Accurate e-Commerce Accounting for Amazon Sellers

December 15, 2020

Meet The Speakers

Paul Grey

Founder of A2X

Listen to the podcast

Here’s a glimpse of what you’ll learn:

Paul Grey talks about his early experience with FBA and why he decided to build his accounting software, A2X
How Paul grew his software into a scalable SaaS product
Paul’s advice to Amazon sellers about accurate and effective accounting
How does A2X help e-commerce business owners improve their financials?
Paul explains they determine FBA inventory valuation using Average Cost Per SKU
The impact of COVID-19 on A2X and its users
Paul shares his thoughts on how current e-commerce brands are changing their outlook about the Amazon platform
The emergence of e-commerce accounting as a specialist discipline

In this episode…

Are you confident about your e-commerce business financials? For most Amazon sellers, balance sheets and financial statements can be complex and hard to trust—and many business owners disregard their Amazon accounting for this reason. But according to Paul Grey, bad accounting can lead to serious issues down the line, and this includes problems ranging from tax compliance to difficulties in transferring your business.

Luckily, Paul has created the perfect solution for e-commerce sellers struggling with their accounting: A2X. As an automated accounting service, A2X posts a seller’s Amazon, Shopify, Walmart, or eBay sales and fees directly into Quickbooks or Xero. This way, business owners can trust their numbers and make better business decisions on every e-commerce platform.

Join James Thomson in this episode of the Buy Box Experts podcast as he chats with Paul Grey, Founder of A2X, about the importance of accurate and effective accounting for e-commerce businesses. Paul shares the motivation behind his e-commerce accounting software and how it helps Amazon sellers vastly improve their financials. He also gives insights on effective accounting, specialized outsourcing, and why you should be selling on Amazon. Stay tuned.

Resources Mentioned in this episode

Sponsor for this episode…

Buy Box Experts applies decades of e-commerce experience to successfully manage their clients’ marketplace accounts. The Buy Box account managers specialize in combining an understanding of their clients’ business fundamentals and their in-depth expertise in the Amazon Marketplace.

The team works with marketplace technicians using a system of processes, proprietary software, and extensive channel experience to ensure your Amazon presence captures the opportunity in the marketplace–not only producing greater revenue and profits but also reducing or eliminating your business’ workload.

Buy Box Experts prides itself on being one of the few agencies with an SMB (small to medium-sized business) division and an Enterprise division. Buy Box does not commingle clients among divisions as each has unique needs and requirements for proper account management.

Learn more about Buy Box Experts at BuyBoxExperts.com.

Episode Transcript

Intro 0:09

Welcome to the Buy Box Experts podcast we bring to light the unique opportunities brands face in today’s e-commerce world.

James Thomson 0:18

Hi, I’m James Thompson, one of the hosts of the Buy Box Experts podcast. I’m a partner with Buy Box Experts and formerly the business head of the selling on Amazon team at Amazon, as well as the first account manager for the Fulfillment by Amazon program. Today’s episode is brought to you by Buy Box Experts. Buy Box Experts takes ambitious brands and makes them unbeatable. When you hire Buy Box Experts you receive the strategy optimization and marketing performance to succeed on Amazon. Buy Box Experts is the only agency that combines executive level advisory services with expert performance management and execution of your Amazon channel strategy. Go to buyboxexperts.com to learn more. Before I introduce our guests today, I want to send a big shout out to the team at Disruptive Advertising. For off Amazon advertising, Disruptive Advertising offers the level of service highest in the industry, focusing on driving traffic, converting traffic and enterprise analytics. Disruptive helps their clients increase their bottom line month to month. Check out disruptiveadvertising.com to learn more. Our guest today is Paul Grey, the CEO and Founder of A2X accounting software firm that posts online sellers’ Shopify, Walmart, Amazon and eBay sales and fees directly into QuickBooks or Zero in tidy summaries that match the payments to the sellers bank account. Paul is also the founder of ExportX, a firm that specializes in celebrating New Zealand brands by making them available around the world. Paul is bringing his expertise to us today sharing best practices on how to turn proper accounting into a vehicle for better understanding overall decisions that need to be made. So welcome, Paul. And thank you for joining us today on our Buy Box Experts podcast.

