WSW - E-Commerce Fundamentals Overview
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Dan DeLong: Welcome to another workshop Wednesday brought to you by school of bookkeeping dot com where it's casual conversations for serious workflows. And today begins another session segment. I'm not sure, quite sure what the word is, but series. There we go. That's, the word I'm looking for [00:01:00] where we're going to start a series on.
E-Commerce fundamentals. And we have a guest joining us. As you may notice, Carrie looks a little different today. We actually have Rachel. How do you pronounce your last name is it Dauchy or? Dauchy. Okay. That's what I thought, but I just didn't want to butcher it. And of course, I get something stuck in my head.
And I always say it the wrong way,
Rachel Dauchy: oh, you'd be surprised what people have said.
Dan DeLong: Ah,
Rachel Dauchy: gotcha. But it's Dauchy.
Dan DeLong: Got it. Rachel and I have had actually Rachel is a, an elite school bookkeeping member where she takes advantage of the quick answers options and we've been chatting about her business and how, she does her thing.
And you're, actually focused on E-Commerce and, that sort of thing and, tell us a little bit about your company and we'll we'll, share.
Rachel Dauchy: So my company [00:02:00] grew into this E-Commerce niche, although it's not just E-Commerce. It's really anybody that's manufacturing.
Stuff or buying and selling stuff and not necessarily just on an e com channel, but they all of my clients usually are selling on an e com channel, but they're usually a combination of some kind of brick and mortar store and E-Commerce channel, usually wholesaling and that kind of stuff. Rather than service based folks.
All of my people sell stuff.
Dan DeLong: Stuff, and we have a concept as far as inventory is concerned, and we've done previous workshops about managing inventory inside of QuickBooks, and it varies in various different levels of complexity where I buy stuff and I sell stuff, I buy stuff, I do stuff to that stuff, and then I sell different stuff, and then I have...
stuff all over the place that I need to [00:03:00] manage. Where do you fall in the, in, in the spectrum there with, most of your clients, or is it just a mixture of,
Rachel Dauchy: of all those? It really, I always hate giving this answer. It depends, but it really does depend because when I first started in QuickBooks Online, and I had been a QuickBooks desktop user before, along with many other accounting softwares.
I jumped on QuickBooks Online about five years ago. And a lot of people would say, you just can't manage inventory on QuickBooks Online. And and for me, I was like but why? I want to know all of the reasons why. So now, of course, I know you can manage inventory in QuickBooks Online. It's very limited.
There are certain things that you can do and you can't do, and I'm sure we'll probably get into that like you had just brought up. You make stuff, you sell stuff, there's a combination of stuff. So in certain situations it, I do think that it's okay to manage inventory and QuickBooks Online. It really depends on what they're [00:04:00] selling, how they're selling it.
And maybe they have kits or assemblies or that kind of thing, just what's going on with all of their things. And if it's a simple enough scenario, I do think that you can do it in QuickBooks Online. So it really just depends. I always make sure when I'm onboarding a new client or I'm doing some kind of discovery call, I really, get involved in what they're selling.
I don't just ask the accounting questions. I ask... What are they selling? What are they making? What are they making? Are they importing? Just, I really need to know the nuts and bolts of what their business is.
Dan DeLong: Because ultimately that's going to guide your recommendation as to where. They live with all of that
Rachel Dauchy: stuff, right?
Yeah, and then I also am a cloud based inventory partner with a few different solutions. And so if it's not appropriate to do their inventory and QuickBooks online, then [00:05:00] I can recommend something else. . So I really need to ask in depth questions about
Dan DeLong: that. Now your name, your company is net deposited.
Can you talk about the origin story of where that came from? And because it does ring true with some of the things that we've done in the past here about the, dangers of living in the bank feed to manage your business. But talk a little bit about
Rachel Dauchy: It's, actually really embarrassing because I had a client, maybe my first year that I started, and I wasn't used to the bank feeds because I was used to other accounting softwares where we didn't really use that.
So I really didn't know how to use the bank feeds properly. And the way I ended up learning was I, accepted everything and then had to undo it and redo it like a whole bunch of times. But I had one client that I. I just deposited everything straight [00:06:00] to sales and I didn't know any different. And so after a while I realized, Oh, this isn't matching his reporting because he, was a franchise client and he has a big central thing where he would get his reporting.
And so I was like, what, I, what is going on here? And I had to figure out exactly what I was doing. And then. And I think, by the way, that's a really great way to learn, is make the mistake, fix it, and then now you won't ever make that mistake again. He was actually quite upset, and he actually dumped me as a bookkeeper.
