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WeIntegrate eCommerce Sales Tax Nexus Automation in QuickBooks Online

Automated instant integration makes the impossible, possible

NEW YORK, NY – September 19, 2023: We Integrate, the leading provider of instant automated bookkeeping and intelligent synchronization between Shopify and QuickBooks Online (QBO), today announced the launch of its first-to-market solution that makes it possible for Shopify merchants to use QuickBooks Online for managing physical and economic nexus without any additional sales tax software add-ons or manual adjustments.

By integrating actual sales and refunds from Shopify, WeIntegrate provides a level of operational control not commonly found in other automated bookkeeping apps.  This newest game-changing capability bypasses QuickBooks’ automated sales tax (AST) with Shopify’s at-time-of-cart sales tax, providing flawlessly accurate reconciliation between Shopify and QuickBooks Online.  Additional proprietary RPA logic, ensures that sales and refunds created in QuickBooks Online establish the necessary relationship between shipping addresses, enabling QuickBooks Online to accurately and automatically distinguish between physical sales tax agency reporting and sales that need to be tracked by QuickBooks’ Economic Nexus tool.

“WeIntegrate’s integration of sales tax between Shopify and QuickBooks Online is a game changer in the industry,” said Jeff Siegel, CEO of Siegel Solutions and Top 100 QuickBooks ProAdvisor.  “Managing physical and economic sales tax in QuickBooks Online can be daunting for eCommerce clients, but WeIntegrate’s new automated solution significantly simplifies this process.”

“I feel like I tested every app that integrates Shopify with QuickBooks Online in search of a way to manage sales tax nexus,” said Roggen Frick, Vice President of Bear Iron Works. “WeIntegrate was the 8th app I tried, and finally, I found a solution for what seemed to be impossible.  With WeIntegrate, sales tax from Shopify seamlessly integrates into QuickBooks Online in a way that accurately distinguishes between physical and economic nexus.  It is simply impressive!”

WeIntegrate’s new sales tax integration solution accurately manages sales tax nexus for Shopify online sales in QBO, and also dynamically integrates sales tax for Shopify POS connections with multiple locations in multiple tax reporting locales.

About We Integrate 

WeIntegrate automates the bookkeeping process between Shopify and QuickBooks online by instantly creating and updating data from sales, fulfillments, cancellations, and refunds.  Shopify merchants and their bookkeepers benefit by the instant synchronization, elimination of data entry, increases in accuracy, reduction in time to reconcile, and simplification of tax preparation.  A wizard-based self-service setup only takes a few minutes and the flow is so easy, you don’t have to be an accountant to get started. For more information, visit us at weintegrate.co.

WeIntegrate, a leading provider of instant, automated eCommerce bookkeeping between Shopify and QuickBooks Online, is excited to announce the launch of it’s new Affiliate Program, designed to help QuickBooks ProAdvisors, Accountants, and Bookkeepers grow their practice profitably, along with an additional revenue stream!

WeIntegrate’s Affiliate Program

With WeIntegrate’s easy setup and instant bookkeeping automation between Shopify and QuickBooks Online, it’s the ideal solution for helping your clients automate their bookkeeping while empowering you to expand your practice profitably.

The Affiliate Program provides you with:

  • Lucrative Commissions
  • Free Onboarding and Training
  • Priority Support
  • VIP Community Access
  • Steering Committee Participation (and hanging with some really cool dudes and dudettes)

“If you’re going to build a practice that involves Intuit QuickBooks Online and Shopify, one of the best integration partners that I found is WeIntegrate.

Randy Johnston, Found, NMG, Inc.

Accounting Today’s 100 Most Influential (2004-2022)


Shopify QuickBooks Integration

WeIntegrate specializes in bringing you and your clients the best of integration between Shopify and QuickBooks Online, including Shopify POS. Sales, refunds, and fulfillments are instantly synchronized and loaded from Shopify to QuickBooks Online in seconds.

