Industry:Outdoor Adventure Goods
"DEAR is going to save you a lot of headaches, it's going to save you a lot of time and stress and money, and you'll see the results in your business pretty quickly."
“Mis-ships and stock-outs are now a thing of the past”
Why DEAR Systems is a great fit for a great outdoors business
Sam Schumann wasn’t expecting his side-hustle to take over his life — or become his livelihood.
Sam started outdoor equipment business Alton Goods as a hobby, to make a bit of money on the side while he studied at University. To begin with, he and his business partner just sold ultra-light hammocks as “a bit of fun.”
“I think we chipped in a thousand bucks each,” Sam says.
After finishing University with Law and Commerce degrees, Sam thought he knew what he wanted to do. But after working as an accountant for four years, it didn’t feel right.
“I didn’t actually resign,” Sam says. “I took a leave of absence and told the company I wanted to work a bit harder on my business, Alton Goods. To be honest, it wasn’t really my intention. I actually wanted to go find a job somewhere else. But then I did start working on the business a bit harder. And after a few months I was like, ‘Holy crap, this is it, this is what I want to do.’”
It’s about the journey — and the destination
Alton Goods is an established Australian ecommerce business specialising in high-quality, durable hiking and camping gear. When it first started, it was only turning over about $10,000 a year – great for University pocket-money, but hardly enough for a living. But Sam kept it going throughout his studies and on the side while he worked as an accountant. Once he took the chance to work on it full time, his accounting days were numbered.
“Probably the whole time that I was an accountant, I think that I knew that I didn’t want to be an accountant,” Sam laughs. “And I always had this itch that I wanted to scratch about what I wanted to do in life. I love the outdoors and I love selling, and Alton Goods really combined my two passions. And yeah, it’s been over three years since I quit my full-time job.”
In that time, Sam’s grown his business by several thousand percent from its humble beginnings. What was once a big year is now less than a week’s revenue, with consistent six-figure monthly turnover.
But, midway through 2020, the Covid-19 pandemic started making its impact felt. Stock got harder to get and shipping times soared. At the same time, customers, newly free of early pandemic lockdowns, were feeling an urgent need to get out of doors and away from it all. Business was booming, at the worst possible time. Sam found himself selling products that either hadn’t yet arrived, or had just sold out. It created a huge manual workload, as well as the need to explain to customers that the item they thought they’d bought wasn’t actually in stock, or wouldn’t arrive for a long time.
“We were encountering problems that were really magnified by Covid. Stock was just selling out really quickly. We’d run out, and we’d have months when there was no stock on the shelves, just huge missed opportunities. I got to a point where I literally just had a folder of invoices, and scrawled on them what I’d paid deposits for and that sort of thing. I realised I really needed to figure out inventory management. Excel spreadsheets weren’t going to cut it.”
Sam cast around for inventory management software, but he ran into roadblocks. One prominent accountant told him not to bother. “He said it’s not worth doing any inventory management until you’re turning over at least $500k a year.” But, asking around other people in the product-selling industry, Sam found they kept recommending DEAR. He soon realised he’d discovered a product that would solve his current problems and allow him to scale the business.
“I said to myself, you know what? F*** it, I need this. I’m going to get it right now. It might cost a little bit in the interim, but it’ll be worth it in the long-term. And yeah, within two months, I was like, ‘“This is absolutely paying for itself.’”
As helpful as DEAR was even immediately post-implementation, Sam knew he was only using a tiny proportion of the program’s power. To unlock the rest — and prepare his business for the growth he knew it was capable of — he needed the skills he’d himself turned away from to pursue his passion.
“I’d got to the point where I was doing the accounting based on what I knew, and it wasn’t 100 percent accurate,” Sam says. “I thought, ‘I need to nip this in the bud early, because we’re growing – let’s get it right at the beginning.’”
He needed an accountant — one that was fast, agile, and that knew ecommerce backwards and forwards.
