WSW Podcast - E-Commerce Fundamentals - Components of an E-Commerce Business
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Dan DeLong: Welcome to another Workshop Wednesday, brought to you by schoolofbookkeeping.com where it's casual conversations for serious workflows. Today we actually have Rachel Dauchy joining us again for another session of setting up your business for E-Commerce as we continue through this E-Commerce fundamentals discussion.
[00:01:00] But Rachel, you're not in your office. Where are you today?
Rachel Dauchy: I am in New York. I am at Shopify Affiliate Summit 2023. This is the first Shopify Affiliate Summit that they have had. It's really cool. There's people from all over the world. I'm a Shopify Affiliate. I have lots of Shopify clients that I support,
Dan DeLong: So this is very topical that you're actually attending a Shopify affiliate conference while we're doing this sort of thing, because that is one of the components of setting up your business for E-Commerce is deciding how you're going to sell online. You're at a Starbucks there, which is the close Yeah the quietest place there?
Yeah.
Rachel Dauchy: Yeah, I think that there was a person yelling, but yeah, I had at affiliate summit. They're actually in a session right now, so I had to come over to Starbucks, so that's why this colorful background behind me, but the screaming should have ceased.
Dan DeLong: Should subside. Okay, perfect. Before we get into our next session about, deciding on the components or the different [00:02:00] components of setting up a business for E-Commerce, there was, of course Intuit does its thing and sends out random emails and causes confusion between business owners and accountants.
So we wanted to talk a little bit about an email that just came out. So I'm going to share my screen here and this is the email that came out and it was talking about, and you can see the the subject , bill pay by Melio is going away. That is a very broad statement.
Rachel Dauchy: Yeah, it is because that's a big deal.
Dan DeLong: Now, as we've had, as we've had on the workshop, we've talked about, first thing we want to make sure is this email legitimate, right? And we've talked about various ways to to make sure that the emails that are coming from Intuit are Intuit emails, and we can tell from the, from address that it does have an Intuit.
com address, so that does set our mind at ease that it is at least coming from Intuit [00:03:00] because there are a lot of bad actors out there that potentially could be scamming you or or giving you false information at the very least. And when we read this,
it's very short and sweet but not sweet I guess. But it's talking about, they're reaching out because they've expressed interest in Bill Page powered by Melio. And on September 12th, which is not too far away they're not gonna have access to that. Bill pay powered by Melio in QuickBooks. So there's a lot to unpack just in that one statement.
And so We've talked to or heard from Intuit about this. And what is happening is that QuickBooks Payments, which we all like QuickBooks Payments, which is money coming in, right? Being able to send an invoice or payment link. Or in person, take a credit card charge or bank ACH inside of QuickBooks and receiving money.
QuickBooks Payments is, [00:04:00] QuickBooks Payments itself is delving into the bill pay side of things. So now in QuickBooks Online, when you wanted to send money to someone in order for you to do that inside of QuickBooks. You would have the Melio service, which was branded hidden in there, but it was super integrated inside of QuickBooks Online, where you could send money or, pay your bills that way.
So now, the QuickBooks Bill Pay service is now taking over that deep integration that Melio occupied. If...
You've had if you signed up for QuickBooks Payments, and if you and if you have Bill Payment by Melio, then chances are that service will no longer work inside QuickBooks Online only, right? That's where Intuit kind of occupies its integration, right? And that's where it gets better results, [00:05:00] because they live in QuickBooks, right?
Obviously they can manage the integration from these outside services a lot better than a Melio or Bill. com or anybody else that could offer these services, right? This is not to say that Melio is going away. This is to say that you won't be able to schedule payments directly from within QuickBooks Online.
That means, if you do have Melio, and you are using the Melio service, You can still use it. You just use it outside of QuickBooks. So the integration, the synchronization, those types of things, those will still continue to work. It's just that you would be managing your bill payments in Melio purple, right?
If you've ever talked to David Leary when he was at Melio or anybody at Melio, there was a Melio green. And a Melio Purple. The MelioGreen is what's inside of QuickBooks Online. [00:06:00] The MelioPurple is outside of QuickBooks Online. And you could use either. But now you only be delegated to the MelioPurple.
Rachel Dauchy: So Dan, did they mention if we sign up for QuickBooks payments, we're automatically given QuickBooks bill pay now?
Dan DeLong: That, that remains to be seen. This was just realized or discovered yesterday. There's a lot of , confusion. There's more questions than there are answers.
