Let’s Talk Profitability! - Webgility | EP. #53

On this 53rd episode of The E-Comm Show, our host and BlueTuskr CEO Andrew Maff is with Parag Mamnani of Webgility. This e-commerce software helps brands to get unique insights into their products, customers, and overall profitability. Tune in to this episode of The E-Comm Show as Parag shares his accounting and financial data expertise.

If you’re an e-commerce brand that’s struggling with managing your finances, then give this episode a listen as Parag talks about looking at cash flow projections, managing inventory, and understanding your business's profitability on a channel and SKU level.

If you enjoyed the show, please be sure to rate, review, and of course, SUBSCRIBE! 

Have an e-commerce marketing question you'd like Andrew to cover in an upcoming episode? Email: hello@theecommshow.com

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Let’s Talk Profitability! - Webgility 

SPEAKERS

Andrew Maff and Parag Mamnani

CONNECT WITH OUR HOST: AndrewMaff.com  |  Twitter: @AndrewMaff | LinkedIn: @AndrewMaff

Parag Mamnani

Parag Mamnani has nearly two decades of experience working with over 10,000 ecommerce sellers to optimize their business processes and grow. His experience working as a Product Lead for Amazon website gives him a unique perspective on the ecommerce market and its remarkable growth. As the CEO of Webgility, Parag has deep insight into the daily operations of ecommerce businesses of all sizes. He believes that most business problems can be solved by looking closely at data and he strives to empower sellers with the data and intelligence they need to succeed. He is a respected voice in the online retail industry and sits on the development councils for both Amazon and Intuit.

Transcript:

00:02

I mean, find your footing, figure out where your business is headed, then really start to operationalize and invest in tools. That totally makes sense.

00:11

Hey everyone, this is Nezar Akeel  from Max Pro. Hi I'm Linda and I'm Paul and we're Love and Pebble. Hi this is Lopa Van Der Mersch from RASA. You're listening to and you're listening and you

00:23

Hello, everyone, and welcome to another episode of The E-Comm Show. I'm your host, Andrew Maff. And today, I'm joined by the amazing PARAG MAMNANI, founder and CEO of Webgility. Parag. How're you doing ready for good show?

00:23

are listening to The E-Comm Show. Welcome to The E-Comm Show, presented by BlueTuskr, the number one place to hear the inside scoop from other e-commerce experts. They share their secrets about how they scaled their business and are now living the dream. Now, here's your host, Andrew Maff.

01:03

I'm good, man. Thank you for having me.

01:06

Yeah, super excited to have you on the show. A lot of our listeners, I'm sure they know I've been an ecom for, like 10-15 years or something like that at this point. And webgility has been there right by my side. You guys have been around for years. I know, countless sellers that use you guys services, your platform, obviously. There's you've just been like a staple in the industry. And obviously being the founder and CEO that makes this whole conversation that much better. But even though that's clearly a fact, let's assume that people who are listening right now don't know anything about you or about webgility. So why don't you kind of give us a little bit of a synopsis. Eric?

01:43

Absolutely. Again, thank you for having me on the show. And yeah, I've been around a while I've been in the E commerce space. Personally, I've been in the space for over two decades now. Early Days started an agency building ecommerce websites and platforms that you might not have heard of any more like x cart and OS commerce early days, and then did the classics. Yes, exactly. And then, you know, did that got my hands on, you know, working with lots of really cool sellers, early days. And then I joined Amazon ran a product there called webstore. So as the E commerce platform, think of it as their Shopify, which they then sort of divested later on and then started web Jilla T were essentially an automation and intelligence platform for small businesses. So started early years with focusing on accounting as you could tell QuickBooks right, so we do a lot of lot of work with QuickBooks sellers, really helping them automate all of their business processes around QuickBooks. So whether it's sort of reconciling their books at the end of the month, figuring out how to do purchase orders, keeping inventory and pricing in sync across all their channels. And over the last few years, we've invested heavily into kind of data and intelligence. So helping businesses really figure out what their profitability is like, right? Like, what, what channel is performing with skews performing, and how can they grow faster? And that's been a long journey. And yeah, you know, I've been at it a little over 15 years now, but it's, it's always fun. It's always a new challenge.

03:13

My so I know. Yeah. Like you'd mentioned. No, I know you guys started. Was it? Oh, 2007. I think yes. You thought Yeah, right. Yes. Nice. And so I know, obviously, you were focused on the accounting side, how, how deep outside of the, you know, the financial, have you guys gotten? Or have you just really honed in on the financing side?