Paul Grey 2:05

James, thanks for thanks for having me on the show.

James Thomson 2:09

I’ve known you for several years when we first met through the Prosper Show four or five years back. For the first time I met you I’ve been impressed by your serial entrepreneurial spirit, you sell online and you support firms that sell online. What led you to find opportunities in the online marketplace space?

Paul Grey 2:29

What led me to find opportunities in online marketplaces? Well, really the origins of A2X the software service used by so many 1000s of Amazon sellers now go back to well, the early days of FBA, you know you just mentioned you were you were heavily involved in that and and I remember that too, you know, back when FBA was a an experiment in a corner of Reno, one right profess and, and I shipped some products in there and received perfectly and made that first sale through through the amazon.com marketplace. And then, you know, a couple of weeks later got that first settlement payout. But of course, the dollars that got paid out did not exactly match the sales that were made. So the next question is What’s going on here? There’s clearly some fees and some other transactions, how do we account for that that settlement period spanned a month ends and a quarter end. So some of it must have related to the previous financial period and you know, the dollars were small with your first settlement payout. But in my mind, there’s only one way to do that financial side of running a business and it’s to do it right from the beginning. And so I waded through that, you know, downloaded that settlement file, and I thought, What on earth have we got here? Alright, and that worked out how to do it in a spreadsheet as probably so many people do. And we build a process around that to automate that using spreadsheets, and then we switch that into clouds free cheat, so we could automate it further and, and that kind of stuff. But it was pretty clear that that was not the way to run a business. That was going to be anything other than a very small ecommerce business. Look, spreadsheets are unreliable. There’s curveballs that turn up in those data files and spreadsheets would break. By then we were selling also with Amazon in the UK and Europe. So you have multi currency challenges and accounting. And, and so as software engineers, it was pretty natural for us to build some Way to automate that that would be robust and reliable and automated, that could handle all of that.

James Thomson 5:07

Building building technology to support your own seller business is very different from deciding you’re going to become a SaaS operator. So how did you make that shift? And say, we’ve got something here, that’s good enough that let’s figure out how to sell this and make it available to 1000s of sellers?

Paul Grey 5:25

Yes, yes, it is. I absolutely second that, you know, lots of us can build tools for our own use. But commercial grade software is a whole different thing. I guess I had the advantage going in that prior to starting selling with Amazon and getting into e-commerce, I’d had a 20 year career, building a software product company, and taking that international, etc, etc. The big thing that, so I had an idea and running a software team of 500 people, 250 of them engineers, you know, you get an idea of what real software it looks like, and how to do it properly, how to do it at scale or so. And so how did we make that transition? Well, I think what actually happened is, you know, I probably mentioned what we were doing at one or two conferences in Seattle, and here and there. And some, we started to get inquiries from accounting firms in the United States had heard about what we were doing. And that was saying, Hey, can we use what you’ve built, because that’s what we need for Amazon. And so we made a version that people could use I, I decided to call it more than a prototype, looking back at it, but it was really when, you know, it went from, you know, one to to 50 to 100. And we said, Hold on a second here. Our theory all the way through had been that, as an early Amazon seller, we would see the challenges in running an Amazon business and be able to automate some of them with software. So I guess we were looking for that opportunity, there were a number of tools we built and some of the others people love, but didn’t want to pay for some of them, people didn’t see the same need that we did. But with A2X. That was pretty clear. You know, we were just people were asking for it. And so that was the decision to then take that prototype as the starting point and invest in rebuilding it as a commercial grade, high quality, highly scalable, secure SaaS products that would be able to support you know, not just hundreds or a few 1000s of transactions, but millions of transactions. And so we took that decision, we invested we built that. And then we launched it properly, I’m going to say in in 2016,

James Thomson 7:58

just about the time that we met. So let me ask you this fall over the last decade I have worked with I can’t tell you how many Amazon sellers that do shamelessly bad accounting of their Amazon business. And while Amazon hasn’t always provided the most user friendly financial files for sellers to use, how do you coach sellers on the need for good accounting and what to expect from Amazon financial data?