Counting on Bean Ninjas
Tracey Newman is the director of Bean Ninjas, an Australian accounting firm specializing in e-commerce. A Xero Platinum Partner, Bean Ninjas primarily work with high-performing ecommerce brands — those who’ve already achieved the milestone of seven-figure sales, or who are looking to scale to reach that milestone. They offer bookkeeping and taxation services, as well as advice to their clients about how best to grow and meet the challenges of having achieved scale.
“E-commerce is a bit like the Wild West,” Tracey says. “There are new and emerging issues constantly, and nuances to ecommerce accounting, which is really specialized.”
Ecommerce business owners, Tracey says, have often started their businesses from scratch, and can be caught unawares by the pitfalls of what is still a relatively new and fast-moving industry. “When they start going with inventory systems, they’re very self-taught. Most e-comms that come to us are putting profit and loss documents in front of us that make no sense whatsoever.”
When Sam first came knocking, Tracey thought his business might be too small. But he persisted, and when she saw the potential for Alton Goods to scale, she took him on as a client. Tidying up the books and optimizing Sam’s DEAR implementation was the first port of call. Landed stock costs, unearned income, foreign currency accounting, foreign sale tax: they may seem like esoteric concepts to many business owners, but getting them right is vital for keeping an ecommerce business compliant – and putting it on track for growth.
“Having accurate inventory and financial data drives strategy. It drives decisions. It allows us to say ‘what if?’ and plug in variables that are meaningful, that are tied to reality,” Tracey says. “There’s a huge opportunity to educate business owners around best practices, not just to improve their inventory system, but to get the right costs across to their financial system, which is ultimately what DEAR is feeding.”
For clients like Alton Goods, having a partner that knows exactly how to use DEAR for inventory accounting makes life “a whole lot easier.”
“The biggest win after getting on DEAR and working with Bean Ninjas has been being able to make decisions based on the correct information,” Sam says. “There’s a huge weight lifted off my shoulders knowing that I can just go and pull a report and have the numbers in front of me at the click of a button, and that those numbers are correct, and I can make correct decisions.”
A great view of the inventory landscape
Once Bean Ninjas came on board, Alton Goods “pretty much rebuilt everything from the ground up,” a process made much easier since the inventory data was already in DEAR. Since then, Alton Goods has found inventory management a breeze — and it’s unlocked their huge growth potential.
“Impacts are even bigger than when I was first getting onto DEAR,” Sam says. “I thought I was growing quickly at that time but since then, things have just accelerated at a pace that I couldn’t have imagined.”
Sam says that, for a start-up product business, the benefits of a system like DEAR become particularly clear when the growth really kicks in.
“At the beginning of this year, a good month was 200-300 orders and within six months it’s become 800-900 orders. I’ve just been able to ride the wave and not have to worry because all the infrastructure’s there in the background.”
Having DEAR looking after the inventory means Sam is able to make the most of his working capital. In a product business, particularly a small or bootstrapped business, it’s very easy to accidentally under or over-invest in a particular product, which can impact revenue or leave the business starved of working capital.
“You don’t want to be over-ordering or under-ordering products,” Sam says. “By using DEAR, I can see what we’ve got at this exact moment in time, which then helps me make the decision of how much of each of our existing products we re-order.”
Being able to take this accurate snapshot of the business at any time (rather than waiting for a month-end inventory count or stocktake) means product investment dollars can be carefully allocated.
“It allows me to go, ‘Okay, we’ve got X amount of money left that we can use to invest in new products.’ And then as the new products come on board, it all seamlessly falls into the DEAR ecosystem, and it allows us to quickly expand without running into too many hiccups,” Sam says.
Mis-ships and stock-outs are now a thing of the past, with the whole product journey tracked end-to-end in DEAR. When a product comes into the warehouse, Sam’s team enters it in DEAR, and the inventory information is immediately passed to the Alton Goods Shopify store. As soon as products are marked “received,” they’re available for customers to purchase on the website. The system works seamlessly, both ways, so if there are 500 products on the website, and all of them sell, DEAR will instruct Shopify to mark them as sold out.
“It’s all in real time, it’s all up to date, and I can go home that evening without worrying that products are going to be selling when we don’t have the stock,” Sam says. “Knowing that I’ve got the infrastructure in place at the backend, just makes the whole process easier. Not having to worry about it, just makes things easier as you grow, and allows you to grow faster and better.”
