This blog post will discuss some of the key strategies modern retailers need to utilize to harness the power of digital marketing and eCommerce solutions. There are endless possibilities when it comes to leveraging online resources for maximum retail success! Keep reading to explore how any business owner can start using the internet today as an invaluable strategic tool for boosting their profits.
Use The Right Platform
When it comes to online retail, finding the right platform to reach customers, and then keeping it up to date at all times, is essential if you want to boost your retail revenue. Lots of businesses are upgrading Magento 2 to the latest version to realise its full potential and get a huge competitive advantage in their niche. Having this kind of aid at your disposal will surely make your day-to-day operations a lot easier and your customers will thank you for it.
It is important to consider issues such as ease of use, payment options, customer service capabilities, mobile commerce options, shipping and return policies, and much more. By making sure you have the right platform for your business, you can make sure that you are truly taking advantage of today's technology to gain the most success possible in the retail world.
Build A Professional Website
Having a professional-looking website is an essential step toward unlocking the full potential of the Internet as a platform to boost retail revenue. By having an attractive page with a clean user interface, your audience will be able to find your store more easily and confidently and make purchases without any hesitation. Make sure that it contains the following things:
- easy navigation
- shopping cart
- FAQ section
- Product pages
- product information
- Search function
- an “About Us” page
- mobile responsiveness
- product recommendations
- analytics tracking
Having these features can help customers to trust that they are getting the best value for their money by buying from you. Furthermore, creating videos or tutorials on how to use particular products or show off looks or trends can be an effective way to drive further interest in your store. With these tools and strategies, you can create an engaging online presence for your business and tap into more potential customers from around the world, allowing you to scale up faster than ever.
Describe Your Products
To attract customers' attention and maximize profits, online retail businesses need to accurately and engagingly describe the products they have for sale. Pictures and videos are essential, as they allow customers to gain a better understanding of what they’re looking at, while clever, creative writing can draw potential buyers in and intrigue them into wanting to learn more.
A product description should provide potential customers with all the necessary information they would need to make an informed decision. Providing something that is both informative and imaginative enables online retailers to make their offerings stand out from their competitors and boost sales significantly.
Promote On Social Media
Promoting your online retail business through social media can be a great way to boost revenue, giving you an edge over traditional brick-and-mortar retailers. By sharing content and engaging with potential customers, you can drive awareness of your store and even generate leads, which may convert into sales. Additionally, creating an omnichannel experience by simultaneously increasing your presence on multiple marketing channels expands your overall reach and puts more eyes on the products and services that you're offering.
Developing high-quality content tailored to each platform helps distinguish you from other competitors and can also help build relationships with audiences that may not otherwise be reached. With plenty of data collection opportunities along the way, the strategic evaluation will be key to if social media can truly help drive retail success for your business.
Collaborate With Influencers
Collaborating with influencers is an effective way to reach a wider audience. By tapping into their extensive network of followers, businesses can showcase products and services through authentic, dedicated advocates. Influencer partnerships also foster trust by delivering honest reviews to potential customers who may be uneasy about making online purchases.
Additionally, engaging with influencers can add credibility and brand recognition, allowing retailers to further expand their reach beyond existing customer circles. Overall, collaborating with an influencer is a powerful method of utilizing the Internet as a platform for growing retail revenue.
Use Email Marketing
For entrepreneurs looking to boost their retail revenue through the Internet, email marketing should be a no-brainer. After all, most businesses are utilizing digital communication more than ever before. Leveraging this strategy allows retailers to connect with their customers in an intimate, personalized way.
Through email marketing, businesses can maintain and grow relationships with their customers by sending them timely promotions and discounts that keep them engaged with their brand. Coupled with the upsurge in consumer demand for eCommerce and contactless solutions during the pandemic, this strategy has become even more important for driving sales growth. With just a little effort, entrepreneurs can make use of powerful email automation tools that allow easy outreach and cultivate customer loyalty - a valuable tool for boosting online retail revenue.
Create A Sales Funnel
A sales funnel is one of the best ways to boost retail revenue online. It starts with clearly defining your target audience and understanding how to capture their attention through specialized content marketing strategies. With an established customer base, you can better optimize your website for customers who already know about your products, and utilize sales automation tools for higher conversions.
Finally, it’s important to understand analytics and user-generated data to monitor growing trends in your industry and enhance lead generation for potential customers. Overall, creating a sales funnel is beneficial for any retailer looking to maximize their online presence and profits.