And yeah, and I, am fine with it, because I moved on. He found somebody that would do it properly for him, and I don't blame him. I just didn't know, and oh, I learned my lesson quick. And now, when I do... Diagnostic reviews. That's the first thing I look at and I see, are they depositing straight to income?
Because obviously now we [00:07:00] know not obviously, but now we know, and this is something that I aim to make sure that I, want to help and encourage other people, but that those deposits that are coming in are just simply payouts. That's cash payouts and cash isn't revenue, obviously.
So, it's really important that you post your sale correctly, either through a sales receipt or sometimes we do a consolidated journal entry for the day. But then what's coming in the bank feed after the fact is your net deposit. And oftentimes it's batched and. Sometimes you have to investigate and find out what's in that deposit, but Depending on what kind of connector you're using, but really that's the gist and I thought it was a funny Because it's so important, but it was something that I screwed up and I learned my lesson about that.
And so now it's really something that I, a lot of [00:08:00] business owners make that mistake and they also create a rule. They create a rule straight to income. And I always. Every time I see that, I cringe a little bit, but.
Dan DeLong: But they don't know what they don't know. And, that's they, run their business from the balance of the bank account.
Rachel Dauchy: Yeah, and so it's not capturing everything. Yeah, it's it's not capturing fees. It's certainly not capturing any kind of chargebacks or discounts or allowances or any other thing that's part of their daily sale.
Dan DeLong: And that's what we're going to unpack a little bit as we go through this, series.
Just wanted to talk a little bit about what it is that we are going to cover and, unpack over the next I think you're with us for eight weeks, Rachel. We'll get to know. A lot about it and this, side of things. So today is [00:09:00] really just about an, overview what is, what are we going to be covering over the next eight weeks because there there's, several major concepts when it comes to E-Commerce and E-Commerce accounting that we, just want to give the, Mr.
Rogers level of, those types of things. And that's why we have Rachel. That's our. Resident expert to give us a little keep us. My job is to keep us from getting into the weeds because that can certainly, happen. And we would just want to talk about some of those things.
And I did a I did a a QuickBooks Power Hour a couple of years ago with Veronica Wasek. She's, also in the E-Commerce.
Rachel Dauchy: Super knowledgeable.
Dan DeLong: Yeah. She's amazing. And so we're going to put that as a link there. So as a good introductory to what we're going to be unpacking.
But so today is, all about what is E-Commerce? And we'll, talk [00:10:00] a little bit about that. But we'll also be talking about, Sales tax implications and tracking sales tax the components that, you need to be able to, do E-Commerce selling stuff online and then what kind of tech stack works best.
And we'll unpack that with Rachel as far as some of those things that you discover in the discovery. Maybe you might have different recommendations for, that. And, those types of things. And then, as you mentioned, inventory, right? So tracking tracking the inventory, how did the client what, kind of level of complexity do they have with their inventory?
And then one thing that is unique about E-Commerce is fulfillment, right? So you, get an order and then you got to send it somewhere, right? So, that, that is another unique component. So we'll, unpack all of those things over [00:11:00] the next few weeks. But first we just want to talk about what is E-Commerce?
In general, like if somebody asks you, Rachel, and I am, what is E-Commerce what would you, say in in layman's terms, so that they understand what, you're talking about with E-Commerce, I get the first question how do you, spell it because you've got E-commerce, you've got E-commerce, and then you have Ecommerce.
No dash. How
Rachel Dauchy: do I know? And then it really just depends because sometimes I write articles for the Woodard report too. And I think, wait, should I put the dash? Should I not put the dash? I don't know. Sometimes if I'm typing quickly, I won't put the dash, but I do think technically it's. It's E, capital E dash Commerce, but so it's a little bit of a misnomer because it's not just E-Commerce.
So really in the platform world when you're [00:12:00] selling on marketplaces or platforms, E-Commerce is really just referring to those sales that you're selling on a marketplace or on a platform like Shopify. It's more than that because I have people in brick and mortar stores that are selling.
So I usually say it's there's a connector that I use a really amazing company called bookkeep and the owner always says everything is E-Commerce. And it's true. I really believe that because I think what we're talking about really is point of sale. So there's the folks that are sending out invoices, I'm sending you an invoice, you pay me later, right?
So and that's accounts receivable, that's I'm giving you terms, I'm allowing you to pay me later. That's not what's going on when you're selling on a website or you're selling credit card swipe in a store, or maybe you're out at a flea market or farmer's market. I have [00:13:00] clients that use Square and they'll use that out in the field, or they've got sales reps out in the field that are swiping sales on Square.