But, this is what we know as of today, August 2nd. Rachel, do you have a client or do you use the Melio service inside of QuickBooks or other bill payment offerings?
Rachel Dauchy: Not really. I don't use it. I actually use the bill pay function within Relay but I don't really think I have any clients using it.
Most of my clients we don't do a lot of bill pay for. And for that reason is they just have a lot of things on auto pay with their [00:07:00] credit cards and that kind of stuff. So not so much, I'm not a big, just cause we're more E-Commerce focused. We're not a big bill pay firm.
Dan DeLong: Got it. Got it. And that's that's probably a good lane to to stay out of if you're not familiar with it definitely in that area.
So just wanted to talk a little bit about that and just share what we know as of today. , the initial reaction to the BillPay service is it's going to take longer for the money to be sent and of course there's , no other choice to do it from within the inside of QuickBooks other than the QuickBooks BillPay service. So we'll continue to track this as we as we see it develop.
Shift gears now and talk about what we were originally going to be talking about is setting up your business for E-Commerce. Now, Rachel, you're at a Shopify conference. And so we just want to unpack and talk a little bit about the things that an E-Commerce business would need to establish in order to even decide to sell online.
[00:08:00] And we were talking a little bit before about, How organizations like Shopify they do one thing and they do one thing really well. But it's a little bit more holistic than that, especially from your perspective, right?
Rachel Dauchy: Yes, definitely. Yeah.
Shopify they're like we touched upon last week when we were doing our. intro a high level of what is E-Commerce even. And I had mentioned that it's really a lot of different things, including selling online. If there's a business that decides that they all of a sudden want to sell online, maybe they're a brick and mortar store and they decide that they want to sell online.
In my opinion, there's no better way than to do it on the shopify platform 100% because Shopify is built It's meant to scale. It's meant to, on day one, maybe you only have a sprinkle of sales, but maybe by day 45, you're selling a million [00:09:00] dollars. It's meant to scale that quickly. So there's a lot of, I'm not going to get into all the ins and outs of it, but really for that kind of function, it has all of the things that you would need.
Dan DeLong: Alright, so let's talk a little bit about some, what we, I guess what we would call the components of an E-Commerce business. So I guess first thing a business gets in business to sell stuff to sell things. So that's one of the first things is determining where they are going to sell things.
So you've got, your, what you called just last time a point of sale, right? Which is, could be a brick and mortar store. It could be an online space. It could be virtual, right? It could be a marketplace. So that's the first thing is determining where are you going to sell stuff, right?
What have you seen as those potential options? Without going, we don't want to go too deep into those things, but where what basic [00:10:00] classifications have you seen to be the the place to sell stuff?
Rachel Dauchy: Sure. Okay. So there's, let's just say that, cause there are some businesses that start off just selling online and that's all they want to do.
But let's say that. You are a brick and mortar toy store, and you've decided you know what I want to sell online I am thinking I've heard all these different things I'm thinking about selling on Amazon and thinking about selling on my own website So there's a lot of different options for people that already sell stuff in person So if they decide all of a sudden they want to go E-Commerce That means that they have some decisions to make do they want what kind of place do they want to sell online?
There are benefits and negatives to selling on places like Amazon, and then there's benefits and negatives to selling on platforms like Shopify, in which you host your own website. And that would be the difference between the platform and the marketplace. And other examples of a marketplace would be eBay or things [00:11:00] like that.
Even Walmart has a marketplace now, Michaels has a marketplace. All of these large chain stores all have marketplaces that you can sell your goods on. There's a lot of different options, and to tie it back to Shopify, Shopify is really, their ecosphere is designed to sell on Shopify.
You can also use Shopify POS to sell your items in a brick and mortar store and a Shopify, but it's not really meant to go outside of that Shopify world. And that's unfortunately a pain. But because a lot of people, when they think about, Oh, I want to sell on E-Commerce, they want to sell on a lot of different places.
So they, they either want to take their brick and mortar store. And go online. They want to sell on a whole bunch of different places, or maybe they don't want to sell on a brick and mortar store anymore, and they only want to sell online. And then when they sell online, are they buying items to resell, or are they manufacturing items?
There's all kinds [00:12:00] of different components to that. So there's a lot to know, but that just all circles back to when you're an accounting firm like me, you get all that information from your potential client.
Dan DeLong: You wanna gather, right? Is this a dip my toe into the water with going into online or is this, I'm just casting my net as far as I can with every place that I can because that's ultimately going to for you it's going to direct what recommendations you're gonna be making , to manage all that because as we were talking before a lot of these applications and solutions that are out there are a little bit short sighted in looking at, they do the thing that they do really well but they don't do it holistically
Rachel Dauchy: to the business owners perspective.
