With US President-elect Donald Trump returning to the White House today, eCommerce brands can expect significant shifts in trade policies and business operations. Small and medium-sized eCommerce businesses must strategically adapt to navigate tariffs, maintain profitability and ensure sustainable growth. Key considerations for this new geopolitical landscape include:

Trade policies and tariffs

The anticipated increase in tariffs on Chinese imports presents immediate challenges for eCommerce brands.

Companies face a critical decision – absorb higher costs in their operations or pass increases on to customers. Either choice will impact profitability, with customer price sensitivity being a crucial consideration.

Brands must carefully analyse their margins and market position to make informed pricing decisions.

Supply chain diversification strategies

Forward-thinking brands are already exploring alternative manufacturing locations to mitigate tariff risks.

Vietnam, South Korea and Japan have emerged as particularly attractive options, offering:

• Production timelines comparable to China
• Established manufacturing infrastructure
• Geographic proximity to existing supply routes

While India presents as another viable location, longer production cycles must be factored into inventory planning, along with tax and compliance requirements.

For brands with sufficient scale, reshoring production to the United States could eliminate tariff concerns entirely, though higher labour costs require a cost-benefit analysis.

Last mile logistics

Brands utilising drop shipping or direct injection models from China face heightened risks under stricter tax and trade policies, as well as customs regulation.

Some key challenges include:

• Increased shipping costs and extended lead times
• Higher risk of customs delays or seizures
• More complex compliance requirements

To overcome these risks, companies should consider establishing regional fulfillment centres in
strategic locations like Vietnam or other low-tariff countries.

Marketing strategy adjustments

With tariffs now potentially taking up a larger share of operating budgets, marketing efficiency is paramount.

If they haven’t already, brands should:

• Re-calculate their cost of delivery to figure out their margins for each product
• Audit current marketing spend and return on investment – adjust accordingly
• Explore cost-effective digital marketing strategies, like organic social media
• Focus not just on acquiring customers, but retaining them in a bid to increase lifetime
  value

My final strategic recommendations

Supply chain optimisations:

• Prioritise Vietnam, South Korea and Japan for manufacturing relocation
• Evaluate production in the United States for high-margin products
• Expand procurement to reduce risk

Restructure your distribution network:

• Relocate drop shipping operations to Vietnam or Japan
• Assess Canadian warehouse options for North American distribution
• Implement robust inventory management systems

Financial planning:

• Re-calculate delivery costs and pricing strategies
• Build tariff impact into cash flow projections

Additional considerations:

• Build and strengthen relationships with alternative suppliers
• Review and update customer communication regarding potential delays
• Explore automation opportunities to offset rising costs

The changing political landscape presents both challenges and opportunities for eCommerce brands. Agility, strategic planning and careful cost management have never been more important. Those who actively optimise their operations while managing customer satisfaction will be best positioned for long-term success.

The post How Trump’s presidency could affect eCommerce brands appeared first on Inside Small Business.

The approaching peak season will inevitably provide opportunities, but small retailers cannot simply sit back and expect shoppers to surge through their doors and online checkouts. Instead, they need to plan proactively, not just on customer acquisition and retention, but on their bottom line – using that as their financial foundation. 

For retailers – typically stock-heavy businesses – one of the most impactful ways to do so is through real-time inventory management. But what is it? And what are the benefits for your business?

Inventory becomes insight

Real-time inventory management is the process of continuously monitoring and updating stock levels as transactions occur. From pen and paper to spreadsheets, the optimised process today occurs on inventory management software or a POS (point of sale) platform. When inventory records are updated as soon as a product is added, sold or moved – for example from a warehouse to shopfront – you can make informed decisions about purchasing, sales, and inventory control.

It’s about more than understanding what stock you have, and where it is, though. Effective inventory management enables you to improve your efficiency, profitability, and customer satisfaction. Real-time inventory software provides a clear and current view of inventory across multiple locations, which is crucial for managing supply chains, warehousing, and retail operations. 

This up-to-date inventory data helps you predict demand more accurately, allowing you to adjust your inventory levels to meet customer needs without overstocking or understocking. Understanding exactly how much stock you have on hand helps maintain optimal inventory levels, reduce holding costs, and minimise waste due to overstocking. 