Benefits of WeIntegrate’s Shopify QuickBooks Integration include:

  • Automate your bookkeeping process with instant integration
  • Accurately track sales, refunds, sales tax, fulfillments and inventory
  • Improve decision making with data that is always in-sync
  • Eliminate manual entry along with the errors that go with it
  • Reallocate valuable time from admin work to growing your business
  • Simplify reconciliation with just the right amount of detail
  • Top quality support (although the app is super easy to use)

“The set up and synchronization between Shopify and QuickBooks Online is very easy, and their customer support is the best! I would highly recommend WeIntegrate to anyone. I love this company!”

Cynthia Facundo, President | Owner | CEO, The Bookkeeping Key, QuickBooks ProAdvisor, WeIntegrate Affiliate

(Switched from A2X)


To learn more about this Affiliate Program or to schedule a demonstration of how fast and accurate WeIntegrate’s instant Shopify QuickBooks integration is:

Submit Contact Form

Are you ready to take your eCommerce accounting practice to the next level?

Join accounting technology expert Randy Johnston for this special webinar titled ‘How to Grow Your Profitable eCommerce Accounting Practice’ and learn the strategies and tools you need to succeed.

From attracting high-value clients to optimizing your workflow, industry expert Randy Johnston will share insider tips for success.

Thursday, April 27th
2pm EDT

Register now to secure your spot and take your practice to new heights!

Keep me posted on additional events and news

Who Should Attend?
– Accountants, Bookkeepers, CPAs, and ProAdvisors just getting started with eCommerce
– Veterans looking for keys and tips to scalable growth

Randy Johnston’s Bio:

Randy Johnston is a nationally recognized educator, consultant, and writer with over 40 years of experience in strategic technology planning, accounting software selection, paperless, systems, and network integration, business continuity and disaster recovery planning, business development and management, process engineering, and outsourced managed services. Mr. Johnston’s accolades include eighteen consecutive years of being listed on Accounting Today’s Top 100 Most Influential People, twelve consecutive years of being named a Top 25 Thought Leader by CPA Practice Advisor, and was listed on Accounting Technology’s top nine technology stars in the industry. Randy Johnston is co-founder of Network Management Group, Inc., co-founder of K2 Enterprises, and has written for accounting and technology publications spanning four decades, including CPA Practice Advisor since 2000.

weintegrate-nexus-blog

Whether you are a first time eCommerce entrepreneur or a successful veteran of the online world, there is no doubt that you have heard about sales tax nexus, an important yet sometimes confusing concern of operating a successfully online store.  By definition, sales tax nexus defines the level of connection between a seller and a taxing jurisdiction, which will ultimately require a seller to register with a particular jurisdiction, collect, and submit taxes.  The two triggers of nexus compliance are 1) having a physical presence within a jurisdiction, referred to as a Physical Nexus; and 2) reaching certain sales related milestones within a jurisdiction, which is known as Economic Nexus.  The following article explains the difference between the two types of nexus, and how you can manage both of these properly in QuickBooks Online. 

Our disclaimer – the contents contained within this article are meant to be a guideline only.  You should consult your tax accounting professional before incorporating anything outlined below.

Physical Nexus

Simply put, for each location that you operate your business from, such as a corporate office, sales office, or warehouse, you may be obligated to collect and report tax for sales that ship to customers in these state(s).  Because you have an actual physical presence, your sales tax obligations will likely be regardless of how much (or how little) you sell.  QuickBooks Online will automatically manage the corresponding sales tax for your business, as long as you set up your addresses in QuickBooks Online properly.  

If You Ship from a Different Physical Location than Your Office:

1. The Company address field in QuickBooks Online should be set to the location you ship from (e.g. your warehouse).  Note that QBO typically defaults this address to your primary office, so you may need to adjust this if your fulfillment center is in a different location.

2. The Customer-facing address field should be set to reflect your company’s billing address, which may be your corporate office.