Paul Grey 8:23

Yeah, I mean, like you I think I’m continually amazed and impressed at how well so many Amazon sellers do without accurate financials, you know, whether they’re doing cash accounting, or no accounting at all,

James Thomson 8:36

okay? shoebox accounting at the end of the day, it’s, it’s

Paul Grey 8:40

incredible. It’s so impressive how far people can get, sooner or later, something’s going to happen. And they’re going to have to address what’s going on in the back office, or even perhaps start a back office function or outsource maybe to an accounting firm that can do it for them. And you know, some of those situations are things such as well, a really obvious one tax compliance. And, you know, in Europe, it’s VAT compliance comes first even before income tax compliance. And you can get a certain way with cash accounting, but once you’re above certain thresholds, you’re basically not legal if you’re not doing proper accrual accounting. So that’s one of the triggers. And people sort of realize that. Another one is, when people go to look for funding, maybe they’re looking for funding for growth, inventory or building, building growth into their business. You know, a lending institution is going to want to see proper financials. Otherwise, your borrowing options really are limited to those really expensive cash flow funding options, which you know, can be a double double edged sword. And another one is when people are thinking about, you know, they’ve maybe built build value in a brand Especially under that, you know, private label FBA seller model, if it’s about building a brand and brand value, and maybe thinking about exiting their brand. The valuation is predicated on accurate financials. So if you, if you, you know, someone’s just looking to interested in purchasing your brand from you, and they’re going to ask for your financials, if you don’t have accurate financials, they’re just going to draw a line through the valuation divided by two or divided by five. So that’s another one of the things that we see people have, you know, it can be it’s an emergency, you know, we need to get our financials up to date, which sometimes has to go back years of reconstructing what’s actually been happening.

James Thomson 10:42

So Paul, what are some of the biggest misperceptions that you’ve seen Amazon sellers have about the financial information on their businesses? Put a little bit differently, once a seller becomes an A2X accounting customer, what positive changes become most obvious to them?

Paul Grey 10:57

Yeah, I think, I think perhaps the number one is that often, for the first time in their business history, they can trust the numbers that they’re seeing in the profit and loss statement and the balance sheet. And just to give some context, that and I know this from my own experience, if you get from your bookkeeper, a profit statement that says, Oh, you made 60% margin on sales this month, and then you get the next one, and it says, Oh, you made only 10% margin as well. In the next one, it says 25%, you just go? That’s not right. None of those numbers are right. So I can’t trust any of those numbers. And why does that happen? It’s because, you know, often an accountant will use the same accounting model for e commerce that they use for another retail business, you know, a corner store. But e commerce is different. It’s a different accounting discipline, there are a lot of timing issues. And the thing is running a business, you need to know what that gross margin number is, firstly, because it’s fundamental to your profitability, you don’t want to be selling it, margins that are too skinny to cover your overheads. Don’t leave any profit for you. And, and, and secondly, you need to be able to see the trends for that to happen, it needs to be accurate. And so one of the things that A2X will do to achieve that, to achieve that trust and the profit and loss statement is firstly, it will separate out the balance sheet items that are coming through in those feeds from Amazon, there are a lot of balance sheet transactions in an Amazon settlement, you know,

James Thomson 12:39

single order, you could have three or four different line items.