Consider seasonal retailers. You don’t want to sit on excess winter stock and have not enough of your summer range. Through inventory management, you can make insights-driven decisions about how to shift your winter stock – through, for example, end-of-season discounts – and how much of your summer stock to order. It’s not just about what stock you hold, but where to store it too. For example, if certain items typically sell far more in store than online, have them in your bricks-and-mortar location rather than an online distribution facility.

Inventory management also enables you to streamline processes such as order fulfilment, restocking, and supply chain management, reducing manual errors and operational inefficiencies in the process. In some instances, if your inventory management allows you to establish confident, transparent long-term forecasts, it might even enable you to negotiate more favourable terms with suppliers.

It’s not just about your bottom line; accurate stock levels ensure that products are available when and where customers need them, improving service and customer satisfaction. In today’s omnichannel retail environment, where businesses – and their shoppers – are active online and in-store, it’s essential to have complete visibility over your inventory. According to Lightspeed’s Retail Insights and Shopper Sentiment Report, 42 per cent of Australians highly value being able to check accurate in-store stock availability online.

Today, when cashflow is uncertain, every dollar counts. Your inventory as a retailer is one of your most valuable assets, not just through sales of it, but through effective management of it. With peak season approaching and economic pressures persisting, establishing greater control and visibility over your inventory could be exactly what you need to improve cashflow, operational efficiency and customer satisfaction in the short-, medium- and long-term.

The post Is inventory management the key to profitability for small retailers? appeared first on Inside Small Business.

In the fiscal year 2022-23, 964 million litres of wine were produced, while sales remained steady at 1.07 billion litres, with a small increase in domestic sales offsetting the decline in exports.

Peter Bailey, manager of marketing insights at Wine Australia, said this is the first time in five years that the total sales volume remained steady year-on-year.

“Sales of Australian wine have been decreasing in our domestic market and export markets over the past five years due to declining wine consumption combined with increased cost-of-living pressures and the effects of the significant duties on Australian wine to China,” Bailey explained.

The national wine inventory decreased by four per cent to an estimated 2.2 billion litres in June last year due to sales exceeding production. However, inventory levels remain high, particularly for red wine.

“This is a move in the right direction for the sector as it responds to the challenge of rebalancing supply and demand,” Bailey added. “However, it is only a small reduction after the lowest vintage in 20 years, and stocks of red wine remain at historically high levels.”

The report noted that the stock-to-sales ratio for red wine was still 45 per cent above the 10-year average despite decreasing by seven per cent due to the decrease in inventory.

While supply and demand for white varieties appeared to be more balanced, Bailey pointed out that sales of white wine in 2022-23 were considerably lower than the 10-year average production.

“Rebalancing supply and demand remains a real challenge for the sector,” Bailey said. “Our situation reflects the global environment, as world wine production has exceeded yearly consumption for at least the past ten years. This prolonged oversupply, equivalent to more than twice Australia’s production yearly, has put increasing pressure on all wine-producing countries.”

This story first appeared on our sister publication Inside FMCG

The post <strong>Australian wine sales up despite lowest production in 15 years</strong> appeared first on Inside Small Business.

Despite improving trade relations and the recent removal of China’s tariffs on Australian barley, Rabobank says even in a “best case scenario”, the wine industry may require at least two years to address its surplus.

The Rabobank report said that Chinese anti-dumping tariffs on Australian wine have disrupted the wine industry, with exports decreasing 33 per cent over the past two years.

With the tariffs coinciding with substantial growth in production and logistics bottlenecks from Covid, the Australian wine industry is now dealing with inventory surplus and low price levels – particularly for commercial red varieties, said RaboResearch associate analyst Pia Piggott.

“So large is the current oversupply has the equivalent of 859 Olympic swimming pools worth of wine in storage,” explains Piggott.

“That’s over two billion litres of wine or over 2.8 million bottles,” she said.

Crushed circumstances

In the late 2010s, the beginning of China’s piqued interest in red wine contributed to the Australian wine industry’s success, Piggott elaborated.

“Driven by sustained economic growth, rising incomes, as well as the social status of wine drinking and gifting, global wine imports to China grew at an impressive 18 per cent compound annual growth rate (CAGR) in the decade up to 2017 – when they peaked at 750 million litres – elevating China to be a top five wine importing nation globally,” she continued.