Note that QuickBooks Online has a limitation as to the number of addresses it can manage.  In particular, if you ship from more than one physical location, you may run into issues managing Physical Nexus in QBO, and you should work with your accountant as to the best means of addressing this.

If You Ship From Your Office Location or You Don’t Ship at All:

For those of you that don’t ship physical products, or you ship exclusively from the same address as your office, you can leave the Company address field set to the value that QuickBooks Online defaulted to.

Click here to learn more about how to set up QuickBooks Online to manage Physical Nexus.

Economic Nexus

When you sell your products and services to customers in states where you do not have a physical presence, you may find that you do not have any sales tax obligations – at least initially.  However, be mindful that as your sales increase in a particular state, you may exceed a sales related threshold that establishes an Economic Nexus, requiring you to submit sales tax to the state after all.

It’s important to know that each state operates based on their own set of rules, which yes, can be as overwhelming as it sounds.  For example, California’s Economic Nexus threshold is currently $500,000 in sales, while Arizona is only $150,000. Alaska on the other hand has a $100,000 sales threshold or 200 retail sales transactions (whichever comes first).  Fortunately, QuickBooks Online does a decent job of managing Economic Nexus thresholds, inclusive of providing visibility as to how close you are toward reaching thresholds in each jurisdiction that you are selling to.

For additional information on running Economic Nexus reports in QuickBooks Online, Click here.

Managing Tax Obligations

Keeping track of sales tax, collecting the correct amounts, and managing both physical and economic tax requirements across multiple states can be challenging without the proper systems in place.  QuickBooks Online eases this process, particularly when used in conjunction with WeIntegrate’s automated bookkeeping app that synchronizes data from Shopify instantly into QuickBooks Online.  Having the most current data loaded into QBO on a timely basis helps ensure that you have an accurate account of your nexus compliance obligations.

For a more in-depth review of sales tax nexus, check out QuickBooks’ Blog titled Understanding nexus and what it means for your business.

Automate Bookkeeping with QuickBooks Online Instantly

NEW YORK, NY, MARCH 1, 2023 – WeIntegrate, the leading solution designed for Shopify merchants to increase operational efficiency via instant, automated integration with QuickBooks Online, today announced that the WeIntegrate: QuickBooks Sync app has been certified by Shopify and is now listed on Shopify’s App Store.

WeIntegrate automates the bookkeeping process between Shopify and QuickBooks online, by instantly creating and updating data from sales, fulfillments, cancellations, and refunds.  Shopify merchants and their bookkeepers benefit by the elimination of data entry, increases in accuracy, reduction in time to reconcile, and simplification of tax preparation.  A wizard-based self-service setup only takes a few minutes and the flow is so easy, you don’t have to be an accountant to get started.

“I am very impressed with how easy weintegrate is to set up, how fast the data syncs between Shopify and QuickBooks Online, and the excellent quality of their support,” said Jennifer Ginther EA, Owner and Founder of FairwindsBiz, a full-service accounting, business advisory, and CFO service firm with specialization in QuickBooks Online bookkeeping.  “I am very satisfied, and I would highly recommend it!”

Click here to learn more about WeIntegrate by visiting our Shopify App Store listing.

About WeIntegrate 
WeIntegrate is an eCommerce Operations Management Solutions provider focusing on helping small eCommerce merchants spend less time on backend and administrative functions, and more time on growing their business.  Our product focuses on the instant and automated integration of sales, fulfillments, refunds and payments between Shopify and QuickBooks Online (QBO), generating real sales receipts, refund receipts, and fulfillment updates in QBO, all instantly as each transaction occurs.  With WeIntegrate, you eliminate erroneous manual entry, simplify the complexities of fixing out-of-balance accounts and summary journal entries, and stop wasting time managing clearing accounts. To learn more about how WeIntegrate improves integration between Shopify and QuickBooks Online, and start loading documents into QBO right away instead of waiting hours, days and weeks, visit us at weintegrate.co

Randy Johnston

Nationally recognized accounting technology educator and consultant provides industry expertise

NEW YORK, NY, July 7, 2022 – We Integrate, LLC, the recognized leading provider of eCommerce Operations Management Solutions for Shopify merchants using QuickBooks Online (QBO) (including instant Shopify sales to QBO sales receipts, refund receipts, fulfillment tracking, and payment reconciliation), today announced the appointment of nationally recognized accounting and technology expert Randy Johnston, to the Company’s Advisory Board.

