Calculating ecommerce inventory and COGS using product cost catalogs

TL;DR

Learn how to track product costs for your e-commerce business, including the importance of quantity and value tracking.

Transcript

hey guys this is Brittany Brown with lectures today we're gonna be talking about tracking product costs for your e-commerce business this is kind of a sister video to one we did earlier that talks about the general overview of all things inventory and costs of goods sold and how all the parts and pieces fit together I would invite you to go watch t... Read More

Key Insights

• 🇨🇷 Tracking product costs involves both quantity and value tracking, which are essential for valuing inventory and cost of goods sold accurately.
• 🇨🇷 Building a product cost catalog can be done using Excel spreadsheets or inventory tools, depending on the complexity of your product costs.
• 👨‍💼 For businesses with stable product costs, basic Excel spreadsheets can be sufficient, while businesses with more volatile product costs may benefit from using inventory tools.
• 👨‍💼 An inventory tool provides operational support and is especially helpful for businesses with multiple sales channels and complex inventory management.
• 🔰 It is important not to strive for perfection in product cost tracking, especially for beginners. Starting with an approximation and gradually improving is acceptable.
• 💁 Ledger's offers resources on their website, including a blog and YouTube channel, to provide more information on tracking product costs.

Questions & Answers

Q: What are the two key factors to track in order to successfully value inventory and cost of goods sold?

To value inventory and cost of goods sold accurately, you need to track the quantity of products by SKU and the value assigned to each SKU. Multiplying these two factors gives you the value of inventory or cost of goods sold.

Q: How can you build a basic product cost catalog using Excel?

In Excel, you can create a spreadsheet where you identify each product and assign a product cost based on the price you paid for it. This method works well if you have stable product costs and don't require complex tracking.

Q: What approach should you take if your product costs are not stable, such as when manufacturing your own products?

If your product costs are volatile, it is recommended to use an inventory tool that allows regular updates. This is especially important when dealing with manufacturing costs and landed costs.

Q: Why might an inventory tool be necessary for tracking product costs?

Inventory tools provide comprehensive operational support for tracking inventory, including aspects like fulfillment management, warehouse management, and acting as an inventory master. However, if you only need value tracking, simpler methods like Excel spreadsheets or QuickBooks can be sufficient.

Summary & Key Takeaways

• The video explains the purpose of a product cost catalog, which helps track the quantity and value of inventory items.

• It outlines the process of gathering information from bills and Point of Sale (POS) systems to create a product cost catalog.

• The video discusses different approaches to building a product cost catalog, from using Excel spreadsheets to using inventory tools.