Before COVID-19, online shopping was growing by about 4.5% a year. The retail landscape has changed this year due to increased movement restriction measures and consumer preference for eCommerce. Those businesses that have successfully adapted to digital platforms thrived while traditional retailers with weak online strategies dwindled.
The growth of eCommerce has also contributed to an increase in financial services provided by non-financial companies. These are often called embedded finance services and can include digital payments, credit, and insurance at the point of sale. The growing trend of embedding finance within businesses can create a more robust and cost-efficient digital economy.
In recent years, platforms such as Alibaba, MercadoLibre, Jumia, and Amazon have expanded their financial services by allowing payment processing. The industry is increasingly becoming service-oriented, as non-financial companies provide credit and insurance to merchants and consumers at the point of sale.
More recently, published reports show that the trend of embedding finance in eCommerce is expanding beyond just online stores. Firms in the agricultural sector, ride-hailing companies, and online logistics are starting to follow a similar development path. They have either started offering financial products or have expressed interest in doing so.
Finance as a Service (FaaS) has been around for some time now, but it is only recently that the COVID-19 pandemic has caused it to become more important than ever. The marketplace eCommerce sector is seeing an increased need for financial services at the point of sale due to the increase in digitalization and remote work, including many non-financial companies offering these services. Finance as a Service provides customers with access to credit, insurance, and digital payments from one platform on any device while also giving businesses access to real-time data analytics.
How The COVID-19 Pandemic Shaped Today’s eCommerce Sector?
The COVID-19 pandemic caused a significant amount of economic damage in the eCommerce sector. The main reason for this is that it was difficult for consumers to spend money while they were sick and unable to work due to illness, which reduced productivity and profits—in addition, having fewer people at work meant fewer people to buy goods and services.
On the other hand, eCommerce businesses have also seen an increase in digitalization and the proliferation of remote work. Due to this, services such as digital payments, credit, and insurance are increasingly being offered at the point of sale by non-financial companies. This is a new development in eCommerce, which was unheard of before COVID-19 due to security concerns about online purchases with people who were not physically present and the increased risk of fraud.
However, this new development is great news for eCommerce businesses because it means they can offer more services to their customers while also increasing sales and revenue numbers. With eCommerce expanding rapidly, it will be essential to keep track of the changes in these selling practices and monitor any digital economy division that may result from them. The growing trend of eCommerce platforms gaining more customers in response to the COVID-19 pandemic suggests that companies within the sector are expanding their customer base by offering digital payment, credit, and insurance for point of sale transactions.
Finance as a Service will become increasingly important in the eCommerce sector due to COVID-19 and post-pandemic globalization.
What Is FaaS?
Finance as a Service (FaaS) is an apt example of the new finance sector, which has seen its value increase exponentially in recent years. Due to the COVID-19 pandemic and increasing digitalization across all industries, finance on demand will continue to be highly sought after. FaaS allows non-financial companies to become more financially involved with their customers without directly providing financial services. Finance as a Service is popular in the marketplace eCommerce sector, which has seen an increase in demand for remote work.
Outsourcing financial and accounting services let businesses focus more on core aspects of their business. Outsourcing the financial responsibilities of your eCommerce business can also help lower overhead costs, freeing up resources that may be dedicated to irrelevant processes such as hiring and training an accountant.
Third-party companies will take over all of the time-consuming financial activities for less than a team within the company can do it. Outsourced finance services are what businesses need to stay competitive without breaking the bank. Because of the vital need for these services, nonfinancial companies now offer them at points of sale with just a fraction of a price as an in-house finance department would cost.
Unlike traditional accounting outsourcing, FaaS goes a step beyond. FaaS is a business model that combines codified standard operating procedures, advanced cloud computing, and digital workflows to enhance agility in meeting partner needs. It also creates easy-to-read financial dashboards together with custom reporting capabilities for regulatory concerns.
How Can Finance as a Service Help the Marketplace eCommerce Sector?
In the post-pandemic marketplace eCommerce sector, Finance as a Service can help in various ways. The first way is by providing financial services to customers who could not physically be at the point of sale due to COVID-19 complications. This would have helped combat issues with customer engagement and increase sales revenue for businesses in the eCommerce marketplace.