“I am pleased to assist the We Integrate team in evolving an already strong product,” said Randy Johnston. “I have not seen an eCommerce solution for Shopify and QBO that has similar capabilities, particularly at the existing price point.”

Randy Johnston is a nationally recognized educator, consultant, and writer with over 40 years of experience in strategic technology planning, accounting software selection, paperless, systems, and network integration, business continuity and disaster recovery planning, business development and management, process engineering, and outsourced managed services. Mr. Johnston’s accolades include eighteen consecutive years of being listed on Accounting Today’s Top 100 Most Influential People, twelve consecutive years of being named a Top 25 Thought Leader by CPA Practice Advisor, and was listed on Accounting Technology’s top nine technology stars in the industry. Randy Johnston is co-founder of Network Management Group, Inc., co-founder of K2 Enterprises, and has written for accounting and technology publications spanning four decades, including CPA Practice Advisor since 2000.

We Integrate is excited to have Randy Johnston join the Company’s Advisory Board. Our leadership looks forward to benefiting from his four decades of accounting technology expertise. In addition, it considers Mr. Johnston’s appointment as recognition of the value We Integrate is bringing to QuickBooks Online ProAdvisors and their Shopify merchant clients.

About We Integrate 

We Integrate, LLC is the leading eCommerce Operations Management Solutions provider.  Our initial product focuses on the instant and automated integration of sales, fulfillments, refunds and payments between Shopify and QuickBooks Online (QBO), generating real sales receipts, refund receipts, and fulfillment updates in QBO, all instantly as each transaction occurs.  With We Integrate, you can eliminate erroneous manual entry, simplify the complexities of fixing out-of-balance accounts and summary journal entries, and stop wasting time managing clearing accounts. To learn more about how We Integrate improves integration between Shopify and QuickBooks Online, and start loading documents into QBO right away instead of waiting hours, days and weeks, visit us at weintegrate.co.

Shopify Integration with QBO Setup

It’s an exciting moment when you launch your Shopify store!  It’s even more exciting when your first sales come rolling in!  It doesn’t take long before you realize the need to have control over key back-office functions such as managing fulfillments, sales, inventory and cash flow. 

As a Shopify merchant, it is never too early to establish efficiencies for growing your e-commerce business.  As an example, automating synchronization between Shopify and QuickBooks Online can be setup for less than 50% of the cost it would take to have your accountant create manual entries in QuickBooks Online.  This becomes working capital that you can invest into your e-commerce top-line growth, including your marketing funnel and eliminating cart friction.

Advantages of automated bookkeeping between Shopify and QuickBooks Online include:

  1. Redirecting your valuable time toward growing sales instead of entering manual data
  2. Lowering costs and errors associated with entering Shopify sales in QuickBooks Online
  3. Increased accuracy of fulfillments, inventory and customer satisfaction
  4. Improved decision making based on up-to-date key data such as sales, profits and cash

(click here to read Integrating Shopify with QuickBooks Online – Why is it So Essential?)

Establishing Shopify integration with QuickBooks Online via weintegrate gives you the additional advantage of instant, unattended automation.  Sales integrate with QuickBooks Online as soon as they are placed on Shopify (you don’t have to wait 3 to 5 days). Having access to the most up-to-date key performance data, empowers you to make accurate and intelligent business decisions, faster than your competitors.