Following the China-Australia Free Trade Agreement in 2015, the wine tariff was reduced from 14 per cent to zero, which helped double China’s market share from 12 per cent to 24.

This event resulted in China becoming one of Australia’s strongest value markets for red wine varietals, making up 18 per cent of export volume and 40 per cent of export value at its peak.

However, Piggott explained that several anti-dumping tariffs and “soft bans” affected various products exported by Australia between 2020 and 2021, with the wine sector taking the most hit, losing one-third of export value from its peak in 2019.

“Unluckily, the tariff coincided with an exceptional growing season and Australia’s largest crush on record,” she added.

“Wine production for the ’21 vintage increased 36 per cent year on year, which would have, in any case, caused an oversupply.”

In addition, China’s wine market has been declining in recent years, Piggott continued, with consumption more than halved from its peak in 2017 to just 880 million litres last year.

“Chinese consumers began transitioning away from wine as part of a broader decline in alcohol consumption per capita. However, declines were greater for wine than beer and spirits,” she said.

Balance and profits

According to Rabobank, the Australian wine market will stay at a surplus for a “considerable amount of time”.

It also suggests that winery acreage needs to be reduced to rationalise assets throughout the supply chain over the next five years, which can return the industry’s balance and profitability.

“For wineries, particularly those selling commercial wine, stocks will remain high for some time as businesses slowly work through selling inventory,” Piggott said.

“While some brands have increased bulk shipments and been able to discount stock heavily, this will need to continue for some time to rebalance the market.”

For large retailers/investors with diverse income streams, she added that the current market provides ample buying opportunities as distressed vineyard/winery assets come up for sale.

“Through this, we can expect increased consolidation of vineyards and wineries as businesses invest in expanding their distribution,” Piggott concluded.

This story first appeared on our sister publication Inside FMCG

The post <strong>Australian wine industry braces for inventory oversupply</strong> appeared first on Inside Small Business.

“You can’t blame Australian businesses for taking on extra stock while supply chains were lagging behind,” Unleashed Head of Product, Jarrod Adam, said. “Thankfully, we are now in a place where we can safely define what ‘too much’ stock is, and where businesses can afford to free up cashflow as economic conditions tighten.”

The $231,700 figure from the report represents an average ‘overstock position’ for each company, which is the difference in value between ideal stock levels for each product, versus actuals. Ideal levels were found using industry-standard formulas that consider both the rate of sale and delivery lead times with all data points used being unique to each product line analysed to ensure the accuracy of the values generated.

This comes with Australian SMEs yet to recover from the supply and transport issues caused by COVID-19 delays. And the $230,000 figure reported can be the difference between growth and failure for many of those SMEs who are currently barely hanging on.

By industry, Building & Construction ($370,528) and Industrial Machinery & Raw Material and Equipment ($358,427) had the highest overstock position of Australian SMEs, while Beverages ($73,244) and Personal Care ($115,165) were the lowest overall.

Of the markets analysed, Australian firms had a higher average overstock position than both New Zealand ($200,733 AUD) and the UK ($186,500 AUD), while the North American firms topped the group at $236,391 AUD.

Josh Ambler, Senior Manager at accounting firm BDO, said that understanding how badly a business is overstocked can mean extra cash in pocket with clever inventory control, but these benefits won’t be felt for all.

“Comparing, say, beverages and construction, you’re often looking at very different inventory models. Unlocking cash from surplus inventory is way simpler if you have a short cashflow cycle, meaning there’s a regular churn of goods in and out of a business,” Ambler said. “For these guys, some relatively simple adjustments in re-supply orders can quickly mean more cash in the back pocket. For businesses with a slow cashflow cycle, ordering will take place at set times, or in higher volume to secure a good price. These companies may instead need to consider how they can move off excess stock before it comes obsolete.”

Adam believes that Unleashed’s findings will make a real difference for product businesses pressured by inflation and supply chain shocks.

“It’s all about finding ways to control the controllables,” he said. “That can mean anything from improving internal efficiencies, to using a more granular, data-based approach to rebuying. We know that unlocking cashflow is a priority for our customers ahead of this new financial year.”

The post Aussie SME retailers and manufacturers “dangerously overstocked” appeared first on Inside Small Business.

