The CFO in an eCommerce Landscape

The CFO’s role in the business organization has steadily been evolving through the years, but as new business models emerge and dominate, so must the business owner meet the expectations of the new paradigm shift. What is an eCommerce CFO? Is there a difference from a traditional one?

The Role of a Traditional CFO

The traditional CFO is a financial position and like all financial positions they mainly include advising the executive team on financial matters such as budgeting, data analysis, and forecasting.

The CFO is responsible for making sense of the financial data harvested from the books and reports. This is a major role of the traditional CFO which affects a lot of role players in the company. 

From such data, they assess liquidity and risk management from which the CFO can advise the company on matters such as capital structure or financing options to fund your company. 

Forecasting is also an important role of a CFO, they are in charge not only of the interpretation of financial data for the past and current financial performance but also for the prediction of the future. 

The Rise of the eCommerce CFO

With the explosive growth of the eCommerce platform, aggravated by the pandemic, almost every business now has an online presence. Transitioning into eCommerce could be burdensome for some because in order to continue growing, you have to tailor your business well into the online landscape. This means learning new KPIs and correlated technology. 

How different is an eCommerce CFO

The eCommerce CFO not only concerns himself with the financial aspect of the business but also should be aware of marketing trends. 

Budgeting is one of the primary duties of a CFO but the primary difference for an eCommerce CFO is budgeting for Software Expense, such as email marketing platforms, website plugins, project management tools, web hosting, and editing programs, which takes the most out of the expenses of an online business.

There is also some difference when a CFO performs the data analysis for an eCommerce company. They have to analyze for inbound and outbound web traffic; at what stage the customer drops a purchase, purchasing trends, and the ratio of marketing campaigns that are converted to real sales.

The CFO also has to evaluate financial risks. In eCommerce, you have to consider a source of risk unique that is unique which needs to be learned and studied. Marketing campaigns are especially important and risky because you might end up losing a lot of money while failing to convert the campaign to any real sale. The CFO also needs to know how to maximize working with influencers who can greatly impact their business brand.

Sales Forecasting helps you personalize your advertising campaign to make sure they reach your desired audience. It is also important for inventory management.

In Conclusion

Most of the roles of a traditional CFO are the same as an eCommerce CFO. However, due to the new and distinct nuances of working on the online platform, you need someone on your team who has experience in the field to interpret your financial data.

If you want to learn how to grow your eCommerce business, don’t hesitate to collaborate with us, we can translate your financial data into a meaningful application. 

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