Paul Grey 12:43

Yeah, and on top of that, sometimes you’ve got Amazon lending transactions, and then you’ve Well, for a start, you have sales tax transaction these days, right? Those are balance sheet items, not revenue or expense. And then now, especially with the newer seller accounts, you have the hold back periods, right. So when you get a payout, often it’s a payout for transactions that happened, you know, up to a month ago, and there’s a match carried forward. And so you’re almost running a sort of a semi receivables balance. And those transactions need to be put in the right financial periods. A2X takes care of all of that. And then that’s on the, you know, what’s your actual revenue and your actual variable selling costs. But the other big component of gross margin, the calculation is what is the cost of goods sold in that financial period. And it’s, it’s, it’s, and this is where a lot of maybe conventional retail accounting goes astray. In e-commerce. There are, you know, long, often long international supply chains, you place an order for inventory today for $100,000. You know, that’s not an expense in November’s profit and loss. Now, that’s actually a prepayment. And then when the inventory arrives, whenever it arrives, it becomes an inventory asset on your balance sheet. Those are balance sheet transactions. And then, you know, in February, if we sell 1000 units, we want there to be a cogs number in our profit and loss statement of what the cost was for 1000 units out of that $100,000 that we spent this month. A2X will do that and by its ability to match up the cost of goods sold number with the revenue number that’s in split out all the things that balance sheet items. That’s how you get an accurate margin number. Now once you get an accurate margin number, month to month, now you’re cooking on your financial side, right because now you can see a true gross margin. And you can start to look at your overheads and you can see about sheet position and you can have financial confidence and make decisions about your business with from an informed financial position. It just eliminates that whole financial thing. blonde, a problem that so many people are finding themselves having to do.

James Thomson 15:05

One of the challenges we have with so many brands that are new to Amazon is they show up, they put all their catalog onto Amazon, they treat it as one blob, like a one total entity. And being able to break things out and look at individual p&l is by SKU. That’s a concept that’s completely foreign to them. And yet, the competitive landscape is going to be different and every one of those SKUs. And so being in a position to know, how many products Am I selling, were the only person making money as Amazon. And maybe I should exit those products, you know that that kind of situation, you know, we run into an awful lot. And it’s challenging for brands that don’t necessarily have good distribution control. And there’s unauthorized sellers selling their products competing against them driving prices down, creating situations where they’re actually the brand is not in control of what ultimately will be the retail price on their products on Amazon. And lo and behold, they’re losing money every time they sell one of their units or product. So I mean, these kinds of situations are foreign to most brands that haven’t participated in a competitive marketplace like Amazon. I’m curious if there are other unexpected ways that Amazon sellers can make better decisions now that they have accurate, updated accounting? Have you seen some clients do some things very clever things that would never have been possible without this kind of granularity?

Yeah, I think that a couple of things come to mind. And you’ve touched on products going into FBA. And then if you don’t control the buy box, you have that stock there. And if it’s not moving, you can get into trouble. And I think businesses that maybe have inventory systems in place for managing their own warehouses or their own three PL stock. Those don’t really as a rule handle the stock that’s in FBA very well from an accounting point of view. And this is one area also where A2X can help because related to the cost of goods sold numbers that it can generate for you. It also will give you a monthly statement of the inventory that you have in FBA at the end of the financial period, which you need for the balance sheet. So with a conventional you know, some people try to take the approach of synchronizing everything near real time. But if VA does not get VA data does not operate near real time. You know, you cannot go into FBA right the second and establish numbers because Amazon doesn’t know it this time.

James Thomson 17:41

So let me ask you a trick question here. Amazon is neither a FIFO nor LIFO model. So how do you account for these weird situations where the inventory you haven’t sold might actually be cheaper to wholesale today than back when you bought it a month ago? I know I’m asking a software engineer this question. And it’s totally nerdy accounting question. But it’s Yeah, I was a third party seller once upon a time too. And I ran into this problem all the time where I didn’t get too fussed about it. But I realized it’s $5 more expensive or $5 cheaper unit today than what it was a month ago. I don’t know how to recognize profitability.

