Is Xero Suitable for Amazon Sellers?
If your business currently sells on Amazon, or you’re considering using Amazon as an additional e-commerce platform, you may have already looked into whether your existing system is compatible for an Amazon seller.
Whether Xero is suitable for an Amazon seller is not a simple yes or no answer. There are different types of Amazon sellers and it’s important to identify the seller type as this will affect the questions you need to ask to see if Xero will work for them.
Amazon and Xero don’t have a native integration currently – you could use Xero alone, but this would result in a heavy manual input of your data. With data input from Amazon including anything from your sales fees, commission, reimbursements, etc – entering all this data can be time consuming. You’re also likely to incur human errors which can cause problems down the line.
Businesses within the commerce space need to know how to allocate revenue properly but completing this as a task manually on a daily, weekly or even monthly basis can be a massive time suck – not to mention you have no control of your inventory. You’ll have access to top-line financial information, but you won’t have full details of where you need to dispatch items to – this requires the user to go back into Amazon, adding another step to the manual process.
Making Xero work with Amazon
There are two different solutions that can be implemented for Amazon sellers who are using Xero; integration solutions and inventory solutions. To choose the right solution, we first need to group our sellers:
- Infrequent sellers who use the platform to sell on occasion and will ship their items themselves with some shipments potentially fulfilled by Amazon.
- Those who sell purely on Amazon and then use FBA, a fulfilment service from Amazon.
- Those who are Amazon only businesses – they will use Amazon for some of their logistics fulfilment but will also have internal warehouses.
- E-commerce businesses who use Amazon, but this makes up only a small percentage of what they’re doing – they will largely manage a lot of their logistics internally. They are also likely to have multiple sales channels such as their own website, B2B email/phone sales strategies.When looking at e-commerce businesses, there is also the need to identify their stock. They may be selling items that come from internal warehouses outsource to third-party logistics companies, but they may also have stock they manufacture themselves. In these cases, the business will need a Bill of Materials (BOM) so they can accurately track the cost of goods sold.
When working with clients who are not infrequent sellers, one of the first integrations that will be needed is linking their Amazon seller account with their Xero account. The next connection would be to an inventory app which will integrate with both sides but also manage elements such as stock control, order processing and fulfilment. To understand what solution would work best, we need to ask the seller some key questions:
- How many sales do they receive per month?
- Do you sell on any other platforms? (This could other e-commerce platforms like Magento, Shopify or direct with other retailers)
- Do they use FBA and if not, do they manage their own fulfilment?
- Do they work with any other third-part logistics companies and if so, are there any types of integrations that are required by the company?
These types of questions will help to identify the type of seller you have and the size of the business.
Knowing this number helps to clarify the complexity of the job but this may not always indicate what type of seller the user is. It will however give you an idea of the size of business and whether you need to consider consolidating the sales due to transactional limits within Xero.
Some businesses may have the requirement to link with different shipping providers such as Royal Mail, FedEx, Evri (Hermes), etc. There may also be the need to link with multiple marketplaces such as Magenta, Shopify, BigCommerce and WooCommerce. Systems like DEAR/Cin7 have both EDI and API integrations with third-party logistics companies allowing users to view what stage order are within the 3PL’s system. This also supports with order processing and stock control.
Let’s take a look at some examples…
- Sellers that only sell on Amazon and either outsource all fulfilment to FBA or manage a small volume of their order internally. The Solution: A2X with Xero provides multiple marketplaces, automatically gathers Amazon settlements and post summarises transactions in Xero
- Sellers who predominately sell on Amazon, have other sales channels and may outsource a small fulfilment to FBA, managing the bulk of their orders internally. The Solution: DEAR/Cin7 (which is an inventory app) provides a range of advantages such as linking to multiple marketplaces, integrates with other sales channels, gives you stock control, integrates with FBA and provides flexible reporting.
- Full scale e-commerce users who sell on multiple channels, outsource fulfilment to 3PL or may manage this internally. The Solution: Stitch Labs and Cin7/DEAR again allows you to link to multiple marketplaces, it integrates with all major e-commerce platforms (WooCommerce, BigCommerce, etc.), allows users to manage their warehouses and integrates with 3PLs (EDI and API)
Xero is heavily reliant on an ecosystem of apps so, when used in connection to other integrations, it’s a great solution for Amazon sellers. By completing the above questions, you can then delve into the different integrations (and combinations of apps) to define the perfect solution for your customer.
We have years of experience of working closely with Xero users and advisors to help businesses learn more about the wide range of apps that are available to help support their business. Additionally, we learn about the fundamentals of their business to help them select the best app to improve their operations and processes and reduce administration time.
To learn more about our solutions and how we can help, get in touch for a free consultation where we can discuss the requirements for yourself, or your own client and recommend the best solution to support their sales and improve internal processes.