Business leaders can take control of rising costs by carefully managing cashflow. Accurate financial data and strong analytical tools can provide a full picture of company-wide cashflow in real time, and help businesses develop plans to better manage the pressures arising from inflation. Such data should provide the necessary insights to ensure business owners are able to forecast expenditure as best as possible.

Here are four strategies entrepreneurs can use to track their cashflow and tackle rising inflation:

1. Adjust prices to offset rising costs

Entrepreneurs are often concerned that they’ll lose customers if they raise their prices. The reality is that owners may keep their businesses in a healthy position by passing the higher costs of goods onto customers. In fact, plenty of organisations have already taken that step.

Using an integrated business management system, business owners can gain clear oversight of their cashflow, from end-to-end, to work out where inflationary pressures are hitting hardest and where additional revenues might be found to help cover growing costs elsewhere.

2. Invest in automation and technology

Many businesses continue to evaluate financial data without the benefit of automation. In fact, approximately 90 per cent of invoice processing is still, to some extent, manual, according to research by the Australian government. This consumes more time than necessary, adding costs like additional personnel, and introduces the probability of human error.

Accounts payable (AP) automation software empowers businesses by reducing manual tasks and freeing up cashflow. Invoices can be submitted, approvals managed, and payments processed through a single platform with minimal human intervention. 

Investment in tech and automation may be useful during times of crisis by empowering the business to get a broader view of the business. For instance, employees can focus on receivables, making it more likely that the business can more easily plan and meet monthly expenses.

3. Track lines of credit to avoid unnecessary borrowing costs

In an inflationary climate, businesses should avoid taking on unnecessary debt, and the interest that comes with it. This could mean tightening budgets based on insights to ensure the business continues to perform at a sustainable level.

Having an automated finance system which covers accounts payable and accounts receivable can help business owners and their bookkeepers better track incoming and outgoing payments. With improved payment management processes in place, a business can take advantage of optimal payment terms and avoid late payments.

4. Invest in inventory management systems

Business owners can take charge of their inventory costs if they have access to detailed historical financial data. This can help predict future cashflow requirements, providing a better idea of how much to order and when, avoiding wasting money or lines of credit on stock that won’t sell until the next quarter or even later.

Insight into real-time inventory can help ensure businesses are not over-ordering stock that will take up valuable capital ahead of the time when that capital needs to be spent.

By adopting financial forecasting strategies, business leaders will be in a better position to successfully sustain operations, even in a challenging economic climate.

The post Managing inflation: four ways to track cashflow during challenging times appeared first on Inside Small Business.

Managing rising food costs, optimising operations and increasing margins are obstacles all Australian restaurants face today. One of the top causes for slim margins is restaurant ‘shrinkage’, whereby a portion of a restaurant’s inventory is lost through wastage, spoilage, breakage etc. Maintaining healthy and profitable margins is a priority for restaurant owners, especially given the slim margin for error in today’s economic climate. While expertise and diligence both in the kitchen and across the supply chain are important, there are simple ways smaller businesses can use technology to tackle restaurant shrinkage.

Tracking wastage

By now, the importance of technology in restaurants – from automated marketing to QR code menus and payment – is well known. However, it can have a huge impact on a business’s ability to track, then reduce, wastage too. A digital wastage log is a great way to get a better understanding of what is driving restaurant shrinkage. For example, are the same ingredients expiring over and over? If so, a business might need to assess the quality of their produce, the accuracy of their ordering, or even investigate alternative suppliers.

Tracking wastage lets businesses pinpoint where their issues come from. If they find patterns, they’ll be able to devise a plan to reduce them as much as possible. Waste logs were once manual, but digital transformation has revolutionised the entire industry, and can now be automated using an inventory management system or a point of sale (POS) system. Through a digital wastage log, businesses can access accurate, real-time data so they can remove guesswork and instead leverage data-driven insights.

Automated inventory management

Accurately forecasting demand, then ordering accordingly, can have a major impact in the ongoing battle against rising food costs and restaurant shrinkage. For this, a business must understand its ‘par levels’ and how much they’ll go through in each ordering cycle. Doing so manually can easily lead to human errors and mistakes in the ordering process, though. What’s more, it’s a time-consuming process that burdens small venues who are already facing labour shortages across Australia today.

