How Ecommerce Brands Can Leverage Financial Data to Meet Customer Expectations

Key takeaways for ecommerce brands:

1. Delivery delays significantly affect consumers' perceptions of brands, underscoring the need to meet fulfillment expectations.

2. Poor inventory management can impact the ability to fulfill orders promptly. Using up-to-date, ecommerce-focused accounting tools can help brands monitor real-time stock levels, costs, and turnover rates to minimize delivery disruptions.

3. Brands that integrate sustainability into their operations – such as offering slower delivery options to reduce carbon footprints – are likely to gain customer loyalty and a competitive edge, but must be on top of their numbers to handle the added complexity.

While ecommerce will probably never experience another growth period like the COVID-19 pandemic years, consumer interest in online shopping continues to increase. According to a recent study by Descartes, a supply chain SaaS provider, 39% of consumers made more online purchases in 2024 than last year, and 57% explored at least one new product category this year.

Based on a survey of 8,000 consumers in Europe and North America, Descartes’ study provides a comprehensive view of online buying and home delivery performance. Additional findings include:

• 44% of consumers intend to increase their online purchasing frequency to at least every two weeks, compared to 34% in 2023 and 32% in 2022. 

• Consumers expect to make almost half (49.5%) of all purchases online within the next year – a 4.9% increase versus today.

• Most consumers in the U.K. (59%) and North America (52%) expect to buy more often online than at a physical store within 12 months.

• Two-thirds (67%) of all consumers still experienced delivery issues.

Despite incremental year-over-year improvement in delivery performance  – 73% and 69% of consumers, respectively, reported delivery problems in 2022 and 2023  – the study notes that customer dissatisfaction remains high, especially regarding the timeliness of delivery. “Yet again,” said Chris Jones, EVP industry at Descartes, “the market continues to underestimate the whole ecommerce home delivery phenomenon.”

The Impact of Delivery Delays on Ecommerce Brands ‍

Underestimating the importance of timely deliveries in ecommerce can be a dangerous proposition. Several recent studies have shown that delivery delays negatively affect consumers' overall view of brands, with the latest being The State of Consumer Holiday Shopping 2024 – a new report by supply chain platform Project44.

Gathering insights from over 1,300 consumers across the US, Canada, and the UK, Project44's report details their shopping practices, spending, and shipping expectations. As for the latter, the sentiment is clear – consumers aren't interested in brands with a history of missing promised delivery dates: 

• 58% of Americans said they’re either unlikely to buy from a retailer who missed a promised delivery date in the past. 

• British consumers are even more unforgiving, with 76% of respondents saying they are unlikely to reorder from a retailer who mishandled a promised delivery date.

Another interesting nugget: while delivery delays are sometimes caused by the carrier, consumers primarily pin the blame on retailers. “Even when third-party shippers like UPS or FedEx are responsible, the blame falls squarely on the brand,” notes the report. “Shoppers don’t make distinctions between the shipper and the retailer – they hold the brand accountable.”

‍The True Costs of Poor Inventory Management 

DTC brands have surely had their share of delivery blunders over the years. Many delivery blunders stem from online store inventory management issues, which are often due to manual bookkeeping processes or obsolete ecommerce accounting solutions. The reason is simple: inventory is, in its essence, an accounting problem.

Think about it: inventory accounting is part of a DTC operator's day-to-day work. Every sale that contains inventory generates a corresponding entry on your P&L. When inventory items are shipped, the asset value on the balance sheet decreases, while the COGS on the P&L increases. And when you buy additional inventory, its value is added to your assets on the balance sheet.  

Consequently, using manual bookkeeping processes or obsolete ecommerce accounting solutions typically results in a lack of real-time data on stock levels, exact costs (per SKU, per warehouse, etc.), and turnover rates, leading to:

• Understocking, resulting in missed sales opportunities and unsatisfied customers
  
  
• Overstocking, which could translate into increased storage costs and obsolete products
  
  
• Misallocation of resources, i.e., investing in underperforming products or overlooking successful ones.

Each of these online store inventory management problems can cause delivery delays. Understocking –  i.e., failing to maintain adequate inventory levels to meet customer demand – can easily create a situation in which orders can't be fulfilled. Overstocking and misallocation of resources, on the other hand, may leave a brand strapped for cash when it's time to replenish its inventory.

Lacking up-to-the-minute data on inventory can also disrupt brands' ability to accurately forecast demand, which is vital for ecommerce fulfillment. “Proper inventory management,” said ecommerce veteran Eric Youngstrom, “involves knowing what your buyers want and consistently keeping the right amount of inventory to meet those wants.” 

The Rise of Sustainable Ecommerce

Another thing buyers want, per project44’s The State of Consumer Holiday Shopping 2024, is sustainable shopping. As people become increasingly environmentally conscious, businesses prioritizing sustainability often experience increased customer loyalty, positive brand perception, and a higher market share. This is particularly evident during the holiday season:

• 65% of consumers plan to prioritize brands that demonstrate a commitment to sustainability.

• 51% of consumers plan to shop farther ahead and opt for a slower delivery method to help reduce their carbon footprint.

“We're seeing consumers shift their buying and sustainability habits when it comes to their holiday shopping,” said Carson Krieg, Director of Global Alliances at project44. “Shopping for gifts before peak season can help shoppers save money, lower carbon emissions and limit delayed shipping headaches. In 2024, retailers prioritizing reducing carbon emissions will have a competitive advantage.”

Acutely aware of that, forward-thinking DTC brands are already leveraging ecommerce-dedicated accounting systems to incorporate key sustainability metrics into their financial reporting. These metrics include:

• Greenhouse gas emissions

• Energy consumption

• Waste generation and recycling

• Supplier sustainability

The same path can be followed to address inventory accounting issues that lead to delivery delays. “Mediocre delivery performance and inconsistent delivery experiences are solvable problems,” said Descartes’ Chris Jones. “There are technology solutions that retailers can consider to cost-effectively provide an optimal home delivery experience.” For example, a specialized accounting software.