Introduction
Whether you’re experimenting with a new venture or already well established and just looking to migrate to a performant, user-friendly e-commerce solution, Shopify delivers.
Alongside great technology, Shopify has a thriving community of apps, developers and a useful knowledge base for any e-commerce retailer. The company is also growing quickly and investing heavily in the platform.
Shopify is a great tool but it’s not without its limits. It’s not designed for sales order fulfillment, managing purchase orders with vendors, complex inventory management or full warehouse operations. There are apps available that can extend Shopify far enough to add one or two features each. This is fine for improving the shopping experience but can quickly strain your business when it comes to your wider operations.
Over the years, we’ve seen hundreds of businesses who have attempted to survive by stitching together Shopify, point of sale solutions and spreadsheets. The inevitable results are that opportunities are missed due to limitations, mistakes are made due to the lack of consolidated information and admin costs rise as complexities increase.
Luckily, there are robust Shopify order management systems, which thrive in delivering optimal retail solutions. In this article, we’ll discuss some of the core activities that are best placed in a back office solution and we’ll provide advice on how to ensure Shopify is successfully empowering your business.
You’ll learn about:
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Shopify’s pros and cons
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Selling on multiple sales channels with Shopify
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Shopify POS
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How to use Shopify for wholesale orders
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Accounting and financial control
Why Choose Shopify: Pros and Cons
Originally built to support e-commerce businesses looking for a simple interface to launch a website, Shopify and its sister solution, Shopify Plus continue to evolve as its user base grows. Here are some important Shopify pros and cons you need to know about.
If you don’t have a background in web development or a team of developers at your disposal, then Shopify is an excellent option because it’s a complete ‘plug and play’ solution, built with ready-made templates and ease of use in mind.
Shopify is a hosted platform, which means upgrades, security issues and other ongoing support are handled by Shopify. You’ll also have access to 24/7 support via live chat or phone, as well as a wealth of online tutorials and community forums.
There are a number of different pricing plans for you to choose from depending on your business’s size and needs. You can also choose Shopify Plus, which is Shopify’s enterprise-level solution for larger businesses.
Shopify’s leading e-commerce solution also has a rich app, plugin and extension ecosystem to help you evolve your store and online customer experience. You can even sell to customers on Facebook and Messenger via the Shopify Facebook App, as well as on other social media platforms like Instagram, Twitter and Pinterest.
On the downside, if you’re not using (or able to use) Shopify’s native payments app, then you’ll have to pay additional transaction fees for each sale you make through your website. Without this app, you’ll also be unable to accept sales in foreign currencies, potentially limiting international business growth.
Learn more about why Shopify is an excellent e-commerce platform here.
Selling on Multiple Sales Channels
All of our most successful clients sell on multiple sales channels – and Shopify is a great e-commerce solution to quickly establish and launch new webstores to serve different markets or brands.
In a study of 46,000 consumers by the Harvard Business Review, 73% of people use multiple channels before making purchases and omnichannel experiences lead to 23% more repeat customers.
Shopify’s core feature set doesn’t power multiple webstores from one admin area, so this means you’ll need multiple Shopify accounts if you want multiple webstores – unless you’re on a Shopify Plus plan where a multi-store feature is currently in Beta.
Each account has its own product set, its own company information and its own look and feel. This isn’t a bad way to go about things as long as you’ve got something backing them up!
Inventory and order management systems will be able to connect to multiple Shopify accounts, keeping your inventory levels in sync, consolidating fulfillment efforts and providing your business with a centralized system to work from. Without a system, you’ll literally have to jump from admin to admin to check orders or set inventory levels, and therefore, you’ll constantly be open to overselling or missed sales opportunities.
Focusing a little more on order fulfillment; when you make the move to multiple brands, you need that branding to survive all the way from checkout to the time the customer opens their package.
Additionally, when setting up new territories, you’re likely to be setting up new fulfillment operations to support them, potentially even outsourcing to a third party logistics company to avoid international shipping fees.
A centralized Shopify order management system will take orders from each and every channel and route the orders to the right team as per your business design – and most importantly, won’t enforce any limitations on your customer-facing assets.
POS
When it comes to selling offline, such as in a physical store or as a rep on the road, you’ll need an order management system.
