Rohan Thambrahalli, president and founder of DimeTyd
The consumer experience has evolved dramatically from simple transactional processes—direct purchases of goods and services—to a complex, layered, and intricate e-commerce market built on a medley of data streams, zeros and ones, virtual personas complete with preferences, brand inclinations, and financial guidance for infinite online consumers.
The increased presence of shoppers flocking to online markets has created a thunderous e-commerce tsunami: a study from Nora Advisor reports that the global 2020 B2C e-commerce market gathered revenue around USD 4.1 trillion. It states further that the market is set to grow to USD 7.01 trillion by the end of 2027. Growth factors include increased disposable incomes and the omnipresent Internet and smartphone usage.
No stranger to keeping up with new trends and tastes, the fashion industry has kept pace. According to Statista, the e-commerce fashion industry’s compound annual growth rate (CAGR) is expected to reach 14.2% between 2017 and 2025, with the industry hitting a $672.71 billion valuation by 2023.
The recent New York Fashion Week, which took place from February 10 through 14 of this year, added a digital format, increasing accessibility for online consumers to review the latest designs, comment on new fads, and ultimately have the option to make purchases.
Seated front and center as the prime location for online sales is the Amazon Marketplace. According to Statista, in 2020, the online retailer was projected to sell more the $52 billion worth of fashion goods. Further, Coresight Research reported Amazon’s dominance in the fashion space, finding it was the number one destination for apparel shoppers, beating out Target and Walmart.
While Amazon serves as a conduit for billions in B2C e-commerce, countless hazards and inefficiencies lurk within the accounting processes of e-commerce. Amazon’s Marketplace is a layered mosaic of complex data streams, shifting regulatory policies, often unseen by Amazon Vendors. It can easily result in lost revenue and a damaged bottom line.
Recouping Lost Profits
Amazon’s accounting is complicated, and there are virtually no software platforms designed for B2C vendors to manage the volume and complexity of transactions. Moreover, transparency related to profit leakage associated with overbilling and deductions are limited. Up to 90% of deductions are out of vendors’ lines of sight—buried in reams of data points.
Recuperating lost profits is also a challenge with an extended processing procedure that requires accounting teams to support claims with evidence and data that is tedious to surface – if it can be located at all. Additionally, the process of manual funds recuperation can extend to months. Even the largest vendors are unlikely to have the in-house capacity to manually process such large quantities of complex data within the numerous and ongoing transactions on the Amazon platform—the complexity quickly overwhelms the standard frameworks of accounting reconciliation.
To meet this opportunity head-on and make the most of the growing demand, B2C product companies are turning to advanced technologies such as artificial intelligence (AI), robotic process automation (RPA), and machine learning (ML). These innovative tools help B2C product companies streamline e-commerce workflows on marketplaces and safeguard against a myriad of potential hazards while identifying, generating, and optimizing revenue.
In addition, RPA can align a fashion vendors’ system to Amazon’s accounting matrices with exact precision. A fully-implemented RPA helps find and eliminate duplicates and missed invoices, providing needed transparency. It also identifies and fixes overbillings and missed deductions that result in lost profits.
Automation also eliminates the risk of potential human error—it creates a far more accurate reconciliation process while decreasing workforce hours needed to audit data manually. Through automation, fashion product companies selling apparel on Amazon can gain back time and resources to concentrate on other mission-critical business areas.
Unresolved and often unnoticed, invoicing errors can prove a pain point for Amazon Vendors. As an example, a fashion apparel company might have invoiced for 30 units but only shipped 26; this discrepancy can create a logistics chain reaction leading to inventory shortages, incorrect invoices, and cash flow disruptions. When this proves a continual and persistent issue over time and in numerous business cycles, mistrust and tension emerge between customers and vendors.
In the past, online product companies processed invoicing and shipments manually. Studies show that manual methods were roughly equivalent to four full-time employees working five full days per week to invoice a week’s worth of shipments for an average size vendor. When employees work those hours, even the best and brightest risk human error, a common accounts payable problem, as well as burnout and fatigue due to the strenuous process.
A survey by the American Productivity & Quality Center (APQC) found that companies can reduce their average cost per invoice by up to five times through accounts payable automation. Using algorithms designed explicitly for each Amazon Vendors’ purpose, AI logic helps determine which products need to be invoiced, shipped, and billed with accuracy and precision. RPA can give fashion vendors the ability to create invoices automatically on Amazon’s Vendor Central portal, while automation increases employee productivity and helps eliminate repetitive tasks.
E-Commerce in the Future
Success in the fashion industry is not new. Haute Couture designers, large apparel wholesalers, and local boutiques have adjusted to new trends, weathered a global pandemic, and are finding success on Amazon’s Marketplace. The online retail giant’s earnings are expected to bypass competitors as the fastest-growing retail business at scale and are on track to overtake Walmart as America’s largest retailer in 2022.
Still, as fashion businesses make the digital move, they must safeguard themselves from the potential pitfalls that can negatively affect cash flow and deteriorate profits, and—in extreme cases—even shutter some companies.
The imminent next chapter for online fashion vendors is to utilize AI, RPA, and ML tools. Advanced technology will drive operational efficiencies, improve cashflow, and help ensure continued success in the Amazon Marketplace amid exponential B2C buying demand.
Artificial Intelligence—Robotic Process Automation—Machine Learning: these advanced features are needed tools for modeled success on the fashion industry’s catwalk.
About the author
While retailers have more tech budget to spend, two-thirds still don’t have enough resources and are challenged to hire and retain tech talent – particularly in the emerging tech space. As a result retailers want more value from their technology partners.
With the current growth trajectory Ecommerce sales volumes in the US are expected to hit 848 Billion by the of 2022.
The industry standard of inventory accuracy sits approximately at 65% at the item level. By deploying item-level RFID, retailers can increase this to 93%-99% quickly to start experiencing the benefits of an accurately stated inventory in their enterprise.
These business owners were being run off their feet, not due to a huge amount of sales (oh how we all want THAT problem) but because their systems were causing them to have to check, double check and check again every integration point through the platform.