. There are I usually refer when we say e comm, I usually refer to those point of sale. Purchases that are need to come into QuickBooks, and we're talking about a payout that's coming one, two, three, four, sometimes in Amazon's case, two weeks after the fact. So what we want to do is we want to post those sales on an accrual basis properly so we can capture the day that they, the sale incurred.
So that way they're jiving with the sales reports in whatever platform you're selling on. And if you're just maybe selling in person, maybe that's just stripe or maybe that's just square. So rather than really relying on QuickBooks Online for Your gross sales. We're dealing with some other kind of external platform.
And so for [00:14:00] my clients, they really want to understand and be reassured that what we're posting in QuickBooks Online is what they're saying on their sales platform. On an accrual basis is really important, especially at month end and at year end, because I have a client that's very high volume. And if we were just relying on payouts that would be a variance of 75, 000.
So we really want to post those sales properly. And then the payout will come several days after the fact. And some now I've dealt with so many of them. Some. Come the next day, some take two, three, four quite, quite a while to pay out. So when we say E-Commerce, I really mean, and this is just such a growing industry point of sale, really.
Dan DeLong: So a way to sell it sell your merchandise that isn't necessarily right out of QuickBooks. [00:15:00] Yeah.
Rachel Dauchy: And then guess what? I also have clients that are now selling. Subscription memberships and digital downloads and things like that. So it's not always stuff because that's another thing is I usually say my clients sell stuff and they're moving product, but guess what?
Now there's point of sale swipes for not stuff. So it's really, it can get a little complex, but it's, I usually say once you're doing it for a while, it's. definitely doable. I think some people shy away from it because maybe they're not super fond of inventory. But it's there's a lot of parts of it that don't even necessarily involve inventory.
Right.
Dan DeLong: And you can come up with an engagement where you steer clear of that. If that's not in your wheelhouse, you just You know manage the financial impact so emily. Oh, yeah Emily from [00:16:00] bookkeep actually let us know that according to ap style the correct spelling Of E-Commerce is capital e dash capital c commerce, so If, nothing else, you know at least how to spell E-Commerce now.
Thanks, Emily. And you mentioned Bookkeep, and Emily is with, Bookkeep. You actually had a case study written about you from Bookkeep, which is really awesome. So It's in the comments there with as a link So if you want to check out, you know that case study about you, please do And we'll talk about what bookkeep is when we get to the components and those types of things you know as you make those decisions how you engage with your E-Commerce clients But that's right.
Oh, that's right. Emily is no longer with Bookeep. She used to be with Bookkeep. That's right. So I can make that connection with that. But that's right. So you're, [00:17:00] talking about A point of sale as lumping in what E-Commerce is and some of those brick and mortar stores, like you mentioned, they'll be able to sell online.
I remember Google had a, a service called Froogle back in the day which was it's basically what it was like a product listing service for brick and mortar stores, right? They could list their, products online. And then people could say, Hey, I want that. And then go pick it up in the store.
Like before that, that today it's very commonplace like I buy online, pick up in the store, but it was called Froogle, F R O O G L. As opposed to just Googling, like I want to be able to... Buy, online or shop online but, pick it up locally this is before COVID. It's like 2006 [00:18:00] type of thing, but the olden days.
Yeah. Yeah. Yeah. Dating myself. And then. There's, all sorts of things and we'll, unpack the differences between a shopping cart and a marketplace, but there are those things and we'll, let's talk a little bit about, those types of things where it's a, marketplace, which is online, which is our probably the most common and on everybody understands it is Amazon's a mark, Amazon's a marketplace, it's not necessarily a shopping cart.
So again, talk a little bit about the difference between a shopping cart and a marketplace. Sure.
Rachel Dauchy: So I actually I'm so excited. I just got a client that is a marketplace and it was really interesting because she came to me and I had never taken a client that was a marketplace before, but because I have so much experience with other marketplaces, I really [00:19:00] understood how to speak her language and what to do.
Essentially, a marketplace is a place online where people can go and post their stuff to sell. So the most popular one is Amazon. So Amazon is, there's a couple parts to Amazon they have. Fulfilled by Amazon, meaning your vendors are just selling their stuff. We'll talk we'll, get, I'm sorry.
Sometimes I'll get
Dan DeLong: too into the weeds. Hold on.
Rachel Dauchy: Yeah I, know sometimes I do that, but yeah. So anyway Amazon is just basically a marketplace where a whole bunch of people come together, sell their stuff. Etsy is another marketplace. Wayfair is another marketplace like that. And then did you want me to say the opposite of that, which would be like a sales platform?