Paul Grey 18:23

Yeah, well, look, there are different accounting policies towards how to value inventory, most of which fall over at the hurdle that you described, which is you can’t do LIFO or FIFO or anything with FBA, because the information simply isn’t available. So what I can talk about is that it is an approach that I think makes sense for FBA inventory, which is to work out and regularly update an average cost per SKU that is, you know, appropriate. And some people’s policy will be to work that out on historical average cost, maybe if they’ve got stuck in their own warehouse, they’ll apply the same method, which maybe they do manage FIFO, they could apply that. Well, that’s going to be pretty close to what we have in FBA. Another way to do it, which is perhaps a bit more aggressive, and maybe appropriate to the Amazon Marketplace, is to value at an audit historical average cost, but at replacement cost, or, or value assuming that maybe there’s an element of expiry or perishability about that inventory. And to write that, write that down if it’s been there for too long. But at the end of the day, the value of that stock is the number that is going to show up in the cogs Cost of Goods Sold when you sell it. So decisions about Inventory Valuation, when it comes down to it actually decisions about cost of goods sold and margin. So, that’s what should guide that decision on inventory valuation. And

James Thomson 20:13

so I’m a big national brand have been selling in traditional brick and mortar through distributor model. Now I’m doing direct to consumer on Amazon. I have an in house accounting group. But now I’m having to account for this thing called Amazon where the rules of accounting don’t seem to work the same. How have you seen larger brands? Who have no experience with e-commerce? Have you seen them deal with? I don’t want to say two sets of books, but two very different sets of assumptions as to how to account for what’s going on in their different sales channels?

Paul Grey 20:47

Well, I think I think the accounting prerogative is for accuracy of accounting for sales, ecommerce, sales fees and balance sheet items, so that it balances with the cash that you’re getting from it channel. Because if it doesn’t match the cash that you’re receiving, then your numbers are wrong, and you don’t know how wrong they are. Whereas if you can reconcile to the dollars in the bank account, then you know, you’ve got everything accounted for. And that’s perhaps one of the big things that A2X brings to the table. You mentioned that A2X connect to QuickBooks Online and, and Zero, it was about accounting systems. And you’re absolutely right. And we’ve got some very nice integration that allows businesses, ecommerce businesses, to scale up to have really very large volumes on those small business accounting packages. But the scenario you described where it’s a bigger brand that’s adding and Amazon as a channel, chances are, they’ll be on any RP or accounting system. And, and so lots of those businesses also use A2X and what what they’re doing, you know, that they’re not needing the, the, the simple integration and automation that the smaller business people do, but what they do need is the accurate accounting journals representing what’s going on in the Amazon channel that says to the cash that’s coming out of the Amazon settlement payout system, and then they’re posting those into the E RP, using whatever method they want, whether they build their own integration or, or just a couple of times a month having somebody key reading. And so, you know, the net suites and so forth. A2X is often used in that situation. And especially when, when the volumes get right up there, you know, if you’re doing 1000s 10s of 1000s, hundreds of 1000s of orders a month. The ability to shield the back office, people it’ll own systems from that transaction volume really delivers a lot of value. Without Can you imagine asking a team of bookkeepers to wade through, you know, 300 orders a month each orders got 10 line items, right? Yeah.

James Thomson 23:13

So let’s talk about that. e-commerce obviously is accelerated aggressively during the COVID period, consumers are shifting the way they allocate parts of their wallet towards e commerce are their short term changes that your firm in supporting sellers, short term changes that your firm’s had to go through in dealing with some of these changing consumer preferences to move online and hence sellers having to get more aggressive with with having a presence online? Yeah,