Yeah, they don't play well with others sometimes, and so that's sometimes challenging because we just find out all these surprises and, oh, A doesn't sync with B. And [00:13:00] so then we need some kind of workaround. And really, that's what sort of made me an integration specialist is because I've had to figure out not how just to facilitate my client just selling on Shopify.
I have to facilitate my clients selling on a lot of different places and then getting that information back into QuickBooks online. So it's really changed the way that I do everything because A lot of these things have to sync with each other, especially if they're using some kind of inventory cloud based inventory hub and that kind of thing.
So it's really interesting. I really enjoy it. But one thing that I should mention that is I don't really counsel my clients where to sell. That's up to them. They're the business owner. They come to me and say, I want to sell blah, blah, blah, blah. And I say, absolutely, I can facilitate that for you. I can set that up for you.
I can create your integrations. I can do the reporting. We can do the bookkeeping. But they, that's [00:14:00] their business decision. I don't really get involved with that so much, but they'll ask me what is more streamlined? What's the most streamlined process for this or that? Or what's the most optimal situation for if I want to be here and I want to be there?
And. So that there's a lot of things to know that aren't necessarily, where should I sell? The most important thing for business owners is to know they can basically sell anywhere they want to sell and how can we as partners for them, integration specialists for them that understand the accounting and everything behind it.
How can we best help them sell? And I always encourage my clients, sell as much as you can with, PayPal and get all the things, get that money.
Dan DeLong: Yeah, and then, that brings up an interesting point. On those sales channels, there are a variety of ways to collect money, right? And oftentimes that [00:15:00] is, that, that poses a unique challenge to, to someone like yourself where you know maybe Square offers a loan based on their prior payments and then, that, those are concerns or considerations for you, but for for the business owners oh, I just need cashflow so they're making decisions based off of business needs, not necessarily, Understanding what the side effect of all of that is.
Have you have you got other examples of surprises that you've seen after you've engaged with the client?
Rachel Dauchy: I am so glad you brought that up because in my opinion, this is the biggest challenge that I have is the POS game, because guess what? They're all out there trying to compete, wanting the seller's business.
It's a big deal because they all have very similar fees, but they now are offering lines of credit. They're all offering their own banks where they want you to hold the balance, but [00:16:00] that's a pain. I don't want anybody to hold their balance. And Shopify even just revealed in their big whatever their new thing.
I forgot what it's called. I can't believe I forgot. It just came out of my head. Their new product. It'll come back at two in the morning. Yeah, their big product thing that they released for the summer, they now have a new and improved Shopify capital, which that you qualify for based on your Shopify sales.
So there used to be some restrictions to that. I read some fine print for a client one time. It include excluded some states, but now it's really just based on your sales history. So you can. apply for this new and improved Shopify capital only if you're using Shopify payments. So there, there's all kinds of, ways that they'll entice these sellers to use their POS, but it doesn't always integrate.
I can't always get all of the information correctly. We can't always get the statements the way we need or reports or that kind of thing. So that can be super challenging because like you said, We're looking at it [00:17:00] differently. How can I get that information so I can look at the reporting? They don't care about that at all.
They're like, oh, they'll give me money. Okay, or this one is a cheaper fee. Oh, okay. But guess what? It doesn't it, it subtracts the fee from the payout. Instead of so it won't match with my sale, right? So it's subtracting the fee. And then when I add it back into the clearing account, I have to put the fee back in there.
So I know that's really fine. I didn't mean to get into that. I don't want to scare anybody. It's really
Dan DeLong: easy. Those types of things, they show up right? Affirm or sezzle, those are types of things where yeah. It's an, it's a payment offering to the customer to be able to buy now and pay in installments.
And that's a convenience thing. But if they don't tell you that, if the client doesn't tell you that, like, where did this money come in to the bank feed from sle where, and then now it's a discussion of oh my goodness, we didn't know how that was set up.
Rachel Dauchy: Oh, yeah. And I [00:18:00] get surprises all the time.
Like what? And it's always in the bank. What's this? What's this? Oops. Oh, I didn't tell you. But I will say Shopify actually is great for that because in payment settings and Shopify payment settings, you can use Shopify payments and a multitude of other payment gateways. It allows you. And they have a direct sync with all kinds of other payment gateways Bread, Sizzle Affirm.
