The topic of the event was Financial management of e-shops, which is a fundamental topic in e-commerce in 2023, because we see sales declines in several segments.
This is related to the current economic situation in Europe, budget planning for online campaigns, financial health analyzes and cost optimization in the e-shop.
Current economic situation in the Czech Republic
From the point of view of the economy, the main points why the e-commerce business is currently in decline are a large amount of money in the economy, increased inflation and large state expenditures. Despite this, the share of purchases in online stores is still rising, from roughly 3.5% (2010) to 14% (2023). We can already see some signs of change and a gradual slight increase in internet sales.
Customer behavior in times of inflation and how retailers can increase sales
The solution to selling even in times of high inflation is to focus on what customers want to buy. From Criteo’s findings, these are personal care and beauty products, home appliances, electronics and travel.
On the graphs, he showed us how advertising on large advertising platforms has grown significantly over the last 10 years. While in 2013 the majority of advertising went through Google Ads, today in the US advertising is roughly equally divided between advertising through Google, Meta (Facebook) and Amazon.
How important is financial management in an e-commerce company?
In financial management, he recommends having these 5 partners – CFO (financial director), chief accountant, tax advisor, auditor and corporate lawyer. They make sure that there is always cash in the company, because the company does not die from a bad economic result, but from a lack of cash.
As for sufficient cash (cashflow), you should be careful about irresponsible purchases, proper management of receivables, optimization of the warehouse, and possibly even loans (from whom and when). The topic of expansion is also related to this. In the case of strong growth abroad, it is okay to have a slight loss temporarily.
There is no universal pill for financing e-commerce
Pilulka has approximately 12,000 customers daily, not only from the Czech Republic, but also from other markets (SK, RO, AT, HU).
He also showed the figures of how they plan sales from individual countries, as well as gross profit, costs, EBITDA and the like. The e-shop Pilulka.cz also received the Delloite Technology Fast 50 Central Europe award.
How to work with price in the context of cashflow, market and inventory
When managing product prices, it is important to focus on the Value chain, i.e. the value chain, which has several parts – What and when do I buy, How much do I have, How do I sell, How do I support it and Can I afford it. There are 5 other areas related to this – Purchase, Warehouse, Product, Marketing and Finance.
If we want to use the price of products for acquisition strategies, the areas How do I sell, How do I support it and Do I have it are important. This is also related to the use of various SaaS tools, for example BlueWinston for product campaigns.
What to expect from the entry of an investor into the company?
They have made several successful investments, for example in e-shops Astratex, Ovečkarna and Sportega.
The most common reasons for acquiring an investor in the company include monetization of a lifetime’s work, the search for a successor, additional capital for the development of the company, as well as the acquisition of know-how for the further development of the company.
The disadvantage of an investor’s entry can be that it is a process of several months and there are often higher requirements for reporting, transparency and evaluation of the investment.
We went through the entire investor entry process on a case study with Astratex. After 5 years from the purchase of Astratex, the e-shop had a 2x higher turnover, its own brand of products and a 7x higher operating profit. It was also thanks to the fact that the e-shop expanded to 7 new countries.