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E-Commerce Sales

For anyone who works in E-commerce, is it normal practice to talk about web and despatched sales?

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I have historically worked in Manufacturing and the sales numbers we discuss mainly revolved around despatched sales and WIP which seems perfectly normal to me.

I recently joined an E-commerce business and whilst we only recognise despatched sales in the P/L we always produced two sets of reports for everything eg Sales & Margin reports for despatched sales and another for Web sales ( the latter could be sales made in the month but may not always be despatched due to out of stock items etc etc. 

As a new entrant to E-commerce I can't but feel that we should only focus on Despatched sales and WIP but would be interested to hear what others do in this sector.

 

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By paul.benny
17th Jul 2021 14:53

Despatches is your actual accounts figure; web sales in this parlance = orders received.

Management will tend to focus on order intake rather than shipped values, and it is a useful metric. You need to keep their feet on the ground by ensuring reporting also includes an ageing of the order book, separating out pre-orders, if relevant from not yet fulfilled. Growth in the latter is indicative of problems.

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By Alonicus
22nd Jul 2021 13:57

I agree with Paul that recognising the revenue at despatch is the way to go.

However, you need to look at the business model; do customers pay on order, or when they are advised the goods are ready for despatch ? If they pay on order and the time difference between order and despatch normally crosses over accounting periods, you may want to consider showing the customer payments as an accrual.

From a management reporting perspective, outstanding supplier orders should receive close scrutiny, particularly with the supply chain as messed up as it is right now (one of our suppliers/importers had three contasiners left on the dockside in the Philippines because the ship was full...). Even if they aren't pre-paid, they are likely to create an obligation which can have a significant cashflow impact, particularly if customers who have waited too long are requesting and receiving refunds.

I'd suggest the key is to look at the business model so that the accounts are an accurate reflection of what is happening. Then document it to ensure consistency going forward !

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