I think Shopify Payments installments, ShopPay is powered by not Affirm there's another one. Yeah, I know. It's like Klarna, yeah, something like that, but, yeah, that's true. Matt says
Dan DeLong: it's surprises are annoying, but also job security.
Rachel Dauchy: And that's totally my point of view, too, because I feel like please keep making mistakes.
I love to fix things.
Dan DeLong: Yeah. And then that's that's part of being a cat herder where as long as you have the process in place and that [00:19:00] expectation with your client that when these surprises come up we're going to need to , have a discussion. This is outside of our scope of work of what we originally agreed upon.
Let's now have that conversation again and reevaluate our arrangement. So that does have a tough conversation, aspect to it. But if you get to the point where you're managing that really well with your clients, Scope creep is actually probably going to be your main revenue generator, because as you've clearly said, it happens.
And you just need to have that process in place to catch that, to be able to reevaluate that.
Rachel Dauchy: Yeah, that's interesting that you bring that up, because that's, as I've niched in this area for the past few years, that's the one thing that... Is that comes up that the surprise this new payment gateway or this new channel in this space that's [00:20:00] more of a frequency than other surprises that maybe other niches that I don't know what their surprises.
Maybe I'm not that familiar with it, but in my world, this is that and I've had to learn I didn't know because I'm still learning every day, and I'm still the pricing is still my biggest challenge. And as a new work firm, I feel very confident in the work that I do and the technical ability that I have.
Oh, you have a new payment gateway. Okay, great. And I can, we can do the work and my team is amazing, but my bigger challenge is this new thing came up and now I have to tell them I have to charge them more. And and just an example of that happened the other day where they are using a new PayPal function that I had to explain if this is more manual work and I'm going to have to increase your price.
And we ended, he ended up not turning that feature on as not to increase his price. But. It's forced me to learn how to run my firm a little bit better with all of this because I didn't have a lot [00:21:00] of that experience.
Dan DeLong: As as Matt will tell you, and we're going to point it out here, all niches suffer from uneducated owners messing up our beautiful accounting.
Just when you get it all nice and neat, here comes a new surprise. So we've talked a little bit about , where are they sell stuff? Now, we're concerned about where do you account for all of that, right?
So there's a, there is a base of your QuickBooks financial or, the accounting package that you're using. And that's one of the things to keep in mind when you're in an E-Commerce space is that there's going to be all of these things that will be really great at selling stuff or, marketplaces that allow you to sell stuff.
But they're not too concerned about the accounting of all of that, right? So Where do you typically live as far as accounting? Do you, is it on QuickBooks Online, QuickBooks Desktop, a mixture of that? Do you have other accounting software that [00:22:00] you work with?
Rachel Dauchy: I've worked with every accounting software there is, but now exclusively QuickBooks Online.
And I really think that the capability of something like a QuickBooks desktop enterprise, especially for this industry, is really powerful. But I only do cloud accounting. So in my world, we're really trying to replicate what desktop enterprise can do, but with cloud based solutions. And so with QuickBooks online I just think the power of the bank feeds, especially being able to recognize the what's going on.
We look at it every single day. We see random payouts come in, spot anything new. We do that. It just, it's the best tool for me to do real time bookkeeping and accounting and keep the books tax ready. That's really the way that I prefer to do it. QuickBooks online only.
Dan DeLong: So in that regard so you've got now your financial or your accounting basis [00:23:00] and you've got these sales channels.
Now you've got, you need something to talk to these two, right? You need an interpreter to be able to bring what you're doing from your sales channels into your accounting. That probably is a key differentiator to with someone like yourself where you've We looked at, okay how are these, how is this information coming in here and how do I get it in here in a usable way, right?
So there's a lot in that space just as there's a lot in that space of sales channels and E-Commerce channels as well. So what we're not, and we're not going to talk about like the specifics, but in general. What I see and you correct me if I'm wrong because I know you will in general, there's a con there's this concept of the sales channel connector.
You have a choice of detail of getting all that detail into QuickBooks, or maybe [00:24:00] putting it in a summary fashion. What side of the fence do you tend to live on with regards to a sales channel connector like that?
Rachel Dauchy: Yeah, so it really depends on what the business is selling. If they're selling high, very expensive high ticket items in which they really only have maybe a few sales per day, bringing in individual sales receipts using a connector, I think is just fine.
And maybe they're only on one channel, and so in that situation they can manage their inventory in QuickBooks and bring over individual sales receipts and update their inventory at the same time with single sales, bring over the customer data with large volume sellers. We never do that. We always bring in a consolidated journal entry of sales for the day per channel.