When just starting out, if order volumes are small, and you’re managing everything through Shopify, then go ahead and enter your telephone orders directly in the admin area. The order entry workflows are slick and you won’t require another system.
For in-store orders, Shopify has another product, Shopify POS, which has been designed for the in-store customer-facing environment. It effectively acts as an extension to your Shopify account and offers an alternative order entry feature. If you’re already using Shopify for your webstore, and not selling anywhere else, then it’s a good solution.
As per the recurring theme here, Shopify’s limitations are further exposed once you start selling in a variety of ways. Some channels such as events are more prone to discounts and bartering and therefore need the freedom of their own assigned price lists and discount rules. You could shoehorn this into Shopify, but why not move these operations into a back office solution that’s designed for multiple sales channels, which each have their own intricacies.
Shopify for Wholesale
Standard Shopify has some wholesale features you’ll find useful such as discount codes and the ability to launch a separate store for wholesale trade customers.
But if you need to send wholesale invoices and receive payments then you’ll need to use a Shopify wholesale app or integrate a wholesale order management system.
Alternatively, Shopify Plus also has the ability to setup a wholesale channel, which will enable you to create a separate password-protected storefront as an extension of your current online store and existing Shopify admin account.
The Shopify Plus wholesale channel lets you show different prices to your wholesale customers and send them invoices, alongside providing your customers with an account that they can log into to place orders.
Accounting and Financial Control
Shopify is not (nor does it try to be) anything close to an accounting package – and we don’t blame them, it shouldn’t be.
Shopify customers often address their accounting requirements through apps that connect to accounting-specific software like QuickBooks or Xero. But these aren’t designed for retail e-commerce businesses.
The result of using an accounting only integration is poor data quality, and therefore, a lack of accuracy and reporting later on which hinders decision making.
Let’s take a very clean example:
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I receive a new order in Shopify for one product at $34.95 plus shipping of $3.00 and tax of $1.00
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The customer and transaction is created in my accounting platform as a paid invoice for $38.95
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That order gets processed and shipped in Shopify
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The COGS of the order are entered based on a static price list value you have for that product
Looks fine, right? Wrong.
The literal order value gets taken care of, but at no point does either system know or cater for the exact cost of inventory or log the financials specific to the shipping line item. There’s also a disconnect from a timing perspective; many businesses opt to defer posting their cost of goods sold journal entry until the product has been shipped.
These are just quick examples that scratch the surface of the sorts of issues that will be invisible to you on every order. Answering questions like “How profitable is this product?” is difficult. You don’t have a single system that knows every financial detail of your inventory, so you’re left with high level assumptions and inaccuracies.
Luckily, there are retail management solutions in the Shopify app store like Brightpearl that allow you to seamlessly and accurately manage the accounting for your Shopify sales. You’ll gain a much more accurate picture on the true profitability of your product sales because these systems house not only your accounting data, but your inventory, sales and purchasing information as well.
Going back to our initial example:
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I receive a new order in Shopify for one product at $34.95 plus shipping of $3.00 and tax of $1.00
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The customer and order are populated into Brightpearl with a line item for the product and shipping; each tracked against different account codes.
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The tax liability is also collected and tracked separately
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Once the order is shipped and invoiced, accounting entries are made to Product Revenue: $34.95, Shipping Revenue: $3.00, Tax Liability: $1.00 and COGS: based on the FIFO cost of the product
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The order is updated as shipped in Shopify
As you can see, Brightpearl will provide much more clarity on the breakdown of your revenue and cost for each order. You will be able to use data rather than assumptions to understand in real time how profitable your sales are, if you’re charging too much or too little for shipping and much more!
Conclusion
Shopify is a fantastic platform to rapidly launch, and manage your webstore indefinitely, but needs a partner like Brightpearl behind it to take over the management of your business.
Shopify is much more intuitive and accessible than its competitors and has an active and positive community. Its feature set is succinct and you can literally launch a new, great looking webstore that’s raking in orders in no time at all. That’s generally where their story ends and our solution begins.
Brightpearl co-exists brilliantly with Shopify to provide omnichannel order and inventory management – and accounting.
As soon as orders are placed in Shopify, our integration steps in and downloads all details to Brightpearl and automatically routes them through your workflows to the appropriate fulfillment center. The system also logs all activities within your CRM and accounts reports with exact details on inventory costs incurred and revenue recognized.