Because Alton Goods sells a lot of product bundles, DEAR’S Bill of Materials functionality has saved time and multiple headaches. Before investing in the software, Sam used to find that he’d sell out of an individual product that was advertised as part of a bundle on his website — while customers were still buying that combination.
“It’s one of the big reasons I got DEAR — we sell a lot of combination products,” Sam says. “Being able to have a bill of materials makes reporting so much easier, because I can sell out of the individual product and then instantly, DEAR will say that there’s zero of the combo left.”
Business transparency has improved too, to the point where Sam (or Bean Ninjas) can get a snapshot of exactly how the business is performing at any point in time, simply by loading up a report from DEAR.
“With DEAR, I know my level of goods ordered not received, and what I’m working with in terms of money that’s owed against that — being able to just run a report, it’s huge,” Sam says. “It’s a huge gain, it’s a time saver, and it allows you to make better decisions. It’s awesome.”
Tracey, on the accounting side, is also a huge fan of DEAR’s powerful reporting capability.
“My favourite thing about DEAR is that I find it quite easy to move around in the software and query reports. From an accounting perspective, DEAR has reports that allow me to define what I want to see. Instead of having to take all the information out to a spreadsheet and put a pivot table on it, the reporting is built in such a way that I can do it all inside DEAR. I really like that.”
Seeing the wood for the trees
The time DEAR claims back from tiresome manual processes — endlessly marking up spreadsheets and fiddling with pen-and-paper accounts — has also been hugely beneficial to Alton Goods.
“The time saved would be days,” Sam says. “When you’re starting a business from absolutely nothing, you’re doing very manual jobs over and over, wasting a lot of time. When you realize that there’s infrastructure out there that can do these things for you, those tasks can be done in 10 minutes. So it’s a huge, huge time saving.”
In a fast-moving product business, time saved is money earned. Sam says that the cost of his monthly DEAR subscription is more than worth the time saving — and the resulting peace of mind.
“It may seem like it’s expensive, but for us the cost of DEAR for a month is about two sales,” Sam says. “Really, it’s absolutely nothing, and the upside is just so much bigger than the cost. It’s money saving in the sense that, to me, DEAR is the equivalent of a handful of employees. It’s all information that a computer’s figuring out for you rather than having a team of people working out for you. So there’s a huge saving there.”
The next step
Tracey is keen to see more ecommerce companies take advantage of what inventory software has to offer, as it’s better for businesses, their accounts — and their accountants.
“I’d be a huge advocate of DEAR,” Tracey says. “Without exception, clients using DEAR are feeling far more in control. They’re feeling a lot happier about their financial side.”
Tracey says that, as an accountant, she gets a lot of questions from prospective clients about what they should be doing, and the difference between the questions they ask before and after implementing DEAR is clear. There’s a huge growth in business maturity, simply from effectively implementing the platform.
“Before DEAR, the client’s saying to me, ‘My financials make no sense. My gross margin is too high/too low. My inventory looks wrong.’ They just don’t trust anything,” Tracey says. “Whereas a client that’s understanding DEAR and using it to its full functionality is wanting to completely skip that conversation with me and say ‘Let’s talk about the future. Let’s talk about which market I want to hit next. What are your other clients doing, for example, in the European Union or USA?’ So they’re forward thinking and strategic, versus reconsidering everything and doubting their figures.”
Sam is stoked with where his business finds itself. It’s grown hugely from its humble beginnings, with Alton Goods now looking to consolidate its annual seven-figure revenue and expand to international markets. From there, the sky’s the limit. He’s keen to learn even more about DEAR, and use it to power his business growth ambitions, and he unhesitatingly recommends the investment to anyone with a small product business and big dreams.
“DEAR is the inventory brain of a business. Without knowing your inventory you’re really going to struggle to grow and grow at pace,” Sam says. “So if you are passionate about what you’re doing and you can believe in it, back yourself and invest in the infrastructure early on.”
“It’s going to save you a lot of headaches down the road, it’s going to save you a lot of time and stress and money and you’ll see the results in your business pretty quickly.”
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