First, let’s start by defining “e-commerce” as selling items (mostly physical/tangible products, but digital products and services could apply as well; although rare) via web-based channels such as: Amazon, E-bay, Etsy, Opencart, Shopify, Magento, BigCommerce, Volusion, Squarespace, WooCommerce, Squarespace, Wix, etc. If you are unsure which platform/channel you are using, your web designer/programmer should be able to answer this.

And by “integration”, we can define that as using the data from the e-commerce platform (such as sales/transaction information) to feed into QuickBooks, so there is no need to enter the sales details manually into QuickBooks (and hopefully, this will reconcile with the actual bank deposits as they come in). Integration also might mean using the data inside QuickBooks to feed into the sales channels/platform; such as using the QuickBooks item list to populate the list of items for sale through the channel/platform(s) and also use the inventory (quantity on hand) to determine if the items are available for sale or not. Usually the item lists is the most crucial part of this whole setup.

So, before taking on an e-commerce integration/consultation engagement, these are the typical questions we would need to start getting answers for:

1. Are you planning to manage/track inventory?

Sounds like a redundant question, but the answer is not always “yes”, as we have encountered merchants that sell 100% digital products and/or services. Also there are some merchants that sell via “drop ship”, customized products, or built-to-order and have no need to track the inventory of their sellable products or finished goods.

If the answer to this question is “NO” – this engagement will be much simpler as there is no need to worry about the QuickBooks Item list to be syncing up or mapped to the channel/platform’s product list and there is no need to bring the itemized sales details into QuickBooks either; and even if it does, there are no potential issues with having unmapped items.

If the answer to this question is “Yes, but not inside QuickBooks”, that means that there is a whole different system, workflow, or software (such as LOCATE, TradeGecko, DEAR Inventory, SOS Inventory, Fishbowl Inventory, etc.) being used to manage inventory and pick/pack/ship process. At that point, we need to look into the specific software in itself and start studying the triangulation of integrations: Sales Channel -> Inventory Management App -> QuickBooks, to study if it is even possible to pull that and/or we will need any additional 3rd party apps like Webgility, T-HUB, Agiliron, etc. to enable the data sync across apps. But typically the item detail sales data and gross profit information per item is going to be manages via this other system/app and not via QuickBooks.

If the answer is “Yes, inside QuickBooks”, then we need to make sure that we can actually sync sales detail data (with specific items being sold) into QuickBooks from the channel/platform, to allow that information to property reduce the inventory immediately from QuickBooks as it is being sold (not necessarily when is shipped), typically via a Sales Receipt or Invoice. In the event that you are using QuickBooks Desktop Premier or Enterprise, you can also bring the sales data via a Sales Order to allow the inventory to be placed on backorder immediately, so the pick/pack/shipping process can be started and the inventory is reduced as is shipped (not as is sold).

Sometimes the answer to this question could be “I have inventory, but will track just the high-level inventory value at the end of the period”, which simplifies the process, because no detail transaction data needs to be synced among systems, and the bookkeeper/accountant can just plug a journal entry against Inventory Asset and Cost of Goods Sold at the end of the period to get the high-level gross margin (but not at the item level)

Bottom line, if you want item-level gross profit (Sales – Cost of Goods) reports inside QuickBooks, you must track inventory in QuickBooks and sync all transactions at the item level.

 

2. Will you be using multiple channels or just one?

This is a really important answer, because multiple channels have some challenges. One, each channel may use a different process and from for integrating sales, which could confuse the QuickBooks user as the workflow might need to be different for each one. And two, typically when we have of multiple channels, the QuickBooks user wants to see sales and gross profit reports by channel! Which means we need to make sure the transactions are coming in with certain data points that allow us to create such a report in QuickBooks; typically using Class, Locations, or Customer Type.

Multiple channels also present a challenge with keeping track of inventory levels, as each channel needs to be updating the quantity on hand available from QuickBooks as the orders are synced and shipped, this delay can cause these channels to still sell items that you no longer have in stock, which can cause a delay in shipping and customer service issue

Multiple channels are the best case for using a “middle man” inventory management app such as LOCATE, TradeGecko, DEAR Inventory, SOS Inventory, Fishbowl Inventory, etc. to manage this process, instead of QuickBooks. While QuickBooks can still be used simple for general ledger software, as these inventory apps typically don’t do general ledger. Multiple channels means potentially managing two separate products lists and/or duplication of managing product lists across multiple platforms, which is why centralized systems (separate than QuickBooks) that specialize in consolidating a single item/products list and syndicating updates across platforms become very useful.

For Amazon-only sellers, a2X is a great app to consider using.  Global Amazon sellers might consider Entriwise.

 

3. Will you use 3rd Party Logistics and/or multiple inventory locations?

This is an interesting additional challenge, as 3rd party logistics means that the control of inventory (or maybe just part of the inventory) will be managed by folks outside your organization and the physical inventory is beyond your reach; which means the shipping/fulfillment of the orders is managed offsite. So we need to decide if we are going to manage that inventory in real-time inside QuickBooks or completely separate as a journal entry. In addition, this is not related to QuickBooks, but we need to figure out how we get sales/order information to your 3rd party logistics provider.

Even where there isn’t 3rd party logistics, but there are multiple inventory locations, we must make sure that the channels/platforms know which inventory location is the sale going to be recorded into and/or design the workflow where the QuickBooks user must choose where location being fulfilled from.

 

4. How will shipping labels be printed?

Some e-commerce platforms will integrate a shipping service and automatically generate a shipping labels to fulfill orders, but in other cases, these shipping labels are being printed manually/separately to the QuickBooks workflow, or if using Sales Orders with QuickBooks Enterprise, they could be using its built-in capabilities to generate shipping labels.

There are also some separate apps such as ShipStation and ShipWorks that can be used to manage shipping labels and fulfillment. These platforms are part of the integration planning process, as they certainly add another step in the process. However, most robust inventory management apps have their own built-in label shipping module as well.

 

5. How often are the items/product lists being added or updated?

Item/product maintenance in e-commerce is one of the most time consuming tasks there is, so we need to make sure we have a process in place to export/edit/import item lists with ease to avoid hours of work and frustration when it comes to making massive updates of pricing, descriptions, or adding new items.|

 

6. Will there be a mix of e-commerce, wholesale, and/or retail sales?

If your business also sells outside the e-commerce platforms such as through direct phone sales, B2B wholesale, and/or through a POS system via a retail location, we need to determine if the inventory being used across all these channels will be separated or consolidated; this requires designing an internal workflow that might create some confusion between the e-commerce typical workflow and these direct sales process.

 

 

We are experts in QuickBooks and Inventory, but not in e-commerce platforms. We could help you get all the QuickBooks-related issues worked out and work with your e-commerce consultant / web designer for the integration into QuickBooks. Just a bit of a warning, E-commerce integration is typically a 60-90 day project and could cost anywhere between $10k to $25k depending on the complexity. We could get started with a paid consultation to give you some guidance on how to get started with planning based on the questions listed above.  Also the software costs of all these apps and integrators that might need to be added onto QuickBooks could be anywhere between $200 to $1,000 per month!

Directory of 3rd apps that are typically integrated with QuickBooks for E-commerce (and it is likely you might need one or more of these):

 

-Hector Garcia, CPA & Advanced QuickBooks ProAdvisor
info@quickbooks-training.net

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