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Vital Accounting Stats for Any Dropshipping Business

Dropshipping has become a popular way for entrepreneurs to start their own businesses without the need to hold inventory or have a physical storefront. As a result, many accountants have found themselves working with dropshipping clients. To effectively serve these clients, accountants for dropshipping need to be aware of the accounting statistics that matter most to them.


Revenue Growth


The primary goal of any dropshipping business is to grow revenue. As an accountant for dropshipping, keeping track of revenue growth over time is essential. This will help you identify trends and make recommendations to your client on how to improve revenue.


You can calculate revenue growth by subtracting the current revenue from the previous period's income. Then, divide that number by the previous period's revenue and multiply it by 100.


Gross Margin


Gross margin is another important accounting statistic for dropshipping businesses. It shows the company's profitability after accounting for the cost of goods sold.


To calculate gross margin, subtract the cost of goods sold from revenue, divide the result by income, then multiply by 100. As an accountant for dropshipping, you should monitor gross margins to ensure your clients maintain a healthy profit margin.


Customer Acquisition Cost


Customer acquisition cost (CAC) is the amount of money a business spends to acquire a new customer. This includes advertising, marketing, and other expenses related to attracting new customers.


As an accountant for dropshipping, you should monitor CAC to ensure that your clients are not overspending on customer acquisition. You can calculate CAC by dividing the total customer acquisition cost by the number of new customers acquired during a specific period.


Average Order Value


Average order value (AOV) is the average amount of money a customer spends on an order. This is an essential metric for dropshipping businesses because it can help identify opportunities to increase revenue.


You should monitor your client's AOV and make recommendations to your clients on how to increase it. You can calculate AOV by dividing the total revenue by the number of orders during a specific period.


Inventory Turnover


Inventory turnover is the rate at which a business sells and replaces its inventory over a specific period. This is an essential metric for dropshipping companies because it can help identify inefficiencies in the supply chain.


It is crucial to keep an eye on how quickly inventory is selling and advise clients on ways to increase sales. To calculate inventory turnover, divide the cost of goods sold by the average inventory value during a specific period.


Return on Investment


Return on investment (ROI) is a measure of profitability that shows how much profit a business generates for every dollar invested. You should track ROI to ensure that your clients get a good investment return. You can calculate ROI by subtracting the cost of investment from the total profit and dividing the result by the cost of investment, then multiplying by 100.


Conclusion


As an accountant for dropshipping, it's essential to understand the accounting statistics that matter most to your clients. By monitoring revenue growth, gross margin, customer acquisition cost, average order value, inventory turnover, and return on investment, you can help your clients make informed decisions that will drive their businesses forward. Understanding these metrics will also help you provide valuable insights and recommendations to your clients. By staying up-to-date on the latest accounting trends and best practices, you can be a trusted advisor to your dropshipping clients.


Work with an accountant for dropshipping who can help you boost your business when you choose The ECommerce Accountant. We specialise in providing accounting services tailored to the needs of eCommerce businesses, including dropshippers. Our team of experienced accountants can help you maximise your profits, streamline your operations, and stay compliant with all applicable tax laws and regulations. Contact us today to learn more about how we can help your dropshipping business succeed.

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