Inventory management is essential in running a restaurant and can be easily automated to reduce errors and lower costs. Integrated within a point-of-sale system like Lightspeed Restaurants, effective inventory management can enable restaurateurs to reduce shrinkage. It allows them to, for example, view current stock and its value, simplify their process through real-time deductions when they sell items and replenishments when they order, minimise loss due to spoilage or even theft, and easily calculate recipe costs and understand their margins. By switching from written logs or spreadsheets to an automated inventory management system, businesses lower their risk of inaccurate ordering and replenish inventory when they need it.

When faced with global economic pressures that are impacting household spending, it’s easy for smaller Australian restaurants to think that big, bold and sometimes risky tactics drive revenue. Often, though, refining and enhancing existing processes can increase a business’s margins. From front-of-house to the kitchen, payments to shrinkage, and everything in between, technology today improves the ‘one-per centers’ – and those one-per centers can add up to big margins.

The post How technology can solve a problem like shrinkage appeared first on Inside Small Business.

It’s not a hopeless situation. There are steps you can take to survive and thrive. Here are five tips to help you gain clarity and shore up your financial position.

1. Get to know your numbers
   This isn’t the time to bury your head in the sand. If you aren’t across your numbers already, now’s the time to be across exactly what’s happening with your business finances. When you know your numbers, you can identify wastage in your business and spot opportunities to create efficiencies. Your numbers tell a story and it’s crucial you understand them.
2. Choose your CFO carefully
   As a small business, it can be hard to justify the expense of a CFO. That’s why an outsourced CFO service can be beneficial. You get strategic experience with the flexibility and cost efficiency of an outsourced solution. The right CFO – outsourced or otherwise – can tailor a financial plan that will steer your business through the current climate, and beyond.
3. Take control of your supply chain
   Almost no industry is immune from the supply chain challenges causing mayhem on small businesses. While you can’t control the weather, shipping delays or other global events, you can implement protective strategies to manage your situation. If you’re in a position to obtain finance and buy in bulk, this can ensure you have the inventory you need. Your CFO can advise on the best strategy for your business based on your industry risk profile and predicted consumer behaviour.
4. Consider new perspectives
   Sometimes it can be hard to see the forest for the trees when you’re so close to your business. Even more so during challenging times when you need to play a more hands-on role in daily operations. When I speak with a new client, it’s amazing the opportunities we can identify immediately to bring costs down and drive profitability up.
5. Review your pricing
   Setting your pricing is a very fine line to walk, particularly in a tough economic climate. Price too high, and you lose volume. Price too low, and you risk covering costs. If your market isn’t willing to absorb a cost increase, are there input costs you can reduce to raise revenue? Or will a modest price increase help you to gain a bigger share of the market and subsequently higher volumes?

The final word

Even with limited budget and resources, you can take action to cushion your business from economic impacts. The businesses that survive will be those that are proactive. Start today with these simple actions and expand the strategic position of your business.

The post Five tips to help small businesses survive in this economic climate appeared first on Inside Small Business.

Often there are mistakes businesses make when it comes to cashflow issues. Here’s where they’re normally going wrong….

1. Delayed payments

It’s a simple fact of life that customers fail to pay on time. More than $76 billion of outstanding invoices are weighing on the shoulders of Australian SMEs. Delays in payments make it harder for you as a business owner to prepare for an accurate cashflow forecast. How can you plan an expense or ongoing payment when you don’t know when your next incoming payment is coming in? Cashflow forecasting is vitally important as it helps make the important decisions that keep the business going in the right direction.

2. Fast expansion

This is one of the most common causes of Australian SMEs’ cashflow complications, the temptation to move too quickly and grow too fast. Without enough cashflow, businesses lose the ability to control their working capital requirements. Growth and progression is vital for every business but make sure your cashflow is up to the task before you expand.

3. Poor inventory management

This is another common cause of cashflow problems, where excess stock is lying around leaving assets that tie up valuable cash for months on end. In addition to holding back cash that you could be using to fund your business, keeping too much stock means you run the danger of it becoming outdated and obsolete, which could land you in further trouble.