And then I'll say the big, difference between the two. And then a sales platform is you're using a [00:20:00] platform like Shopify or WooCommerce or something like that. And you are, it is your website. So customers are going on to your website. Buying things directly from you. So the, main differences on a marketplace, they're a facilitator with sales tax.
So they take care of your sales tax obligation. They collect the sales tax from the buyer, and then they remit it to the appropriate state and file the return with your own website on your own platform. You are responsible for figuring out the sales tax liability. And that's a, we'll stay at that high level, but that's, that main difference.
Dan DeLong: If I was going to put a "Dan"alogy to all of this, I would say that the difference between those two platforms is a yard sale versus a swap meet. So you have, if you have stuff that you want to sell get rid of your junk, right? You have an option. You can do a [00:21:00] yard sale, garage sale type of thing.
And. That's fine, right? You just have to deal with the marketing of that, letting people know that you're having a yard sale, putting out signs, and that sort of thing or you can schlep all your stuff and go down to a swap meet or someplace where, sorry, I got a little excited there you go down to a place where a bunch of other people are bringing their dump, their junk to sell, and then you don't have to worry about marketing.
That's fine. Because there is already going to be a serious amount of foot traffic, but of course you have to deal with how do you stand out in that marketplace so that you attract people to that, but you're going to have, a bunch of people already there at the marketplace. Right?
And that's what Amazon does. That's what Etsy does. That's what all of those other people are already going to those [00:22:00] places because they know they exist. Whereas if you have a, garage sale or yard sale, they may not know that. Unless they are actively looking for an in an individual yard sale.
Garage sale to to, buy somebody else's junk. Yeah,
Rachel Dauchy: exactly. And those, website owners, they have to market all on their own. Google through all kinds of different marketing endeavors. And I have clients that they use all kinds of different techniques. And I'm no marketing expert at all.
So it's interesting because I watch how they do it. Then on something like Amazon, what, like you said it's, got tons and tons of other sellers and you have to somehow get to the top of that list. And that comes from buying, you buy advertising from them and you buy placement from them. So you're spending a lot of money to be on something like Amazon, but.
It's sometimes it can be [00:23:00] well worth it, right? Just depends
Dan DeLong: I don't think there is a human alive that doesn't know about Amazon, right? They're very good at marketing, right? They're, quite when your company is a verb. To people, right? Like I'm going to Google it or I'm going to Amazon it or I'm going to YouTube it.
That is like when you're, in... Or
Rachel Dauchy: Venmo. I'm going to Venmo you. Yeah. It's so funny how those have just completely become language.
Dan DeLong: It's now part of your part of the, vernacular. So. that's what you're in for over the next six or eight weeks here as we unpack the, different things about what E-Commerce is and how can you help your clients or help your, help yourself if you're a business needing to do some, E-Commerce [00:24:00] and, spreading the diversifying how you sell things because if anything that COVID has taught us is that you cannot have all of your eggs in one basket, especially if you're a retail store to be reliant on people coming to coming into your place of business to buy your stuff.
E-Commerce was the. Tomorrow's conversation that got put into today, probably because of because of a COVID and those types of things. So people who weren't set up for E-Commerce were definitely Impacted pretty substantially by that period of time.
We do agree.
Rachel Dauchy: Oh, yeah. Not even that, but then take into account all how many of us are always on our phones and how many potential customers are always on their phone logged in to PayPal on their browser or already logged into. Apple [00:25:00] pay. And there's these really creative sellers that are taking advantage of those things that people can instant buy.
So that's not even, I have to because of COVID it's now how creative can I get? Because I want to sell on all these different channels and there's all these.
Dan DeLong: And we're going to talk a little bit about how do you, do the accounting side of all that? But I appreciate you joining us here today, Rachel, and we look forward to to working through these these topics on the workshop and appreciate all of you joining us. I see a lot of the engagement here I like that.
A great ad analogy.
So hopefully you join [00:26:00] us in, the coming weeks as we unpack the, E-Commerce fundamentals. And appreciate you joining us here today, Rachel. Any any closing thoughts from you?
Rachel Dauchy: No, other than I'm happy to be here. I love E-Commerce so much. It's I, it's truly one of those things where I get excited to get up and come to my desk in the morning, because I really, the reason that I really like E-Commerce or point of sale selling is because I just like the different things.
Everybody sells. I really like the industry. I like learning about their background and why they're selling the way they're selling. I find it very interesting and I just really enjoy
Dan DeLong: it. All right. For those of you that run screaming from all of these things you, now have a resource to be able to work with Maybe hand off a client if you don't want to deal with the E-Commerce with, Rachel.
So we [00:27:00] look forward to seeing you next week and, we'll we'll continue continue this topic next time. Have a great day.