Build A Good Brand Image
A good brand image is essential for any business, especially those in retail. To this end, building your brand presence online should be a top priority. Here are some tips to improve it:
define the brand
develop a consistent visual identity
focus on customers
be authentic
monitor your reputation
Creating a social media presence and ensuring the content you post is well curated, using targeted advertising to reach potential customers, and replying to interactions with customers quickly are all essential components of developing an online identity that resonates strongly in today's digital age. Equally important is the webpage itself: having a modern look and feel along with an online store that is easy to access and navigate can help draw attention to your products and contribute positively towards boosting your company's reputation and revenue in the long run.
Offer Incentives
Offering incentives to your customers can be a clever way to use the internet for retail success. These come in many shapes and sizes, from discounts or free shipping offers to exclusive access to certain products. By offering incentives, you can create a sense of excitement and anticipation while also encouraging your customers to remain engaged with your business.
Furthermore, when word of your offers spreads, it can help create new leads and drive more people to use your services. Don't forget that an incentive doesn't have to cost a large amount – anything from small token gifts such as stickers or postcards, to bigger reward systems, can help engage customers and increase revenue.
Improve Customer Experience
For online retailers looking to maximise their revenue potential, improving the customer experience should be a top priority. From creating a positive, easy-to-navigate website to personalizing interactions with shoppers, engaging them at every stage of the buying journey is crucial for driving sales and increasing loyalty. Leveraging modern technology and incorporating feedback from shoppers can help online retailers improve the way they approach their customers, positioning them perfectly to capitalize on the digital revolution in retail.
By thinking of ways to enhance any customer touchpoints, both online and offline, and employing new tools like automated order processing systems and personalized product recommendations, savvy retailers can create an outstanding customer experience that will keep people coming back for more. For example, creating a loyalty program or rewards system can be an effective way to increase customer retention and build long-term relationships.
Make The Most Out Of Testimonials
Utilizing testimonials from happy customers and other stakeholders is an excellent way to leverage the power of the Internet for retail businesses. By sharing positive reviews about the quality of your products or services and any memorable experiences that result from shopping with you, potential buyers can learn more about what makes your business unique.
These written recommendations can serve as persuasive endorsements, helping to convince customers why they should trust you when making a purchase online. Additionally, real-time integration with review platforms built into your online checkout can also provide validation of your business in real-time while customers wait to complete their purchases, further increasing conversions and boosting revenue.
Implement A Loyalty Program
Implementing a loyalty program can be an effective way to take advantage of the internet when boosting your retail revenue. It helps to create positive relationships with customers and compels them to come back for more purchases, both online and in-store. With many customers opting for loyalty programs via apps or cards, it’s important to understand how best to cater to that base. When designing the program, it’s important to consider factors such as having multi-channel interactions and offering rewards that capture a customer’s attention.
Utilizing data analytics can help you better tailor the loyalties they offer as well as track their effectiveness so future changes can be made if needed. However, understanding exactly what kind of loyalty program makes sense for your specific business is key before making any decisions.
For example, if you are a restaurant offering takeout and delivery services, you may want to consider offering discounts for orders above a certain amount of money or free items on future orders. Or, if your business is more B2B-oriented, a loyalty program could include incentives such as exclusive access to new products or discounted rates on bulk purchases.
Keep Up With Trends
As an online retail business, it's essential to stay on top of trends so that you can make the most of your internet-based sales. Trends in consumer behavior change rapidly, and understanding those shifts gives you a competitive edge. Staying up to date means researching popular items and services online, and finding out what your target audience likes and feels comfortable buying.
You should also be tuned into the latest content creators and influencers that share useful tips on staying ahead of the curve in the ever-changing retail industry. By giving potential customers exactly what they are looking for and positioning yourself as an expert on industry trends, you will be well on your way to boosting sales and becoming more successful with your online retail business.
You can easily follow all that's modern by subscribing to various newsletters, websites, blogs, YouTube channels, etc, to stay up to date on the latest trends in the retail world. Additionally, you should also make sure your website is optimized for mobile devices and regularly update its content so customers can quickly find what they're looking for when browsing through your virtual store.
By taking advantage of the opportunities that come with running an online retail business, you can increase customer satisfaction, boost revenue, and create long-term relationships with your customer base. Utilizing these tips can help you move forward in making the most out of working on the Internet while helping to ensure success in all aspects of running a successful online retail business.