4. No sales leads

Poor cashflow can also be the result of low sales and a lack of new leads. It may be a seasonal demand issue or an overall slowdown of business but many organisations can hit a sales roadblock from time to time. Freshening your marketing campaigns can be one way of getting around this problem or renewing your focus on digital marketing and new salespeople.

If you find yourself experiencing cashflow problems the most important thing is that you address them quickly and it would be wise to engage the services of a financier to discuss the solutions available to you to provide your business with the extra cash it needs to keep up with its growth and working capital requirements.

The post Got a cashflow problem? You’re not alone and here’s what might be going wrong appeared first on Inside Small Business.

Now, we are finally coming to the end of the cheap lending cycle. Inflation is rising globally, spurred by pandemic-induced supply chain shortages, rising commodity prices, including oil and gas, thanks to Russia’s recent invasion of Ukraine.

In the US, inflation hit 7.9 per cent in March, causing the Federal Reserve to raise rates for the first time since 2018. This has, rightly, put Aussie businesses on notice to expect a rise in interest rates, with Commonwealth Bank already tipping that cash rates will increase in June.

While Australia is far behind the US on inflation, pressure will likely increase. The RBA expects underlying inflation to rise to 4.75 per cent, while the Consumer Price Index (CPI) has already risen to 5.1 per cent annually. Just this week the RBA has increased the cash rate target by 25 basis points, which was swiftly passed on by the major banks, despite there being some abnormal economic factors caused by COVID over the last two years..

But what does all this mean for small businesses? Many business owners, particularly those running high-growth, eCommerce companies, will be focused on supply chain issues that will negatively impact their ability to secure stock, which in turn will restrict their cashflow. The rising interest rate environment is only going to further impact on a business’s freedom to operate.

The end of cheap money

Until this point, businesses have enjoyed record low borrowing rates from traditional banks due to the all-time low cash rate and fierce competition from non-bank lenders, enabling them to fund their growth cheaply.

This has meant it has often been considered ‘best practice’ to borrow to fund growth. Most small businesses, therefore, have outstanding loans in one form or another, and an increase in interest rates will essentially result in more expensive loan repayments for them. Since these are often long-term debts that will take years to repay, this will mean carrying the debt for longer, incurring more interest.

For those businesses looking to obtain shorter-term funding to invest in growth or cover them until more cash arrives, this funding will become more expensive. Banks and other lenders that require physical assets to secure finance to, will likely set more stringent terms. As any business owner who has taken out a bank loan knows, the prospect of losing your house because you can’t make payments really ups the pressure.

Borrowing to stay ahead

The issue is that, now more than ever, businesses need to have cash to get ahead. Competition in the supply chain is fierce, with suppliers, particularly those in Asia, able to select which buyers they want to sell to. Australian businesses are also facing record high container prices, with shipping operators preferring to focus on larger markets, such as the US.

All this means that Australian businesses may not be getting the best terms from suppliers, meaning that stock is slower to arrive, and margins are cut (or costs are passed onto customers).

Companies that have emerged cashflow-positive from the pandemic are in an excellent position to get ahead of competitors by buying stock more quickly and in greater volume from suppliers, in order to secure themselves better rates and more immediate availability. But those companies that can’t fund this may fall behind.

Finance, for supply chains

There are a range of so-called ‘non-bank lending’ products out there that businesses can turn to that will be much more flexible to the needs of smaller, high-growth businesses across a range of industries.

Many non-bank lenders won’t require a business to specify a physical asset to secure lending to, making them more suitable for eCommerce or other similar businesses. Plus, funding types such as Debtor Finance (sometimes known as invoice finance) mean that companies can receive cash from unpaid invoices early, without waiting for the usual 30, 60 or 90 days to pass. An innovative supply chain financier, such as Octet, can provide the facility for this, and will take a small fee, but ultimately that funding is still yours from your own sales, and, therefore, is less prone to interest rate rises.

On the procurement side of your supply chain, Trade Finance can assist to line of credit means we pay your suppliers immediately, while you pay us back over time. Take advantage of any available early payment discounts, whilst receiving your goods quicker than the competition. The next few years are going to be uncertain and challenging, but savvy businesses shouldn’t settle for high-interest bank funding to see them through, without at least considering the alternatives.

The post Rising interest rates: what Australian SMEs need to know appeared first on Inside Small Business.