03:34

Yeah. So I mean, listen, I think, you know, I've had this question a few times, and something that most people sort of maybe don't recognize, but like your accounting and financial data, that system is likely the first and only system of record that every small business has, is the only system that actually has true data about what's happening in your econ business. Because it has your financials, what's the money coming in? And what's the money going out? So, for us, that's always been sort of the anchor and the epicenter of everything we do. But early days, our focus was really on. Okay, how do we automate your closing books? Like how do we get all of your econ transactions into your QuickBooks? How do we make sure we know what your expenses and fees are? And we we've, you know, grown over the years as really following our customers lead where they've come to us and said, Okay, now you have access to my data. What more can you automate for me? So I have my inventory across all my channels, how do I keep all of my channels in sync? Right? I have pricing that I want to adjust across channels. I want to do listings on different multiple channels when I expand to new channels. So over the years, we've added lots of capabilities, but you know, QuickBooks and Sood NetSuite are really kind of our sweet spots of where we focus that you know, growing scaling, multi channel ecommerce business, that is spending, you know, so much time and effort In trying to reconcile their books, figuring out where they're making money, and automating a lot of manual effort. So yeah, that's that's been sort of our focus. But yeah, QuickBooks and sort of accounting ERP does remain at the folk at the core of everything we do.

05:17

So, you know, from our end, you know, we do a lot of marketing here, obviously, it's, we're, I'm like you, right, I'm on the I'm still on the agency side, I'm waiting to figure out the platform so I can stop. But like, when we do the marketing side, it really does amaze me, how many sellers we end up working with that don't really have that kind of insight, right? Like, what are your actual cost of goods? What should your at least from our perspective, what should your target ROI be? Or if from an Amazon perspective, or any of these different marketplaces, you know, they increase their fees? And, like, I know, there's another increase that Amazon's doing during just q4 And like, so there's, there's things like that, is there? Do you have direct integrations with pretty much everything that kind of updates internally? Or is that something that kind of I'd imagine that's complicated, because it comes with like, different categories and stuff. But how does that whole process work?

06:09

Yeah, yeah. Listen, you know, I like to start by sort of just telling sellers that, you know, so many tools out there, and so many companies out there market, everything is sort of E commerce is easy. And I think that that is exactly sort of the opposite, right? Like e commerce is hard. And in fact, the moment things get easier, you know, sellers, you know, various tools make it easier than, you know, competition only rises. So now, if you look at kind of a seller's ecommerce stack, I mean, we're talking an average of maybe 15 apps that they use to run their e commerce business. And so the challenge is, when you're looking at Sage, your marketing aspects, you find a lot of tools out there that will look at the marketing and be able to tell you say your return on your ad spend, because they're able to calculate, you know, from your ad channel to the dollar you made in the order. But you have to go all the way back to your actual cause of the items for you to know whether you made money on the order to begin with. Yeah, so. So I will say there's a reason I've been at this for over 15 years now, because it's a really hard problem to solve, right? You have to connect lots of channels, lots of systems, and they're constantly evolving. And it's a moving target, because every platform we connect to is evolving their own API's making new datasets available, and we have to constantly adapt to that. So I'd love to tell you, we integrate with everything, but we don't yet it's a you know, it's a work in progress. But but we do you know, today, we connect to all the major marketplaces, we connect to your accounting platform, we connect to your shipping app, we connect to your payments solution, we've added now, connectivity to your ad platforms, we're actually doing a lot more on the marketing side here coming up in q4. But our ultimate sort of nirvana for us is can we get the seller to see what is their profitability at a channel and at a SKU level, like if you could tell every single SKU which was profitable, which order was profitable, which channels are profitable. Now you have the true power of really figuring out where to put more dollars to work and where to throttle back. And oftentimes, those decisions are being made not based on where you're making money, but kind of maybe where you're seeing a lot of volume. And, and that's not necessary. That's, that's maybe one way one strategy that really works. But getting your sense of your financial data, I think is is real key. And frankly, that's the recipe for growth. Because, you know, you can find a lot of tools out there, most sellers will have access to those tools that can fine tune your pricing that can fine tune, you know, your competitive score, and keywords and optimize them. And I'm not saying those are not great tools are actually really, really powerful. But once that playing field is leveled, what's next? How do you actually know what's profitable, so that you can, you know, kind of get that competitive edge and get ahead.

09:23

Profitable is such an interesting, like concept, which it shouldn't be, but like, I'm trying to think of the best way to word this. So like, there, it blows my mind how many times like I'll speak with seller and they're still doing most of their business, either. They're just kind of letting it go into QuickBooks and hoping that they'll figure it out. Or they're have some convoluted spreadsheet that really only makes sense to them. How do you kind of showcase that data and actually present what is profitable and also how do you you mentioned that you get profitability down to a SKU level? How do you do that? How do you Yeah, that's fair. How did you do that?