As an online retail business owner, you have to stay ahead of the competition by learning and leveraging different strategies. Investing in SEO, advertising, and optimizing site design is essential for a successful business. Keep up with trends, use email marketing wisely, and promote your products on social media platforms. Reach out to influencers for collaboration or to create an effective loyalty program that entices customers. Keep customers happy by offering incentives but more importantly improving their overall experience with your brand. Rely on the power of quality testimonials so potential customers can become loyal ones. With every step, be sure to build a good and professional image around your online retail outlet that best represents who you are and what you want to offer to the world.
Robinhood reported a net loss of $423 million, or $0.49 per share, in the three months ending in December 2021. A year earlier, before its IPO, the company had posted a net income of $7 million or $0.01 per share.
Following the news of the results, shares of Robinhood dropped by as much as 15% to $9.98 in extended trading.
Robinhood, in its third set of results as a public company, posted total revenue of $363 million for the fourth quarter of 2021, compared to $318 a year earlier. According to IBES data from Refinitiv, analysts had been expecting revenue of $362.14 million.
During the fourth quarter of 2021, Robinhood’s costs rose 163% from the previous year, contributing to its $423 million net loss.
Robinhood, like many other tech start-ups, is yet to turn a profit following its IPO in July 2021. While its revenue was a positive sign, the company saw its monthly active users drop by 8% from the previous quarter to 17.3 million.
US stock indexes were set to rise on Wednesday following positive earnings reports from investment banks.
JPMorgan Chase & Co and Goldman Sachs Group Inc both beat analysts’ expectations for first-quarter profit.
Goldman saw its overall investment banking revenue jump 73% to $3.77 billion, the highest amount seen since 2010. The bank managed to effectively capitalise on record global investment banking activity, which Refinitiv data showed as reaching an all-time high of $39.4 billion in the March quarter.
Meanwhile, JPMorgan, the US’s largest bank, reported earnings as having leapt almost 400% in the first quarter of the year. Like Goldman, it saw immense growth in its investment banking revenue, which jumped 57%.
JPMorgan reported that consumer spending in its businesses had reached pre-pandemic levels and risen 14% above Q1 2019.
Shares in Goldman rose 1.5% on Wednesday, while JPMorgan’s shares fell 0.6% despite its almost quadrupled revenue. The share slip came as the bank released over $5 billion it had set aside in reserves against COVID-19-prompted loan defaults.
Goldman easily held on to its first-place ranking for global M&A advisory, while JPMorgan overtook Morgan Stanley as the world’s second biggest advisor.
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It was also revealed on Tuesday that Goldman Sachs plans to expand operations to Birmingham this year. The bank expects to recruit “several hundred” people across the divisions it builds, beginning with an engineering department that it will fill through a combination of new hires and employee transfers.
HSBC, the UK’s largest bank, posted a 34% drop in profit for 2020 and has signalled a “pivot to Asia” along with job cuts to compensate for the decline.
The bank reported a pre-tax profit of $8.8 billion from revenue of $50.4 billion in 2020, going slightly beyond analysts’ expectations of an $8.3 billion profit on income of $50 billion.
Part of HSBC’s losses, like those seen by Barclays, were caused by a sharp rise in credit loss provisions owing to the COVID-19 pandemic. HSBC set aside a further $1.2 billion in Q4 2020 to cover an expected rise in bad loans, bringing its total loss provisions for the year to $8.8 billion.
HSBC also reinstated a dividend of 15p, significantly above analyst forecasts of 10.1p, following the Bank of England’s lifting of its dividend ban in December.
Also on Tuesday, HSBC announced plans to accelerate its transformation plans. The bank is currently undergoing a major restructuring intended to reverse several years of underperformance, which will involve cutting 35,000 jobs and reducing costs by $4.5 billion by 2022. 11,000 jobs were shed during 2020.
The bank also signalled its intent to focus on opportunities for growth in Asian markets. Stephen Moss, its head of strategy, will take on the role of chief executive for the Middle East, North Africa and Turkey, and will relocate to Dubai from London. More executive roles are expected to relocate to Hong Kong, HSBC’s historic home base.
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"I am proud of everything our people achieved and grateful for the loyalty of our customers during a very turbulent year," chief executive Noel Quinn said in a statement.
Barclays announced plans for a share buyback and a resumption of its dividend on Thursday as it revealed that its full-year numbers for 2020 came out at a £3.1 billion pre-tax profit.