Paul Grey 23:45

yes, yes. And it stems from from the desire of the A2X team, that all ecommerce businesses should be able to have those accurate ecommerce financials that to make decisions. I think given that A2X is about automating and streamlining the back office function were a little bit removed from the consumer behavior except as it shows up in the trends and so forth. But I think a couple of things that come to mind we’ve seen and I’m sure you’ve seen this as well, James, so many businesses that maybe had a cursory e-commerce capability or a website have Have a seat, okay, we’ve got to get organized. And as you know, they’ve either added a Shopify store or they’ve got more of their catalog onto Amazon. And I’m really happy to head to ramp up that as a channel because it goes from being secondary to being in some cases the only channel during lockdown period. And, and so, so we’ve really worked hard to support all of those people that are there. to adding or upgrading their e-commerce capability. I think the second thing that happened, and I’m sure you would have, you would have seen this firsthand James earlier this year. Firstly, with the pandemic, when it first took hold in China, and all those factories were locked down around that Chinese new year period, that caused havoc early on in supply chains, even when those of us in other parts of the world were, you know, thinking that’s not affecting us. Well, it was right people couldn’t get stopped to market. And if they were ordering inventory on, you know, a sophisticated just in time basis or anything like that, suddenly, they’re facing the problem of not being able to replenish top selling items, and that can be devastating for your top bottom line. And then when, you know, a month or so later when the pandemic really took hold. And, you know, Amazon, FBA was under such stress, right, and having to prioritize essential product lines and categories, entire other categories were closed to inbound shipments and same effect. Again, at the other end of the supply chain, if your category is closed, and you can’t get in, and Amazon is your only channel online, and your offline channels are locked down. You know, that was devastating to people. On the other hand, if you happen to be selling foodstuffs, or anything deemed essential, you kind of had the opposite problem, which is all your stock suddenly sold. And how do you get, you get more because the seats were full. So the upshot of all of that is that, you know, there’s a proportion of big Amazon, businesses or businesses with a lot of sales through Amazon, the Amazon channel, realized the business risk that they’re taking on without probably thinking too much about it. Because any disruption to that supply chain at the factory, and if you’re sourcing from, from a pandemic affected country or at the, you know, delivery to FBA, or Amazon closing categories, all of those things can were shown to be quite devastating to a business’s viability. Now that leads people to think, how do I mitigate that supply chain concentration risk? I guess you could turn it? What do I do? Well, the answer is you diversify, you added a second channel, a third channel. And so

James Thomson 27:37

not just a sales channel, but also a manufacturing channel,

Paul Grey 27:41

manufacturing, you know, secondary stock location as singers. And so I think the obvious beneficiary was the Walmart marketplace with a lot of big Amazon sellers. And I’m sure they were probably promoting the Walmart marketplace to a lot of Amazon sellers. And so you look at those numbers of sellers on the Walmart marketplace. And it’s what doubled in recent months.

James Thomson 28:07

Although, although Paul, one of the peculiar things we saw is the companies that did best on walmart.com were brands that were already in the physical stores, ie they had a first party relationship with Walmart, those are the only brands that Got curbside pickup, all these online only brands, they didn’t benefit from any of that increased demand. So yes, you could buy something on walmart.com and have it shipped to you. But it wasn’t the same kind of volume lift, that the brands that are already on the physical shelves we’re experiencing. And at least here in the United States, a lot of brands don’t want to be on the Walmart, physical shelves. They don’t mind being on the wall on the marketplace. But they don’t want to have that same kind of relationship with the Walmart retail stores.

Paul Grey 28:52

Yeah. And if you’re not going to do that, and then you look at bringing up your own brand store or a store for each of your brands. Yes, yes. It has been an enormous beneficiary of of that, the others. And how that was reflected back with with A2X is we had businesses and accounting firms relying on A2X for the Amazon accounting, there was a growing chorus of people saying, Hey, we use A2X, you know, that enables our business with Amazon, we need something of that caliber for these other channels without borders. And that’s that’s what led to us introducing A2X for Shopify stores last year. And a couple of months ago, A2X for the Walmart marketplace and then just a couple of weeks ago, A2X for eBay sellers as well. And so that’s where we’re responding to that, you know, diversification of channels and people in those different channels. Really Identifying the need, I guess they’ve been able to see what’s possible in having accurate ecommerce financials with Amazon sales and say, Well, hey, why can’t we have that for four other main e commerce channels? And so we’ve been working very hard to respond to that need.