10:06

Yeah, well, a it's a very hard problem to solve. And you know, we're trying to fine tune it every single day. But you're absolutely right. What we see most commonly is that, you know, first off, you know, QuickBooks is an afterthought, your accounting is an afterthought, because you're looking at it as a tool for compliance. You're thinking I need QuickBooks, I need my accounting books to be complete. I'm going to hand this off to my bookkeeper, my accountant. It's a bookkeeping activity, and they'll take care of the data. And that's fine. And to your point, the place that you actually know what's happening is they'll go to each sales channel to see what sort of revenue they got. And they'll look at their bank account and say, How much cash do I have? Right. And frankly, this is where most people are under leveraging their accounting and financial system of record. Because done right, your financial system should not just be a place where you get compliance. But it's what should be giving you insights as to what you should do next in your business, right, every month, every quarter, as you close your books, it should give you insight as to what's coming next. Now, there may still be a need for some spreadsheets as you try to figure out where you want to focus on in your business. But really, what we do is we provide two complementary solutions. On the one hand, it's the accounting automation products. So basically, you have to basically be able to take the data from your different sales channels and be able to synchronize it so that all of your revenue, all your expenses, and fees from all of the different channels are organized. So the bookkeeping pieces done, right? That piece should be just automated. And whether you do it or you work with an accountant, they can help you get all the data flowing automations, the piece that you get your books completed with. The second piece is then the analysis. So we have a product, we've recently launched his call agility, intelligence. And that's really a multi channel analytics app that connects to the same channels that you would with your accounting platform. And it's connecting and bringing in all of the revenue data from your channels. It's dissecting the different fees that are happening at your various payments processor with your shipping app, and in your marketplace. And it's pulling in the cost data from your accounting system. So we get a 360 degree view from all of your revenue and your cost information. And that's what gives you the profitability insights. And you can see that profitability, all the way from the channel to the order to the item. But it does come back to how strong is your data, because frankly, a lot of people don't even enter their cost center accounting system, which just sort of blows my mind. Because how do you know your profitability, because you'll end up putting your costs in your Excel sheet. But you should be generating your POS from your accounting system, you should have all your vendors set up there, you should know what your item costs are. And no, I don't think this can all get very complicated. But that's where you got to have your financial systems really well, oil, because that's the data. It's sort of like, you know, driving a car without seeing a speedometer. Right. Like, if you don't know how fast you're driving, how slow you're driving.

13:14

So the cop pulls you over? Yeah,

13:17

exactly. I mean, you know, and, and you sort of need all the gauges, right? Unfortunately, you can't just have one. And so this is why we also partner with a lot of accounting firms and a lot of financial professionals, because, you know, it's not just about getting your automation set up, but oftentimes, it's about getting your books set up, right, and getting your financials custom, really helping you to make better decisions. So yeah, I mean, you know, it's all fairly automated once it's all up and running. But we know that it can be overwhelming, it can be scary sometimes to touch your financial systems and your accounting data, which is frankly, one of the reasons why, you know, it's a cost for our business, but we provide white glove onboarding to all of our customers. We invest heavily in our customer success teams, because you want to be able to get your books set up right and feel confident that all your data is running correctly. And you know what's happening. Yeah, so yeah, it's it's, it's not an easy problem. But But yeah, you got it. Done. Right. It brings tremendous value to to our customers.

14:25

What about from like, a projection standpoint? Because like, one of the things that I get this question all the time, someone's asking me like, oh, you know, are you a seller yourself? And I was like, no, like, I don't know how you all do it. I inventory scares the crap out of me. Figuring out like, because profitability is one thing, but then it's what is your projectable cash flow so that you can actually make sure you have inventory for you know, especially like this time of year where you need to make sure you have enough in stock and so is there any kind of like, projection that you map out? Or is that something that you kind of turn to and say like, Hey, we're feeding this information to you Your Account or something? And that's something for you all to discuss internally to map that out.