Though the bank’s full-year profit was down 38% compared with 2019’s figures, Barclays still managed to defy analysts’ expectations of a pre-tax profit of £2.8 billion. This is partly owed to a slight increase in revenue, with its corporate and investment bank reporting a 35% jump in pre-tax profits for the whole of the year, the best on record for the division.
A large part of Barclays’ costs for 2020 stemmed from the bank’s decision to set aside £4.8 billion to cover loans that it considers unlikely to be paid back due to the economic impact of the COVID-19 pandemic. Its credit card and retail banking businesses were also struck by a downturn in demand, cutting pre-tax profits by 78%.
Barclays has been one of the largest providers of emergency loans during the COVID-19 pandemic, having issued around £27 billion to businesses and provided more than 680,000 payment holidays globally for customers with outstanding loans, mortgages and credit cards.
Despite its losses, the bank announced on Thursday that it would resume dividends, with payments of 1p per share issued to shareholders.
Barclays’ CEO, Jes Staley, expressed optimism on the back of the full-year earnings report. “Barclays remains well capitalised, well provisioned for impairments, highly liquid, with a strong balance sheet, and competitive market positions across the group,” he said.
“We expect that our resilient and diversified business model will deliver a meaningful improvement in returns in 2021.”
Separately from its results, Barclays also reported that its staff bonus pool for 2020 was 6% higher than the £1.5 billion pool it shared out in 2019.
ByteDance, the Beijing-headquartered owner of TikTok, is set to meet its advertising revenue goal for the year, which will place it firmly as the second-largest giant in China’s digital advertising market.
According to Reuters, the tech company is on track to make at least 180 billion yuan (or $27.2 billion) in annual advertising revenue, making up the bulk of its $30 billion revenue goal for 2020. In terms of ad revenue, it is beaten only by Alibaba.
Though TikTok is ByteDance’s flagship product internationally, the social media app contributes little to its parent company’s overall cashflow. Of ByteDance’s ad revenue, nearly 60% comes from Douyin, the Chinese version of TikTok. A further 20% comes from ByteDance’s news aggregator Jinri Toutiao, and less than 3% from its long-form video platform Xigua.
These final numbers will be adjusted by the end of the year, as many of the company’s most important campaigns – including year-end sales – have not yet been officially launched.
ByteDance continues to struggle with an order from the Trump administration ordering it to divest its US operations of TikTok by this Thursday. While a deal between ByteDance and Oracle appears to have been settled, the company lodged a petition with a US Appeals Court late on Tuesday challenging the administration’s order and seeking an extension to the deadline.
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Outside of TikTok, ByteDance is looking to other avenues of growth, with plans to invest 10 billion on its Xigua platform next year. The company intends to increase Xigua’s count of daily active users to over 100 million, while its Douin eCommerce platform is expected to reach roughly 150 billion in gross merchandise value by the year’s end.
TUI AG, also known as TUI Group, announced on Thursday that it had swung to a pre-tax loss of over €1.4 billion for the three months to the end of June, representing a 98% fall in group revenue. The company have described the period as a “business standstill”.
TUI said that its operations had partially resumed from mid-May, with 55 hotels (representing 15% of its total portfolio) reopening, but consumer interest remained significantly lower than typical summer volumes. The bulk of its losses resulted from pandemic-related impairment charges and added costs from ineffective hedging contracts.
To cope, the company said that it had entered “crisis mode”, in which it reduced monthly costs to a mere €237 million during the quarter – a reduction of more than 70% overall.
The news comes after TUI’s Wednesday announcement that it would receive an aid package from the German government worth €1.2 billion to help it survive the downturn in international travel.
“The €1.2bn stabilisation package strengthens TUI’s position and would provide sufficient liquidity in this volatile market environment to cover TUI’s seasonal swing through winter 2020/21… and in the case of any further long-term travel restrictions and disruptions related to COVID-19,” the company said in a statement.
Airlines and travel companies have been among the worst affected by the COVID-19 pandemic, which has resulted in travel restrictions being imposed throughout the world.
The figures show that tourists are eager to begin holidays abroad once the pandemic has abated and lockdown measures are eased. In the UK, TUI reported that holiday bookings for summer 2021 were up by 145% By contrast, its bookings for summer 2020 are down by a total of 81%, and with an average selling price 10% lower than the norm.
Xero’s analysis revealed a 26% decrease in small and medium-sized enterprises (SMEs) during the month of April, and a 28% increase during May, compared with figures from the previous year.