James Thomson 30:19

So let me ask you, even before the lockdown, we had Buy Box Experts saw even decently sized brands choosing to stay away from the Amazon channel, or taking no more than a nominal interest in the channel. How do you see brands today, changing their outlook about Amazon? beyond the obvious, well, I guess we got to be on Amazon, because customers are. I mean, there’s, there’s more to it than just sort of giving up and giving in and saying fine, you know, structurally, you have to rethink, okay, I’m now going to have this major secondary channel, I may have to split inventory, I may have to do a bunch of other things that I wasn’t prepared to do as an organization. You’re seeing companies that may not even be ready to handle a second set of financial accounting. Are there other things that you’ve seen, as companies have said? I guess I guess I have to be on Amazon. Today’s this, this is the year I have to be there.

Paul Grey 31:17

Yeah. Well, I mean, it’s a real dilemma, isn’t it? And in our business, we made that decision that I will be selling on Amazon. But I think also, James, you know, there are entire categories of products that are not sold on Amazon at all, and maybe never will. Right. Right. And so you see huge growth in you know, a lot of those people will sell through a Shopify store, for example, because the customers for those categories of products, you know, they know they’re not going to get that product from from Amazon. Anyway, I guess the flip side of that is, if your product is eligible for Amazon, which let’s face it is being millions of products. And you’re reluctant to read have your brand on Amazon, if you’re the brand owner. I’m not going to say it’s an easy decision. But the way I think about it is, first of all, it should be about customers, not necessarily just about you. I mean, yes, you own your brand. But think about your customers. Yeah, if your customers want to buy through Amazon for their own reasons, they know it’s going to get delivered. They already put in all their credit cards and delivery addresses. It’s convenient, they you know, whatever reasons that they have, if they are wanting to buy through Amazon, Why are you stopping them from buying through their preferred channel? I’m not saying it’s one answer or the other, but I think the customer should be at the center of of the decision.

James Thomson 33:01

That’s how Jeff Bezos thinks, start with the customer.

Paul Grey 33:04

I think so. Yeah. Well, you know, he’s got a lot of things right. And I think that’s probably one of them. I think another part of the dilemma is that if you don’t have your product on Amazon, and manage your brand story and how your brand is represented in that channel, then chances are your products are going to end up there anyway. But you don’t know who will be representing them, or how well or how badly or how accurately and that is likely to harm your brand. So in my view, it’s better to seize the initiative, you know, do the Brand Registry thing and all the copyright trademarks and so forth. And get your brand represented properly in that channel, because so many customers use that as a reference the reviews, the you know, the all of that information, price reference or whatever it’s going to be. Yes, yes. To me, to leave a vacuum in that channel is to risk a whole lot of brand harm.

James Thomson 34:10

And give your competitors a huge leg up on you, which is, yeah,

Paul Grey 34:14

well, I think so there’s another argument that if people are looking for your product, if they can’t find it, then they are and they want to purchase through Amazon. Their obvious next step is to buy the next big best thing that has done for them. Yeah, absolutely.

James Thomson 34:32

I want to ask you, you told us in the beginning of our discussion, you spent 20 years building other software companies. And here you are developing accounting software for brands on Amazon. Is there a particular moment where you realized, actually I’m pretty good at doing this, I can shift to selling software in an area where prior to this, you didn’t have experience but you know, you’re onto something big. Was there a point where enough people were asking that you said, there’s clearly a business opportunity, and I’m going to embrace this.