And leave all the customer data and insights in the actual sales channel reporting. [00:25:00] So yeah, I think that's a good teaser for next time is to get into maybe a little bit more detail about how that works. But it boils down to if you're going to do this kind of work, it's requires tech stack.
You can't just do it in QuickBooks. You can't really, you, it's really for the people that Like all that integration. That really are interested in the whole cycle of all of that. And it does require using some connectors. It does require having an understanding of how things, need to be mapped to QuickBooks and that kind of thing.
And and so for, there are people that are really interested in that kind of challenge and more than happy to get into that a little bit more, even talk to those folks specifically about. Those kinds of questions, because once you have that tech stack down of what connector you prefer and all that kind of stuff, and if your folks are primarily on Shopify, you [00:26:00] can really streamline your process.
And and it really becomes a snap and then you can troubleshoot because it's, oh, yeah, exactly. AI is a tool. Even here at Shopify, they say the same thing. It's a wonderful tool. But it's not here to replace anybody's actual job. Maybe copywriting and that kind of thing, but you still need to have a human person oversee everything and look at the flow of information and make sure that everything's being done correctly.
And I don't really think that'll ever be replaced, especially sales tax. I've brought that up elsewhere. AI can't handle that and changes and sales tax. Yeah, so if you, if have a strong understanding of those apps, which we'll get into that stuff later, but yeah, it's really super fun, but I do like to get paid.
I do like to get paid for it too, right? So I don't just do it for fun,
Dan DeLong: right? It's not fun. I do have one client who's like my educational background testing [00:27:00] ground. Cause he does all those things that we just talked about where it was just, Oh he has one product, which is nice.
So yes, he sells one thing. Don't you love
Rachel Dauchy: that?
Dan DeLong: But he sells it in different channels. He's always trying, he's a startup. So he's trying all these different things. And and I'm using him for educational purposes and not necessarily because like you, I have this challenge with having, coming back and managing those things.
So I'm sinking the educational cost into myself because he's doing all the things that every client will do.
Rachel Dauchy: That is the best way to learn. That is the greatest client to have. Yeah. Is have those ones where you can learn all the systems.
Dan DeLong: And we have a relationship. We have a relationship where he understands that, this may not be my area of expertise, but I will help figure it out with him.
Rachel Dauchy: Undo.
Dan DeLong: But in general, okay, so there's, in general there's three things that an [00:28:00] E-Commerce business will have is a way to sell stuff. a way to account for stuff and then some something that Will integrate between the two or send that sales data in a usable way into the accounting side of things and That's really those components And then all of those components have sub components How, where we're going to unpack those in the future episode about sales tax and inventory management and cost accounting and, all of those things.
Yeah, I
Rachel Dauchy: would probably say that instead of three, maybe four, just cause of the inventory management, but but definitely three and in, and somebody made a comment about how and QuickBooks also have built in connectors that. It's work with some stuff, but she said that shop the Shopify connector wasn't functioning anymore.
I don't know anything about that.
Dan DeLong: Shopify is no longer syncing with QBO. That's news to me. That's news to me. But there are there are built in connectors those types of things. And that's something that you want to.[00:29:00] Flesh out is, bet, bet which one, which is the right one, right?
Because
Rachel Dauchy: I don't have anybody on that Shopify connector, by the way, and that Shopify connector only brings individual sales receipts. I don't have anybody using that. So I wouldn't know if it were working, but I do have people, it
Dan DeLong: brings in individual sales receipts, but it doesn't track individual items.
So that's, no, it does not. It's like a. Why bother?
Rachel Dauchy: Yeah. And it matches to payouts, which is okay, but I do use it for
Dan DeLong: Amazon. Yeah, and we'll unpack those, as we get to those marketplace or those kinds of connectors. So there are lots of them out there and we'll vet our favorites on a future.
Rachel Dauchy: Susan said. Susan said it was a comment in one of the groups. Okay. Yeah, I'm gonna, I'm gonna look into that today as well. Cause I, I would like to know, maybe I'll ask the Shopify folks.
Dan DeLong: Alrighty. We will [00:30:00] we'll, we will continue this conversation. Who knows where Rachel will be next time? Maybe it'll be in a I don't know.
Where are you going to be next week? I guess you should ask.
Rachel Dauchy: Lounging in a pool chair. No, I'm just kidding. No, back in Detroit. That's where I'm based at. All a
Dan DeLong: great discussion. And thank you, Rachel for stepping out of your conference to, to do this. Appreciate you joining us and we'll see you all next week.