How to Setup Shopify Integration with QuickBooks Online:

Another essential difference of weintegrate, is how easy it is to set up and start integrating.  Upon logging into your weintegrate account, the app directs you to a simple setup wizard that guides you through a series of questions and settings.  No accountant needed. It’s as simple as this…

  • Click Step 1: Specify and connect your Shopify store
  • Click Step 2: Add your QuickBooks Online Company
  • Click Step 3: Sales Settings such as whether to use the Shopify order number or QBO transaction number and shipping service levels
  • Click Step 4: Refund Defaults such as what bank account to use
  • Click Step 5: Customer matching where you set whether to track customer details or just load all Shopify sales into a single bulk customer in QBO
  • Click Step 6: Item matching where you specify whether to track inventory or load all Shopify sales into a single bulk item in QBO

It’s that simple!  The entire process can take as little as 10 to 15 minutes.  Once completed, all of your Shopify sales, refunds and fulfillment updates start automatically, instantly and unattendedly integrate with QuickBooks Online. No buttons to push.

We get it.  We’ve been there.  Starting a new business can be as daunting as it is exciting.  If you’re a typical entrepreneur, cash flow is at the top of your worry pyramid.  In fact, it goes without saying that when you run out of cash, you run out of business.  As a means of preserving cash, you may do what many of us do, and trade your valuable time (“soft cost”) for the costs of actually investing into tools and much needed technology (“hard cost”). After all, entrepreneurs are experts in multi-tasking and working 29 hour days. If it means saving cash we can flawlessly execute on whatever needs to get done, right?

As an example, many Shopify entrepreneurs are found caught sacrificing their time when it comes to getting e-commerce sales entered into their QuickBooks Online company.  Instead of establishing integration between these 2 key business systems, the viewpoint is typically that their business is either too small or there are just not enough sales to justify automation.  However, when you consider that you could integrate Shopify with QuickBooks Online for as little as $19 a month, the manual route could in fact prove to be the far more costly option, in more ways than one.

The remainder of this article outlines 5 key pitfalls to pay attention to when your Shopify store is not integrated with QuickBooks Online.  If you’re experiencing any of these issues, you may want to consider establishing automated integration sooner than later.

1. Time Spent on Manual Entry is Time Not Spent on Growth

When your systems are not integrated, someone, someway, somehow, has to retype your Shopify sales into QuickBooks Online.  This is a tedious, recurring task that can be as time consuming as it is a distraction from focusing on more important things, such as improving your e-commerce store’s conversions and sales.  If you are thinking that you will just have someone manually enter sales into QuickBooks Online, think about the actual cost (hard or soft) of this decision, and how that compares to just $19 a month for a fully automated solution.  

Regardless of who manually enters your sales into QuickBooks Online, statistics show that mistakes are inevitable.  Errors caused by manual data entry include transpositions and omissions, which can be costly, particularly when such errors go unnoticed for a period of time. In fact, research firm Gartner reports the average cost of poor data quality on businesses is between $9.7 million and $14.2 million.

One of the biggest concerns you might face when entering sales manually is the potential for mistakes in tax filings, and missing important tax filing deadlines. Automating the flow of accurate and timely information about sales helps to reduce tax risks and the potential for compliance penalties.

The bottom line here is that regardless of what stage your Shopify venture is, manual entry becomes a costly distraction. Having to clean up data entry mistakes, address tax filing issues, and unnecessarily draining working capital will likely slow your business’ growth.

2. Disappointing Customers with Out of Stock Items

Nothing will let the air out of your e-commerce balloon faster than having to call back customers and break the bad news that you cannot ship the item(s) they fell in love with because said items are actually out of stock.

How does this happen you ask?  Simple.  It’s another side effect of not integrating Shopify with QuickBooks Online.  When your e-commerce sales are not integrated with your backend system, there is a time lag that causes your systems to be out of sync until such time as the sales are manually entered into QuickBooks Online.  If you are already integrated but your sales are only synchronizing with QuickBooks Online once per hour or once per day, you still run the risk of overselling inventory, as integration needs to occur as instant as possible.  This problem is even more exasperated when you have multiple stores connected to a single inventory source (e.g. omni-channel).  The easiest way to think about this problem is the wider the gap between the time of a sale and the time it takes for inventory data to update, multiplied by the velocity of sales, the bigger the risk of overselling becomes.