It also found that invoices are taking longer to be paid, with the average waiting time for SMEs rising from 30.7 days to 38.5 days since February – an increase of a little over a week.
The platform also identified a decrease in small businesses’ employment rates. In an analysis of payroll data, it emerged that small business employment fell by 6% between May and March despite the influence of the government’s coronavirus job retention scheme, which is set to be scaled back in the coming months.
Hardest hit were small businesses in the hospitality sector, which shed 11% of jobs in April and a further 3% in May. Revenue-wise, the sector saw an average decrease of around 57% in April and 53% in May. The next closest sector was arts and recreation, which saw losses of 41% for both months.
These findings form the basis of Xero’s Roadmap to Recovery manifesto, which calls on the government to provide extra support to help small businesses rebuild in the wake of the pandemic.
“The pandemic has had a devastating impact on business,” said Gary Turner, UK managing director of Xero. “As our customer data shows, jobs are being lost and the creation of new ones will depend on how quickly the economy can be rebooted.”
Subscription models now extend into everything from the automotive to the supermarket industry and include everything from pet food to virtual spin classes. Alongside online advertising, subscriptions are a business model that has exploded in popularity, because monthly digital payments provide more long-term recurring revenue streams than one-off sales and generate long-term online customer relationships. 10 million people signed up for Disney+ within 24 hours of its November debut, and Salesforce.com is valued at around $140 billion, giving some illustration of the commercial success of the subscription model.
However, the model is now in danger of becoming a victim of its own success, with industries heading hard and fast towards a ‘peak subscription’ cliff edge. There is simply a finite limit to the number of services people and businesses are willing and able to subscribe to. Customer recruitment and retention is extremely difficult because subscriptions can be an expensive, long-term commitment; half of subscribers to e-commerce services cancel within six months. At the same time predatory practices such as those in smartphone apps make consumers increasingly wary about “subscription traps.” Finally, the subscription economy is excluding billions of people who cannot afford expensive long-term contributions. For the newspaper industry, this means not only shrinking the potential market but denying all but the relatively privileged access to the independent information that is vital for democracy to operate. It also means denying industries the ability to offer ‘low-hanging fruit’ of smaller, cheaper transactions for more limited services and thus denying them access to a far bigger customer base. Professor Aggelos Kiayias, Chief Scientist at IOHK, suggests how new technology could provide an alternative model.
There is evidence that ‘micro-transactions’, where people have the option of paying tiny sums, as little as a fraction of a penny, for individual services such as songs or articles, can cumulatively offer a rich revenue stream. Free-to-play mobile games generated $88 billion through other services such as ‘micro-transactions’ in one year alone. Mini-transactions also form a potential ‘gateway’ to a bigger subscription market by offering initial ‘taster’ services to a wider audience.
A key barrier to this has been that slow transaction speeds and high transaction fees make ‘micro-transactions’ unviable as a lucrative revenue model across all industries. Even the fastest, VISA, can only process some 24,000 transactions a second. The blockchain space has also hitherto offered little in the way of a solution because of the so-called ‘scalability problem’ which seems intrinsic in the protocol design of systems like Bitcoin. This makes transactions slower and fees higher, the more users are added to the network.
Free-to-play mobile games generated $88 billion through other services such as ‘micro-transactions’ in one year alone.
A New Model
A recently announced system based on a “proof-of-stake” blockchain discipline, dubbed Ouroboros Hydra, is set to challenge the subscription economy and enable a new payment model which has potential to revolutionise the financial services industry. The third-generation “layer-2” protocol will allow parallel processing of transactions to take place at the physical limits of the network without compromising security or relying on energy expensive “proof-of-work.” This could allow the blockchain to scale to process millions of minor to major transactions on cell phones, outpacing conventional payment systems used by current subscription services. Unlike conventional “layer-1” blockchains, its overall transaction processing throughput can get faster as the number of nodes in the network increases.
With revenue models based on digital advertising and subscriptions nearing a cliff-edge, such high-speed third-generation blockchains could allow new industries to emulate the mobile gaming industry’s ‘freemium’ model, allowing users to pay for extras to their basic service. Customers will be able to pay in cryptocurrency rather than fiat currency. A set of simulations conducted as part of the research announced, show the system demonstrates sufficient transaction speeds to minimise transaction fees, facilitating ‘micropayments’. This opens up the possibility of an alternative to the subscription economy.