15:04

No, I love that you asked that question because we've, we're just in the early days of this, but we do have a forecasting capability in our solution. So ability intelligence provides a sales forecast. So it'll actually tell you, based on your historic performance, well, we can project out as being your sales velocity. And we can also tell you what sort of order volume you're going to be seeing. And we're working on it. It's early days, I don't want to misspeak. But we're working on a very comprehensive AI driven forecasts where you can look into the future and exactly to point be able to forecast your cash flow, figure out when you're going to run out of stock. And with the magic of our application, you'll be able to automatically trigger a purchase order to your vendors. So you're not ever going to run out of stock. So really taking all the thinking out of the planning process, and being forecast out what that future looks like. And again, we just launched this product earlier, this quarter, actually. So we're really excited, and lots of customers given us some really great feedback. But that for me, and for my team, you know, that's the Holy Grail, right? If we can give you a real accurate picture of where you're making most money, and give you an idea of what your profitability looks like, when you're going to run out of stock and actually automate all of that behind the scenes, we will have taken the heavy lifting of I think several different people on staff and including the business owners headaches of like, what is my cash flow look like? Am I ready for the for the holiday season? Or any season won't matter?

16:48

To any season? What um, what would you say is like when someone first you know, comes you guys, they get set up, they're all loaded up ready to go? What's like one of the first things that you find that they were unaware of, until they got set up in webgility.

17:04

The number one place that our customers get a hiccup is their inventory. Most businesses don't start off having a plan for how to organize their inventory. And so we do invest a lot of our time and just helping them get their skews, right. It's crazy to me that businesses start off without planning what their SKU names should look like, how do they solve for variance versus options? How do they separate those skews by different channels? And how do they record revenue from different channels and expenses and accounts across the different channels, so that they know which channel is performing the right way. So it's that initial inventory, and that account setup that I find most people overlook. And frankly, I don't blame them, it's just it's not a recipe for scaling, you end up sort of stitching together different tools and different spreadsheets to just find your way to that million dollar of revenue. And then you end up having to go back in time trying to rectify all of those things at all to fix it all. But but it, you know, be much better handled, and I think set up for success done a little earlier. And yeah, I think those are the typical stumbling blocks is how do you get sort of your accounts and your, your skews set up correctly, that's most of the time. And that's what prevents automation, right? Because your skews aren't matching, you have to create a whole mapping of your catalog, your accounts are not set up, you have to go reset them up, and then your financials historical versus forward looking don't match up correctly. So then you end up sort of looking at your business from a completely new lens. And by the way, when to cross that hump. It's just beautiful, right? Like when business owners start to see their data that elegantly and really understand what's been happening across their different channels. It's, it's great for them then but but there's that initial kind of hump of getting across. And I think one of the worst things that, you know, I've noticed in that sort of very common in the marketplace is you have a lot of folks that are touting, hey, don't worry about your accounting system, just package of summary journal entry of like, how much income and expenses you had, and let's move on. And that just sort of blows my mind. It's like you're, you know, the whole point of your accounting platform is to give you control over your financials. And, and that's a recipe for you need six more tools to do what you really need, which doesn't make sense to me. Like, we believe that you should have your accounting system be your system of record that's giving you the insights you need for success and We layer our solution on top of it. So it complements it really well, and gives you all the reporting and forecasting that, you know, most systems, including QuickBooks are not equipped to provide.

20:11

Yeah. It's amazing. That's such an interesting insight that that's the direction that a lot of them go. What um, that, you know, it's funny you say that, because that million dollar hump seems to be almost incredibly standard across every commerce category, no matter it's like, they get to a million. And then usually, it's around like one between what I've seen anyways, like that 1.5 to 2 million mark is where they finally start digging into their financials. And then all of a sudden, it's like a completely different business. And that's what allows them to get to like that five $10 million mark a year and in scaling from there, what is like? What is an ideal? You know, customer? webgility? Do you kind of suggest like, Hey, start from the beginning? Or is it more of a, once you get up and running, and you're on a bunch of different marketplaces and things like that, then it's a little bit more understandable.