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3. Orders Ship to Customers Late or Incorrect

Once those customer orders start rolling in, you have to move promptly to deliver on time.  Customers expect (and I mean expect) top shelf service.  Any delay or mistake that flips the last mile fulfillment process sideways, can drive your customers right into the hands of your competitors.  Two of the most common logistical problems that can occur are a) shipping late to customers, and b) shipping the wrong items.

A decent integration tool with operational oversight can empower you with the basics of ensuring your shipments go out on time, inclusive of being able to establish internal Service Levels (SLAs) that bring your attention to any risks of late shipments.  Real-time integration between Shopify and QuickBooks Online brings additional value to your business process by sending your orders through the fulfillment cycle as rapidly as possible, empowering you to fulfill customer orders accurately and quickly, and strengthening your store’s brand in a competitive marketplace when you consistently deliver what customers expect, as they expect it.

4. Lack of Visibility to Your Key Business Metrics

In a marketplace where competition is fierce, having accurate data at your finger tips is essential for making intelligent, timely business decisions.  When using both Shopify and QuickBooks Online, the best way of gaining visibility into these key sales and financial metrics is by leveraging the most real-time integration possible.  Synchronization with QuickBooks Online that is delayed even by just an hour, can lead to gaps that cause incorrect analysis, and impacts your ability to make proper decisions for your business.

You and your accountant must have an accurate view of sales, inventory, cashflow and other key performance indicators that bring clarity to the most efficient and intelligent investments into your Shopify store’s success.  Efficiently managing working capital and inventory replenishment can only occur when your finger is instantly and always on the pulse of your business’ heartbeat.

5. Loss of Your Competitive Edge

Think about it this way.  If you drive a Toyota Corolla, would you think you can win a race against a Ferrari (with all due respect to the Toyota)?  It’s virtually impossible to keep up with your competitors when you’re not leveraging an automated integration solution for your e-commerce store, particularly when they are.  Your competitors will have the advantage, and a stronger handle on managing cost effective inventory that increases their profits, ensuring that items are in stock and delivered to customers on time, and maintaining a high degree of customer satisfaction.  It will be very difficult to outflank them, and they will win the race each and every time.

Conclusion

It’s exciting to have an opportunity to start and grow a Shopify store!  As you maintain good stewardship of your working capital, make sure to avoid these critical issues that can impede your plans for growth and success.  Whether you’re just getting started, or you’re well on your way, automating integration between Shopify and QuickBooks Online can prove to be one of the best investments you make. For a relatively low operating cost, it will free up your resources (including your time), help you gain competitive advantage and drive your business to success.

decide-between-dropship-and-inventory-model

E-commerce has rapidly emerged as the dominant way we do business, both as consumers and entrepreneurs. And with e-commerce growth continuing to soar, smaller businesses are required to determine their best path to success in a highly competitive marketplace.  Fortunately, with growth comes innovation, and there are multiple options available for entrepreneurs to help them get started running their online business in a way that’s right for them. 

This article is going to focus on one very important aspect of your e-commerce journey as an entrepreneur.  How to manage the products you are selling to your customers.  After deciding what you will offer your customers on your way to world domination (which is often one of your toughest decisions in getting started), you need to figure out how to get access to said products, and ensure they can be shipped to your customers as expected.

The two common options you have at your disposal are the Inventory Model (also known as stocking), and the Dropshipping Model.  Let’s take a look at the key pros and cons of each model, to help you make the best decision for you and your e-commerce store.

Inventory Model

If you decide on the Inventory Model, it’s very name suggests that you will be responsible for managing inventory (which is correct).  You take sole responsibility to source your products, receive them, stock them, ship them, wash, rinse and repeat.  