Access for All
A genuinely decentralised and scalable blockchain protocol could create an economy based on millions of ‘micro-transactions’. On an individual level, online newspaper readers could pay per article rather than paying a set amount per month, or gamers could buy virtual items within a game for fractions of a penny. Companies can also engage in more fine-grained business-to-business exchanges. This new protocol can therefore open up online services for people who may otherwise be unable to afford them, opening up a bigger mass market to industries, or systems for which so far it was uneconomical to do so. ‘Micro-transactions’ provide a way to ‘on-board’ people as longer-term customers as well as providing an alternative revenue stream to subscription.
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Limitless Potential
Importantly, Ouroboros Hydra is not just a transaction processing system. It is capable of offering smart contracts as well which means it would be possible to encode and enforce various policies related to the ‘micro-transactions’ processed by the system. The result is a flexible design that can also accommodate any elements of the subscription model for those participants, users and businesses alike, who prefer it. Furthermore, taking advantage of suitably crafted smart contracts, novel business models can be developed hybridising between the two approaches and thus allowing innovative and highly tailored and personalised engagement between businesses and customers.
What Next?
This is only the start. Decentralised and scalable blockchain protocols could enable millions in the developing world to enjoy access to previously inaccessible financial services, such as remotely paying for vital services like utilities and healthcare. In this way, we can pave the way towards a more inclusive, truly decentralised, people-centric banking system, which can form the future backbone of financial services.
Emergency Government Loans Appeal to Only Half of UK Business Owners
Following the UK government’s recent announcement of further measures to be taken to shore up businesses against the financial impact of COVID-19, business finance lender MarketFinance has canvassed the opinions of business leaders and found that more than two thirds (67%) do not believe that government funds will reach them in time and that they will run out of cash before the 12th of April. Outlined in the press release below are the key results of MarketFinance’s research.
- Loans: Only half of businesses likely to take up government subsidised business loans
- Cash: Two-thirds of businesses have less than £50k cash and are likely to run out of money before Easter
- Revenues: 80% report falling revenues between 40-50% in March
- Time: 45% of owners believe it will take at least a year, if not two, for the business environment to normalise
- Crisis: 63% liken coronavirus pandemic to the global financial crisis in 2008
Loans
Only half (52%) of UK businesses are considering taking advantage of the Coronavirus Business Interruption Loan Scheme (CBILS which offers up to £5m, interest free for the first year, over 6 years) to shore up their businesses. Because most businesses (67%) have a pre-existing loan, their biggest concern (36%) is making repayments for any additional loan. Invoice finance (borrowing against invoices on completed work) ranked highest as an alternative to taking a loan, with 48% considering this option over the next 12 months, to avoid the addition debt burden.
Cash Flow
With revenue at companies across the country being hit hard, 80% reported a decrease this month of between 40-50%. They are seeking immediate measures to ease this pressure on cash flow. Business owners ranked a larger overdraft facility as first preference before seeking a business credit card and in third place, using invoice finance as a means to inject working capital into the business.
Anil Stocker, CEO at MarketFinance, commented: “Business owners are uncertain on revenue numbers for this year with a third expecting at least a 50% drop in sales and, rightly, weary of taking on more loans that they might not be able to pay back. It’s important to realise that in the fine print, many banks will ask for additional security and Personal Guarantees for loan amounts greater than £250,000 of borrowings.
“The number of businesses that believe they won’t make it to Easter has doubled from a third to two thirds despite the Treasury’s announcements. Time is of essence. It is imperative that businesses are made aware on how to access the measures they have announced but also to widen the range of finance options available to them”.
Advice
Most (35%) business owners are turning to their accountants for advice on what to do next before consulting their friends and family (21%). Only one in six are seeking advice from their bank manager on what to do. Business owners feel their accountants are the most accessible given the remote working environment.
Accountant Rashesh Joshi at Alexander Rosse commented: “The government headlines from last week covered numerous initiatives to be implemented such as the CBILS scheme, the job retention scheme and a new lending scheme facility for larger firms amongst a raft of other measures. The reality on the ground is unfortunately unlike the rapid spread of the COVID-19 virus.
“We have been in touch with a number of the accredited lenders and our colleagues at larger accounting practices. Feedback, information and practicalities of the application process and lending criteria are decisively in slow motion. It seems large institutions with all their resources had no contingency plans in place. We are aware of challenger banks and other businesses who could act quicker but have been frustratingly left out of the original process (but now invited) thereby losing further critical time as highlighted in MarketFinance’s research.”