21:00

Yeah, you know, our, I would say, our sweet spot is around the half a million to a million dollar revenue mark, and goes all the way up to about 50 million, and we have even larger customers on the platform. But that's usually the sweet spot. And to your point about that 1 million hump or the half a million or so it's really, when you're going from it, you know, being a side hustle to becoming a real business, right? You're working and grinding likely at a full time business and doing an E commerce business on the side until you really start to see that register the ding. And then once those sales come in, and you can get past that half a million mark, the dream becomes real. And we see you know, business owners, kind of becoming business owners, instead of thinking of it, it's just a side gig. And that's when they start to establish systems. And by the way, this is this is all natural, and it totally makes sense. You don't start a business to create operational systems. You don't, you know, right. So, you know, you're trying to build a business, you're trying to feed your family, you're trying to, you know, establish a career for yourself. And so totally makes sense to figure out your path. And which is why, you know, we definitely, I mean, in fact, we have a blog post, we're, I think I wrote it in, it's probably just in pre production here should be launched soon. But we talked about using free tools. And when it totally makes sense. And really, when you're getting started, there's a number of free tools. In fact, QuickBooks itself offers free integration tools to various shopping carts and channels. By the way, I'm a total fan of when you starting early use of free tools, figure out what's going to get you going and find I mean, find your footing, figure out where your business is headed, then really start to operationalize and invest in tools. That totally makes sense. I mean, I did it myself, early days, right. I mean, 15 years ago, we got started, we didn't have a full technology stack. And today, you know, we've got Salesforce Pardot, intercom, you know, you name it, right, like all the major key tools, and it's a big line item in our expenses. But that's, that's you, you hit that when you hit scale. But early days, there's a lot of free tools out there. But I will say the moment you and this is also sort of a personal choice for a lot of sellers, when they decide to go from a single channel to multi channel. But things are a lot easier when you're selling just in one channel isn't as hard as Amazon makes it to like really, operationally managed with Seller Central, it is still much easier when you just have one channel to focus on. But the moment you diversify to two channels, free tools don't really cut it. You cannot do things on Excel manual doesn't work. Because because you know it's funny, it's I have two kids, and it's like two is not equals two. It's a problem. It's like exponential. So yeah, the moment you get you know more than one channel, you want to really think about tools and automation. And that's why that's where sort of our sweet spot is as well as that's where we can really help sellers kind of bring everything together because then we normalize things, right? You look at one dashboard. You look at one set of reports, you see one order stream of all your channels, you see one expense, and then we elegantly categorize everything and put it into the right bucket. So you kind of know which channels what and where you made your money and what's working, what's not working.

24:40

Yeah, it's really funny that you say that I never even thought about that, you know, leveraging the free tools and all that kind of stuff. Like when you're on one platform, it's usually pretty easy. Like even our approach with it from a marketing side, which in my eyes is almost like the complete opposite end of the spectrum of what you're working on. You're making sure that we're doing our job right. But as soon Get like we talk about all the time about going omni channel and you know being on multiple marketplaces, developing your own website and starting to build your own brand and everything. But every time we speak to specifically like Amazon sellers that are doing, you know, a couple million dollars a year, they're like, alright, let's make a website, and then we'll just start making money. They're like, No, no, no, it doesn't work that way. You're starting over from scratch. So let's use the free stuff and ease into this and see what that process is, there's pretty funny that it's the same way on your end and never even kind of thought of that.

25:30

Yeah, I mean, I, you know, I also just say, like, I find with sellers, they make the decision to go multi channel to quickly, right, because they haven't necessarily maximize what they can achieve on a single channel, before they go out hunting for new and especially if your goal, if you're a brand, it's sort of a no brainer, you kind of have to have a website, right, you need to build an audience and build a repeatable kind of base that you can market to. But for EECOM, only sellers, I mean, you can maximize what you're doing on a marketplace and double down on strategies that are working, there are tons of great tools, as you probably know better than I on how to find new products and sell more solutions. If you can kind of build that repeatability with a single channel. That's, I think, a better recipe instead of really taking on the burden of additional channels before you've really fine tune your your single channel business. But yeah, different approaches out there and certainly depends on kind of the skill set and expertise. And you know, I've been following you know, your your podcast and yeah, I mean, you guys have had some some great content around. How do you really optimize marketing? How do you build your brand, and you know how you fine tune your marketing and advertising spend, I think it's, it's really, really insightful and valuable for your audience.

27:00

Appreciate that. Great, great way to end frog really appreciate you having me on the show. standard, normal, fun stuff at the end of any show. I'd love to give you opportunity. Let everyone know where they can find out more about you and of course webgility

27:13

Yeah, absolutely just visit web Jilla t.com And I'm on all the social channels if you can't type in my name, just look me up Parag@webgility.com and yeah, I would love to interact with any seller that's out there. And you know, we have folks listening and available on our website to address any questions and help figure out how we can help you scale

27:36

beautiful appreciate boy thanks for being on the show. Hey, thanks to everyone that tuned in. Yeah, everyone that tuned in thank you as well please make sure your usual rate review subscribe on whichever podcast platform you want or YouTube or just head over to ecommshow.com. But if not, as usual, we will see you all next time.

27:54

Thank you for tuning in to The E-Comm Show head over to ecommshow.com to subscribe on your favorite podcast platform or on the BlueTuskr YouTube channel. The E-Comm Show is brought to you by BlueTuskr, a full-service digital marketing company specifically for E-commerce sellers looking to accelerate their growth. Go to BlueTuskr.com Now for more information. Make sure to tune in next week for another amazing episode of The E-Comm Show.