Here are the Pros:

1. You’re in the Driver’s Seat

One of the biggest factors when deciding to use the Inventory Model and stock your own products, is how much control you need or want over your business operations and brand identity.  By leveraging the Inventory Model, you are in the driver’s seat. It’s your own team that handles everything from knowing when to replenish new inventory, to receiving said inventory into your own warehouse, picking, packing and shipping.  Because you control your team, you have ultimate control to ensure everything is done right (or wrong), and ensure that products are shipped to your customers on time.

If distinguishing your brand in the marketplace is also important to you, sourcing and stocking your own inventory (and possibly manufacturing your own product) will likely be the best (and potentially only) option for you.


2. Positive Customer Experience

Because you’re in control of your operations with the Inventory Model, you have direct control over your customers’ experience.  This is not just about managing a team of pleasant speaking customer support reps.  It’s about guaranteeing success of what is referred to as the “last mile”, the phase of your customers’ journey from the time they place the order until what they’ve ordered has been delivered.  After investing all you have into maximizing conversions and sales from your website, having control over logistics with the Inventory Model allows you to ensure products ordered are both in stock, and delivered to your customers on time.`


3. Greater Profit Margins

When you stock your own inventory, you are able to take advantage of bulk discounts by buying larger quantities from your suppliers.  As you hand select the items you are selling, or manufacture your own designs, you distinguish yourself competitively and are not competing as much on price, thus allowing you to potentially set your own price.  Higher price with bulk discounts leads to greater margins.


And now the Cons:

1. The Need for Space

When you opt to stock your own inventory, you will obviously need a place to store these items.  No, your front lawn will not suffice for many reasons, although in some cases where you have just a couple of SKUs (aka items) and they are small, entrepreneurs have been known to start by warehousing in their garage or basement.  That said, neither option is scalable as your e-commerce store grows, and you will eventually need to plan for warehouse costs, as well as certain equipment and people to work in the warehouse.


2. More Working Capital Needed

To get inventory, you have to pay for inventory, typically before you have sales against that inventory (and the space along with those people previously mentioned).  This requires, you guessed it, money.  As a new e-commerce business, you may not have said working capital at your disposal.  And from a business standpoint, even if you do have the cash, you will want to ask yourself where this investment can serve your business better.  Should you tie it up in inventory, or invest into growing more sales.

3. Distraction from Growth

To manage your inventory is a considerable amount of work.  You have to monitor inventory levels, ensure you do not run out of stock (which includes forecasting and planning), order new inventory in time to ship and keep customers happy, as well as outbound warehouse operations such as picking, packing and shipping.  While this is certainly achievable, you need to ask yourself when (and if) is the best time to embark upon this initiative.  Remember, there is only one of you and your time is precious.  Every minute not focused on the growth of your e-commerce store could be considered a minute wasted.

After reviewing the above, if you are concerned about making investments into the Inventory Model but you still have aspirations of being a successful e-commerce-preneur, there is another options referred to as Dropshipping.

Dropshipping Model

Dropshipping is a great option for newbie e-commerce-preneurs, and for many has proven to be a good long-term solution. Here’s how it works: Business owners list products for sale on their site that are sourced from a third party dropship partner (basically someone who sources and stocks inventory so you don’t have to worry about this).  Inventory is held by the third party in their warehouse, and then the third-party ships directly to customers on your behalf when orders are placed on your e-commerce store.  Keep in mind though that inventory held is not exclusive to you.  It is shared between you and any other e-commerce venture who is interested, on a first come first served basis. 

If you’re new to dropshipping and not sure where to begin, not to worry.  A quick online search will find plenty of guides to help you become familiar with how to begin, including this blog from Shopify titled How to Start a Dropshipping Business: A Complete Playbook for 2021

Seems simple enough, right?  And in many ways it is.  