Paul Grey 35:10

Yeah, that’s a good question. Is there a point? Well, I guess it’s a progression, isn’t it? There’s a point where it’s kind of fun. There’s a point where other people must face this problem. Surely other people will need this if, if we can get it working for our own e-commerce transactions. And then there’s a point where you start to get that feedback from people actually use it. And you know, one of the things that I’m most proud of with A2X is that customers take the time to write reviews and post them online. There’s this half a dozen offer app review sites, run by, you know, Gartner group, and yes, software, people run app directories and Shopify has one, Amazon has one now as well. And people have taken the time to write reviews there. And you know, if I’m ever having a down day, you know, all I’ve got to do is reviews because people, most amazing things, you know, I’ve seen people say things like, A2X changed my life, you know, and that has to be written by a bookkeeper, right, that was buried and broken spreadsheets, suddenly got three days a month of their life back. But you know, it’s when you get, I’ve worked with a lot of software products over the, you know, through my career, and I’ve, I’ve never, never seen feedback like that. So I know that we’re really solving an important problem that helps out a lot of people. And we’re working hard to do it at a price that’s really, really good value, you know, is saving people a huge amount of time and more importantly, helping them run their e commerce businesses successfully. And I guess the other thing we’re particularly proud of is that over 500, accounting firms have adopted A2X and they deploy it for all their A2X clients, I think there was one of them. A firm called Seller Accountant out of Georgia, made a YouTube video where he said, A2X is non negotiable for all my clients. Yeah, it’s, it’s tremendous. But I think, actually, if I could just go down that down that route. James, I think one of the things that we’ve really noticed over the last couple of years is that there’s is the emergence of e-commerce accounting, as a specialist, professional discipline within the accounting and bookkeeping space. You know, there are a number of midsize and bigger accounting firms that have started specialist departments or divisions that focus on e commerce recognized as a specialist discipline. And then there are startup accounting firms that are almost using a software startup model, you know, offering fixed monthly price subscription services and standardizing their processes and being very clear about who they serve, you know, we serve Amazon sellers that are this size to this size, or we have this product, which is for people just getting started as a private label, Amazon seller, some of them even specializing in Shopify accounting, for example. And, and these, these firms are doing a fantastic job because they’re offering a really high value, outsource service and of course, Amazon sellers with so many are predisposed to sticking to the knitting and outsourcing non core things and accounting. Who I’ve asked wants to really

James Thomson 39:03

or as it turns out, many of them don’t even want to do accounting at all. They want to outsource it.

Paul Grey 39:08

Yeah, well, you can only go so far with that particular particular approach. But, you know, you’re seeing firms now. There’s one called Click & Mortar Accounting, specializing in e-commerce Of course, in fact, there’s one called ECommerce Accounting LLC, started by a lady called Cindy Smith. You know, really serving ecommerce businesses and Amazon sellers in particular. And some of them would be I would suggest, the ideal go to people for advice for bigger brands. You know, with a store starting to sell on Amazon, they’re going to run into these questions of Well, how do I account for that stuff and you really do benefit if you have a specialist accountant involved. There’s another one that comes to mind called Catching Clouds based in Colorado. They’re really one of the one of the thought leaders and best practice e commerce accounting. And we

James Thomson 40:10

actually have Scott coming joining us on the podcast shortly. So

Paul Grey 40:13

Are you Yes? Well, you know, all means pick his brains because he’ll be able to talk in far more detail than me about the ins and outs. And, and so I guess one thing for for people to consider is whoever’s doing your bookkeeping and accounting right now, if, if you feel that they don’t really get Amazon, I can assure you there are a growing cohort of bookkeepers and accountants out there that do understand Amazon accounting, and they don’t have to be near you. They don’t provide that service from wherever they are. In fact, one of the things that we at A2X have done is we help ecommerce businesses connect with the right accounting firms that have the specialist skills. For them, there’s a section of the A2X website, probably caught something like find an ecommerce accountant that will help you put in what they’re looking for where you are. Because of course the people in the UK and Europe they really need that VAT expertise. In the United States, it’s more about sales tax as well as the that the various factors involved in e-commerce and in the USA. So so that’s a good resource there for people as well if they’re needing a bit of extra help in this e-commerce. It’s great.

James Thomson 41:44

Paul, that is all of our time for today. I want to thank you for joining us. For those of you interested in learning more about Paul’s A2X company, please visit A2Xaccounting.com. Thank you, and we’ll see you next time. And now to finish today’s podcast I’d like to share some final thoughts. For third party sellers to be successful on Amazon. A critical lever will be soliciting feedback from customers. We at Buy Box Experts are really big fans of the team at eComEngine, and it’s tools that help Amazon sellers to simplify the process of messaging customers of Amazon orders. To learn more, go to eComEngine.com And with that, I want to thank you for listening today and I look forward to joining you next time on the Buy Box Experts podcast.

Outro 42:29

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