Rashesh added: “We are partnering with our clients to help with their cashflow forecasts, rationale for the loan application, contingency plans, how they would cope with self-isolating staff and a whole raft of questions that the banks will ask before they will even consider lending. We are encouraging lenders to get with the reality on the ground which is frankly brutal. In our view the process needs to be simpler and quicker and bridging finance also made available to small to medium businesses".
Anil Stocker added: “Economies around the world are in a state of shock. In the UK, the government has poured billions in subsidies, grants and guaranteed loans for businesses, but nobody can be sure how well the rescue will work and how this money will be propagated around the small business community. It is critical that business owners have a prepared mindset for all scenarios. They will be heavily reliant on all their advisers – accountants, bankers and boards – to help them navigate the turbulence ahead.”
“The government needs to urgently implement and deploy their policy announcements. Business advisers will play a key role in guiding businesses on the best finance options for them. It’s imperative they are up to speed with all the necessary information and nuances of what is available”.
With the new IFRS 15/ASC 606 compliance regulations now in place, CFOs need revenue recognition solutions that can handle complex, multi-element arrangements and fast changing product offerings. CFOs can no longer survive in fast paced business environments with a revenue recognition process where you kick off in the morning and sit around waiting for the answer. Real-time revenue recognition reporting is today’s reality. Rajiv Chopra, expert at Aptitude Software explains for Finance Monthly.
I am amazed that in 2018, and with this backdrop, so many CFOs are still not utilizing advances in accounting technology and are overly reliant on manual solutions. Over 75% of prospective clients I am speaking to are still managing revenue recognition accounting with home-grown “band-aid” systems that are reliant on manpower, excel and internal “spaghetti IT” solutions.
These manual solutions, in which the C-suite place their trust, are high risk. There is a high dependency on a select few individuals who are working under intense pressure for sustained periods of time, levels of staff turnover are high, and teams suffer from ‘Excelitus’ and burn out from the boredom of repetitive tasks. The real value of the finance team - providing management with data insights and analysis, is lost.
For example, we saw an $8bn dollar company operating in 160 countries, running 60 plus inventory spreadsheets just to track their sales. It would take 3.5 hours to open these spreadsheets – you can imagine the stress levels when they needed to close the books! Another company was doing 6 million transactions in a quarter, with 19,000 products and running 20 different revenue management systems, just to know where their revenue was. The level of financial risk was frightening with so many opportunities for misses and mistakes.
The question to CFOs and Chief Accounting Officers is why? You’re not saving money when your staff are waiting around for slow systems, correcting errors that shouldn’t be there and spending time on low value, repetitive processes. When we pose this question to CFOs and CAOs, one of the most common answers given is habit. Yet when pressed, they often admit that concerns over cost is often the real reason behind their hesitancy to adopt new technologies and automated solutions.
While the cost of revenue recognition solutions will always depend on the specific profile of an organization, a recent survey from PWC shows that the majority of companies (58% public / 84% non-public) have spent or will spend less than $500,000 complying with the new revenue recognition standards, with implementation costs going up in step with an increased contract volume and complexity (PWC 2018 accounting change survey).
There are several areas where organizations can look to build return on investment, but I believe the human cost of manual revenue recognition is significant and often undervalued by many companies. You just have to look at the high levels of staff turnover in finance teams, also consider the stress levels as they try to close the books manually and deliver substantiated reporting. In their study on the financial impact of staff turnover, Oxford Economics estimates that it costs over $39,000 just to replace a finance employee when you consider the loss of productivity, agency fees, HR and management time.
At our recent RevConnect conference, the benefits of new revenue recognition technologies were described as ‘night and day’ by David Peterson, Revenue Accounting Manager from Ivanti. He explained how, by moving from a spreadsheet-based solution to an automated revenue recognition solution, they had reduced their close from 5 to 3 days, giving his team time to do more analysis and deliver more insights to the business.
Using automation also means finance teams can leave behind all the rote tasks of data download and copy and paste and focus on data insights and analysis. New technologies also encourage innovation and attract technology-savvy talent. A recent survey from the Association of Accounting Technicians revealed that 75% of finance professionals found that using accounting technology has either made their job easier or freed up time for them to concentrate on adding value to the business.