So let’s take a look at the Pros:

1. Easy to Manage

Because someone else is bearing the burden of the entire warehousing process (e.g. facility, people, inventory, and related costs), you don’t have to worry about any of this.  You need to manage your partner(s) to make sure they are performing as expected, but by and large you are empowered to focus most of your time on the growth of your e-commerce store.  Invest into an affordable tool that gives you clear visibility and alerts to know that your dropship partner is shipping on time or if there are issues.

2. Minimal Risks Allow You to Test and Try New Items

Leave the heavy lifting (no pun intended) to the warehousing experts.  In theory, if you have done your job to properly vet out the right dropship partner for you and your e-commerce store, you will be “plugging into” a well-oiled logistics process.  Another benefit here is that you do not need to invest into inventory itself.  Unlike the Inventory Model, with Dropshipping you invest less, and often are not obligated to pay for inventory until it sells.  This opens up a great opportunity for new e-commerce store owners to be open minded to test and try selling different products and learning what interests your target customers best.

3.   Operate from Anywhere

Want to run your business from the beaches of St. Lucia?  Well with Dropshipping you can (as long as they have internet).  You are not tied down to a physical structure, as your drop shipping partner is bearing this burden.  Just take your laptop with you anywhere you need to be, and you can work without pause, from anywhere around the globe (and convince people the mojito is necessary to help with marketing creativity).

And the Cons are…

1. Lack of Quality Control

When dealing with dropshipping, because the ownership of operations lies with your dropship partner, you have little to no control.  If you’re not on top of things (and sometimes even if you are), you may experience issues such as disappointing your customers due to no inventory available of an item they purchased, a breakdown in your dropship partner’s logistics cycle that causes shipments to be late to customers, or mistakes leading to incorrect items being shipped.  It’s important to be prepared with great customer service, apologize for the issues, and rectify them promptly (that is if you want customers coming back for reorders).

2. A Lot of Competition

Because it’s easy to get started with dropshipping, and the e-commerce industry continues growing at a rapid rate, you face increased competition from fellow entrepreneurs.  With more of your peers selling from the same pool of available inventory, it’s more challenging to distinguish yourself from the pack when compared to selling your own brand.

3. Lower Profit Margin

In the world of dropshipping, products cost you more, period.  Your dropship partner bakes in additional costs per item to cover their operational overhead (e.g. warehouse, people, process).  Combining this with potentially lower selling prices in order to compete, Dropshipping typically leads to less profits in exchange for the convenience of having another party run this aspect of the business for you.

Thank you for the info, but now what?

Ok so now that we have laid down the key pros and cons of each model, and likely made the decision process more confusing, let’s break it down with a few tips to help you think this evaluation through and come up with the best option for you.

Do you have enough capital to invest and where should it be deployed?  As previously mentioned, to embark upon the Inventory Model requires a fair amount of capital.  If you have it, great!  But also make sure to ask yourself whether that capital is best invested into controlling your own inventory, or investing into growing your topline sales (e.g. marketing, optimization, etc).

Are you prepared to invest the time necessary into running the Inventory Model?  Think about it this way.  You only have so many hours per day (yes of course as entrepreneurs we know how to extend our days to 47 hours per day), and you need to decide where best to allocate your time for the best interest of your e-commerce business.  Adding responsibility of owning the warehousing process is a sizable commitment.  Is now the right time to take this on, or is it best to defer until your e-commerce store is stabilized or grown to a certain degree of success?

How important is control of your brand identity and business?  When relying on your dropship partner for warehousing and related services, you put your destiny in their hands.  Your customers’ ultimate happiness to properly receive what they order on time is out of your control.  You can better control your overall brand identity in a positive way when you own this process.  When delivering accurately to customers on time, as well as brand product distinction are a critical core value, you may want to opt for the Inventory Model.

Regardless of which model you choose, these are clearly exciting times for e-commerce opportunities.  There is no one-size fits all solution either.  You will review your plans, your available capital, your core values, and your goals, and considering the pros and cons outlined in this article, you are well on your way.

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