As an eCommerce business owner, you’re likely feeling the mounting pressure of supply chain issues, increased inflation, and changing sales tax nexuses. While these challenges are concerning, you would do well to see all of the opportunities on your horizon
Having innovative eCommerce accounting software solutions and the right financial professionals on your team can help you navigate these challenges and emerge on top of the eCommerce food chain. As eCommerce evolves as a whole, 2022 will present emerging businesses with acquisitions opportunities and an ever-growing market flooded with consumers shifting to an online purchasing model.
At Fully Accountable, our team of accounting controllers and fractional CFOs combine the latest eCommerce accounting software with superior business strategies. If you’re looking to navigate the challenges eCommerce businesses face in 2022, you need foolproof financial directives and a confident approach. Continue reading to learn how we can guide you through the stormy weather of 2022 and get you to the sunny beaches of beyond.
eCommerce business owners in all industries must be acutely aware of the challenges inflation presents in 2022. While COVID might have peaked, inflation is anything but transitory. Instead, it’s growing. Much of this is due to the supply chain issues facing eCommerce companies. But regardless of the cause, the Consumer Price Index was the largest it’s been since 1982.
Housing, cost of labor, energy – you name it – prices are up. Business programs such as the Paycheck Protection Program have resulted in artificial stimulation within the markets. Because the government has been giving consumers money, businesses have been able to sell despite inflation. With those programs winding down, it remains to be seen whether consumers will continue their buying habits. This type of activity has recession written all over it and eCommerce businesses would be wise to implement contingency plans.
eCommerce companies should plan on continued inflation, which means higher inventory, labor, and shipping costs. Essentially, you should plan on everything being more expensive in 2022.
Beware of Interest Rates
To combat inflation, the Federal Reserve has stated there will be three interest rate increases in 2022. How high these interest rates reach will most likely depend on the rate of inflation. This proposed solution seems precarious, one that entails fighting inflation while ensuring the economy continues operating smoothly. Because of this, eCommerce businesses must closely consider how raising capital will affect their cash flow.
eCommerce business owners should plan for more expensive business loans and credit lines. They should consider refinancing loans due to historic lows and try to lock in rates for debt if they can. Lastly, if you are considering financing, you should do it ASAP.
Supply Chain Problems
No surprise here, the supply chain issues will likely persist in 2022. As long as stimulus cash percolates markets, demand, as well as prices, will stay high. When you add the uncertainty of new variants to the equation, it’s easy to see how backlogs in factories and ports will affect prices as well. While there’s hope on the horizon for improving the COVID situation, there’s no indication that the supply chain issues are going anywhere any time soon.
Because of this, eCommerce businesses need to be extra careful about inventory planning. You should order in further advance, carry more inventory to account for delays, budget for increased costs, and stay informed of price increases.
Recently, there have been numerous acquisitions for businesses conducting eCommerce. Since there is substantial cash flow in markets, aggregators have begun buying direct-to-consumer businesses. In other words, if you are consistently turning a profit, you’re in high demand right now. Private equity firms are also looking for returns on their funds raised.
With the continued increase of eCommerce businesses, the long-term benefits of acquiring eCommerce businesses are appealing to larger companies and institutions. Whether you’re looking to buy an eCommerce store or sell your own, 2022 will be a good time to consider both.
Increasing Payment Methods
Customers will continue seeking more convenient payment methods in 2022 and eCommerce businesses need to respond to the increased demand. Providing a full suite of payment options is an easy way to increase sales. Decreasing customers’ checkout time builds trust with your brand and ensures your customers notice how convenient you make their purchasing experience.
eCommerce companies should also be on the cutting-edge of technology. Here are some of the payment options eCommerce companies should consider implementing into their businesses:
- Apple pay and fingerprint payments through smartphones: half the iPhone users out there utilize Apple Pay for purchases, with that number growing every year. eCommerce businesses would do well to implement advanced payment methods into their company payment structure.
- Bitcoin and other blockchain currencies: cryptocurrencies continue to affect consumers’ daily lives and your eCommerce business should capitalize on this growing number. More and more companies are considering these valid payment options.
- Fintech options- Fintech options such as Klarna make it possible for customers to buy now and pay later. PayPal, for example, has implemented a “Pay in 3 offer” making it easy for customers to spread out their transactions over longer affordable durations.
Instant Analytics and Sales Optimization
Business analytics tools are continuing to improve and eCommerce companies need to build their arsenal and streamline the sales process. These tools used to be slow in collecting and aggregating data. Now they give you instant results that show you things such as how your customers are responding to your online ads.
If you combine these tools with machine learning, you can make more informed sales projections and determine where you are losing sales, minimizing your bounce rate and cart abandonment.
Excitement Around Growth
Despite all of the obstacles the pandemic has brought, there still remains a silver lining. Throughout the pandemic, eCommerce has increased and shows no signs of slowing. eCommerce retailers face markets rife with opportunities if they navigate the supply chain and inflation challenges correctly. Acquisitions and controlling inventory are critical for eCommerce companies that want to stay relevant.
With the threat of further lockdowns and the pandemic still looming, consumers are likely to continue to commit to their purchasing habits. In other words, online shopping is here to stay. The more companies can take advantage of this shift, the more prosperous they will be in the future.
Fully Accountable Will Guide You to Sustained Financial Success In the New eCommerce Landscape
The past few years represent a seismic shift in the business landscape. The ongoing pandemic has fundamentally changed the way consumers view their shopping experience. With the overall market volatility caused by the pandemic, there is a tendency for companies to shy away from the challenges they face.
Change opens doors for advancement, and the eCommerce companies that take advantage of these emerging opportunities will achieve the success and growth they desire.
Hiring a team of financial professionals such as Fully Accountable maximizes your ability to take advantage of the new eCommerce landscape. Navigating the eCommerce landscape can be tricky and present high-risk rates. With supply chain issues, changing tax nexuses, and high competition, you need proven strategies from financial professionals who know how to get you results.
Contact Fully Accountable today and put your eCommerce business’s financial success in the hands of controllers and fractional CFOs who understand how eCommerce is changing. The opportunities are ripe for the plucking, you just need to know where to find the fruit.