The benefits for CFOs who have embraced new revenue recognition technologies are extensive. Crucially, they have much happier and fulfilled finance teams. They can also take back control of their environment which can result in increased output, better critical decision making, and more business opportunities.
I encourage all CFOs to stop playing catch up, be proactive and reduce the manual processing of revenue recognition. Empower your team to add value to your business, grow as contributing team members and move away from hours of manual tasks that don’t have a place in the modern CFO office. When speaking about his organization’s move to an automated revenue recognition solution, Mark Flournoy, CAO, at Intuit summarized the change perfectly: “We (finance) are actually now in service to enable the rest of the business.”
Your kids won’t stop talking about it, your friend hasn’t come out of his house all week because he’s addicted to it, some of the world’s biggest sports stars and youtubers are doing it. It’s not a drug, it’s a game; Fortnite, and with so many playing the game month to month, the creators are making quite a killing. Below Ken Wisnefski, CEO of digital marketing firm WebiMax, discusses the microtransaction element behind Fortnite’s big profits and the future of this clever new way of selling.
Like so many quarters fed into an arcade machine, an around-the-clock influx of outside cash has turned the video game industry into a revenue resource like no other. Whereas video games were once a one-time purchase rarely exceeding $50, we now have free-to-play offerings like “Fortnite” that can rake in millions. How is that possible? “Microtransactions” and “platform-based business models” allow gamers to customize their experience by spending real-world cash in exchange for in-game goodies. The fact that Fortnite developer Epic Games earned just shy of $300 million in April 2018 alone tells me a few things as a digital marketing expert, but chief among them is this: We’re not in Super Mario World anymore.
For the unacquainted, Fortnite is a co-op survival game that takes place in a “sandbox” universe and drew a record 3.4 million concurrent users in February 2018. On the revenue side of things, there are aspects of Fortnite that are free to download. There’s also a roughly $10 seasonal “Battle Pass” that’s optional, last for a few months and provides additional immersion. The microtransactions that I mentioned earlier – and the platform that makes this exchange possible – is a hotly-debated concept among gamers. In the case of Fortnite, many say Epic Games got it right and I agree.
“Rank your Battle Pass up before it expires, and you'll earn more than enough in-game cash to unlock the next Battle Pass,” a March 2018 GamesRadar.com article says. “That eliminates the dread of having to pay more and more cash to stay up-to-date in a living game, and it encourages you to keep playing for the whole season and into the next. So smart!”
The Emperor’s New Clothes
Microtransactions are, as the name suggests, a way for users to pay a nominal amount of real-world cash or in-game currency and receive small game-enhancing perks as a result. There are right and wrong ways to implement microtransactions into a game. The wrong way, as Electronic Arts (EA) learned in 2017, is to sell “loot boxes” to users that create an unfair playing field. This crisis came to a head upon the release of “Star Wars Battlefront II.”
“We’ve heard the concerns about potentially giving players unfair advantages. And we’ve heard that this is overshadowing an otherwise great game. This was never our intention. Sorry we didn’t get this right,” a statement from EA read following player backlash.
Only months later, “cosmetic-only” microtransactions were up and running again inside that galaxy far, far away. Back here on Earth, I think the majority of us can see the parallels between EA now selling “loot boxes” that don’t affect gameplay and what Fortnite has been doing since launch. In my experience in digital marketing, someone who wants to spend their own money on attainable goals should be able to do so. When you start toying with the framework, such as paid-for results at the top of a Google search page, then we need to throw in some disclaimers or other ways to give everyone equal footing.
The Conduit
Try and find Apple’s brick-and-mortar “App Store” in your neighborhood. We won’t wait around, because we all know it isn’t there. Slate reported in early 2018 that this non-physical outlet for iPhone programs earned $38.5 billion in 2017 and “is poised to double its 2015 revenues by some time in 2018.” What readers should understand is that there’s no longer a need to offer physical goods as the only way of making money. Today, we have people streaming their live feeds of Fortnite gameplay on the Twitch website and reportedly making $500,000 per month doing so. Amazon may be building local warehouses to help expedite shipping, but it started as an online-only book-ordering company and its CEO is now the richest man on Earth.
I find it helpful to think of ride-sharing services as a more tangible example of what digital platforms can offer: An actual good or service that’s obtained for a payment on a middle ground – or “platform,” if you will. I only have to look under my own roof, where kids are playing Fortnite, to see what microtransactions have evolved into and how in-game “V Bucks” can be spent on spiffy new avatar outfits.
