Calculations to sell or buy a business

Consolidation of Ecommerce Businesses

Consolidation is Trending- What it means to you & your inventory

2020 has birthed more eCommerce businesses than any other prior year. While some of the newer enterprises have accelerated, others are experiencing slowdowns as they grapple with capital issues and product shipment delays due to the pandemic. In contrast, the more mature ecommerce businesses are experiencing heightened competition for market share and customers’ mind space. This atmosphere has bred the perfect environment for consolidation as it has become an appealing way for both newer businesses to survive and the more mature companies to thrive.

We once saw consolidation happen with large malls; we are now seeing the same in digital marketplaces. Established businesses in the market are absorbing startups creating more opportunities and bigger market shares. As this trend continues into 2021, inventory management software and operations optimization will be increasingly prevalent and important to companies’ valuation for consolidation assessments. 

Consolidation benefits and the impact

Consolidation increases operating margins, a quicker pathway to scalability, and increases access to new technologies or geographies.  Parent companies acquiring smaller startups are seeing immense opportunities to create more holistic shopping experiences for the customers. While startups are also seeing the potential for greater and faster profitability through increased market share when working together. In addition, with the increased pressure for brick and mortar stores to enter the digital marketplace, consolidation will only continue to make way for companies to be relevant and achieve growth. 

Due to the increased competition in consolidation efforts, investment assessments will be more rigid and more stringent. The increased competition will also allow the investors to look more closely at the potential acquisition’s synergies. Companies will want to have the best foot forward in tightening their operations and accounting measures to be posed as a viable and highly valued company. 

So how does all this relate to an inventory management system? 

Whether you are looking to sell your business or procure a new one, an inventory management system will make the transition easier. An inventory management software solution can help synergize two companies creating a smooth change for everyone on the team.

Inventory management software solutions can help ease the transition between people, process and technology because they offer centralized data and workflows. Companies are able to sustainably merge with an inventory management software system, or IMS, as it will provide cleaner financial reporting and be able to illuminate the company’s potential risk factors. For the procurement company, an IMS will take three times less work than merging with a company that had no established processes. This also means the selling company will gain a higher valuation of their business by establishing processes and technology assets. 

These cloud-based data solutions will also increase your people and processes productivity, allowing for more direct communication across departments and even across warehouses separated by immense distance. Inventory management systems create more opportunities for sustainable growth and give more assurance to investors as they will provide transparency and accessibility to risk assessments so that the new conglomerate can be more proactive in regards to those risks. 

As consolidation keeps trending and more and more ecommerce companies continue to emerge, we will see an increase in inventory management software solutions. They will become an integral part of the ecommerce ecosystem as they connect multiple aspects of the supply chain and beyond.