The COVID-19 pandemic has created a need for technology to assist businesses with their financial management. Working with a professional finance team instead of internally relieves the organization from disadvantages and still benefits them. But what exactly does Finance as a Service have to offer to those in the eCommerce sector?
- Finance Professionals – Businesses that use FaaS have a professional team of finance providers they can call on at any time to resolve issues with bookkeeping or financial planning. The FaaS model allows businesses to access the expertise and experience of an entire team without having to rely solely on in-house individuals. It also allows companies to customize the services they need.
- State-of-the-Art Technology – An outsourced accounting services provider will typically provide modern software solutions like cloud computing, AI, and advanced analytics. Marketplace eCommerce businesses can use these types of accounting software to reduce work done in spreadsheets and replace it with digital tools that generate easy-to-understand business intelligence.
- Real-Time Reporting Capabilities – In today’s marketplace eCommerce sectors, in addition to a dedicated team handling financial reporting, organizations are also implementing combined systems that track metrics and key performance indicators. This allows them to have immediate insight into financial information from anywhere.
- Access to Professional Finance Services – For many businesses, the use of state-of-the-art digital technology is increasing, and there is a greater need to reduce operational costs. Outsourcing finance services can provide the much-needed flexibility that benefits both business owners and employees. A professional financial services company will use appropriate digital resources to automate tasks, which will help employees focus on core business decisions.
The Benefits of FaaS for eCommerce Organizations
The benefits of Finance as a Service for eCommerce organizations are numerous. There are many reasons it is beneficial to outsource with finance as a service, including the following:
Scalability Finance
Finance as a Service can provide scalable solutions for businesses of all sizes. This ensures that the solution can grow with your company and reduce costs associated with hiring additional employees or outsourcing work. FaaS providers are structured so that they adjust the allocated resources to every task, ensuring they always have the right amount. With companies building the right systems and streamlining their internal controls and processes, FaaS accounting providers can quickly and effectively jump in to help with any accounting activities after being contacted by organizations.
Cost Savings
Finance as a Service will help you save money by providing high-quality, cost-effective services through technology solutions offered through cloud computing software and advanced analytics. By allowing Finance as a Service to help you automate and streamline your financial operations, it will free up time for management teams so they can focus on other areas of the business that need attention.
Accessibility
Finance as a Service allows organizations to access experienced finance professionals at any time and from anywhere in the world with just an internet connection and a phone. Finance as a Service providers have the technology, knowledge, experience, and expertise to provide high-quality professional finance services without any geographical limitations.
CFO Support
FaaS providers, such as Consero, can offer CFO support for businesses without a dedicated finance chief. As the company’s financial leadership devotes itself to analysis, FaaS takes care of repetitive tasks. With this model helping thrive in a digitalized eCommerce world and proliferation of remote work, the CFO focuses on forward-thinking growth by steering attention towards future goals and providing a more strategic planning trajectory.
Increased Financial Visibility
As the business grows, leadership needs a bird’s-eye view of the organization. Finance as a service platform provides them with financial reporting, which presents current opportunities and challenges. With better visibility into their economic status, companies can make more informed decisions and monitor cash flow, understand their profitability in the market, track how effectively they’ve acquired new customers, and check account balances.
In addition, businesses can leverage FaaS to grow their business. This enhanced reporting system provides more data that can be used to make better decisions towards eliminating inefficiencies and identifying new opportunities that may arise from this digitalization.
What Can Marketplace eCommerce Expect from Finance as a Service?
Without up-to-date systems, inefficient processes, and the wrong team, it can be difficult for any company to achieve success. In particular, for new or small businesses, their finance departments often lack accurate data, and digitalization has made remote work increasingly common. eCommerce organizations will benefit from FaaS in the foreseeable future because it will help them improve their processes and reach new levels of success.
Strategic finance is crucial for eCommerce businesses looking to remain competitive. The trick to staying relevant during such unpredictable times lies in responsiveness and the effect of business decisions over time. It’s because of these business-impacting factors that companies need to look ahead rather than dwelling on the past, and you can do so by using finance as a service.
This is why Finance as a Service solutions can prove to be an efficient solution for companies that need significant financial system overhauls. Consero offers services that help you manage your marketplace eCommerce finance.
