 

Jeri Wambeek  25:52  

A lot of people don’t see that though. Yeah. There are two other things you mentioned, one was sort of with the onboarding process, how do you successfully go through an onboarding process if you don’t have an integrator? So I apologize, I didn’t answer that.

I know that for me. If you don’t have an integrator and you do the onboarding process yourself, take your time. It’s not something you can do over a weekend. Give yourself at least two weeks to go through the things properly. But most importantly, actually, test your workflows through that system. You should be doing this before you choose the system anyway. Because as I’ve said, before, the devils in the detail. You really need to understand your business, what you’re trying to achieve and what you’re trying to get out of it.

Before you even open a system and try and look at it, brainstorm what it is that you do and what you want the system to do. And don’t just think because the website has a few tick boxes that say it does something that it does it the way that you want it to. Think about what your workflows are, then go into the system with a trial and actually practice it. Do it yourself, see what it looks like, ask the questions of support, really go through your workflows and see how it works for you because that’s when you’re going to work out if it’s the right solution or not.

Then when you’ve chosen the solution, go back through those workflows. Again, make sure you’ve got complete data, don’t just put basic stuff in there. Because if you put basic stuff in there, then you start using the system, then you’re gonna have to start manually doing stuff anyway. So as an integrator, it’s our purpose to help people go through that process and handhold them to get all of their data and do all the processing for them so that we get it set up to its optimum level, the day they go live. That’s the idea.

When you do it yourself. Just take your time, give yourself at least two weeks minimum, to really think about it properly. practice using the system, see how it works, test things, and then what you’ll be doing. A lot of people just think you can do it at a weekend, which it doesn’t work that way.

 

Ellen Main  27:45  

And then again, if you are going to start using different add ons, that’s when you need them all to be working together. And you don’t want that. And that’s where you come in?  What are the benefits are of having good inventory? and management? Is there anything else that you think would be practical for eCommerce businesses to know?

 

Jeri Wambeek  28:13  

I think, going back to one thing you said, right at the beginning was that inventory can be a bit scary and accounting is a bit scary, and it all feels a bit too hard, but you can’t avoid it. You can’t avoid either of those two things. The other thing that inventory and accounting is, it’s not sexy, and it can be seen as boring and confusing. And it doesn’t have to be, I think that’s something that I really want people to understand, if we just focus on the inventory itself, it is just about the movement of stock. It’s stock that’s coming in, and stock going out, and that stock that’s moving around. Don’t be afraid to take it seriously. And to look at it properly. Because a lot of the problems can be solved.

You’ve got to look at every bit of detail. The incoming stock is not just new purchases, it’s also the returns coming back to you. The outgoing stock is not just fulfillments and stock going out. There is also stock that’s going out because of manufacturing or contract manufacturing, or whatever else is happening in your business. Packaging, whatever is happening in the business. Just take your time to understand what’s going on in the business.

My number one golden rule with successful inventory management is to mirror what’s understand and then mirror what’s going on in real life in your system. If you do that your system will be right and it’ll give you useful information that you can actually use to make decisions on what to buy next, and what not to buy and what to sell and what to discount and you know what to price all those things. It will help you so don’t be afraid to break it down. Take your time because it is not that hard if you understand and you break it down. 

 

Ellen Main  29:56  

Yeah, that’s so great. I know we just scratched the surface. But thank you so much for coming on here and talking to everyone and about inventory and where to start and when they should consider looking at inventory solutions. And if anyone does actually look need an integrator or want to get a whole lot of different systems working for them, definitely check out WAOConnect which is W-A-O-Connect.com. You’ll be in very safe hands. Thank you so much. 

 

Jeri Wambeek  30:34  

Thank you so much, Ellen, for having me. It was so fun. Thank you.


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