E-commerce Financial Excel Model
Originally published: 26/07/2019 07:57
Last version published: 04/12/2019 08:23
Publication number: ELQ-68029-5
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E-commerce Financial Excel Model

The e-commerce startup financial model will perform a financial projection with a range of assumptions.

Ever since the introduction of the internet into our daily lives, electronic commerce, or e-commerce, has been the biggest growth industry. Ultimately, if you want to start your own business nowadays, not considering e-commerce could be a major problem for the development of the company you wish to grow.

However, there are lots of things you will need to consider when deciding on the business model that suits your online business the most. For example, you need to think about who your customers will be (B2B or B2C), the source of your products, and how marginal the sales will be and your budget for the development and promotion of your digital brand. Because of all these factors, our E-commerce Financial Model should help you navigate your through the decisions you need to make.

The model allows you to:
- Make financial projections for up to 10 years and then test them with a variety of assumptions;
- Try out different business models: using marketplaces, or developing your own digital store, or a combination of the two;
- Account for sales of goods and services, plus the sale of digital products using the subscription model;
- Account for seasonal changes and year-to-year fluctuations of demand;
- Calculate and compare projected performance for the different areas of the business, plus marketplaces with different fee schemes.

The template is divided into 3 main sections, which are Sales Projections, Fixed/Startup Costs, Report Outcomes

Model Config section allows you to:
- Set a length of the Projection Period (from 2 to 10 years) by picking a relevant value from the dropdown list;
-Enter the Start Date of the project;
- Enter a code of the currency which all monetary amounts will be displayed in;
- Show or hide instructions by selecting the respective value from the dropdown list.

There are several tables here too, like Sales Channels, Business Lines, Sales Trend.

Sales Projections
Fill in this section with the following information if you wish to sell goods and services with a conventional selling model;
- Names of products
- Marketplaces (either third-parties or your own website)
- Expected average number of products sold for every month

The sales projections will then be calculated automatically. The numbers for each product sold in each month are then a product of the month-specific expected average number and year-specific percentage trend value which you enter in the Dashboard.
If you think that prices will increase over time, you can input a respective increase rate with a frequency into the Price Increase section. Then the Price Evolution table will have the actual adjusted prices.

Subscription Projections
Fill in the Acquired Subscriptions table if you want to receive subscription revenue from digital products. Input the number of subscriptions you expect to acquire for each combination of product and marketplace.
Adjusting prices and cost of digital subscription products is easy if you think that they will change over time

Fixed Costs
Starting with the Staff table, enter the names of employee positions and the respective business areas they will be working in. If you cannot attribute an employee to a specific domain, put 'Non-Specified. This process means that you can calculate profit margins for each area of your business.
The Other Monthly Expenses table follows similar logic. Simply enter the names of the expense items into the list with the business lines they fall into, then the expected montly amounts of expenses for each month.
You can also enter increase rates if you think the amounts will change, like in other areas explained above.

Startup Costs
This is the final step and the accuracy of these figures is essential for increasing the effectiveness of the model.

Report Outputs
Once all data is entered, the reports will be available in the dashboard. This includes the following:
- Financial statements including Income statement, Balance sheet and Cash flow statement;
- Profit (EBITDA) report presenting breakdowns of income and expenses by lines of income;
- Breakeven reports giving you an idea of when you are going to recover your initial investments;
- Net revenue report displaying revenues, after deducting marketplace commissions, for each product and business line;
- Net revenue report by marketplaces displaying revenues, after deducting marketplace commissions, for each product and marketplace;
- Sales breakdown report displaying, for each business line, expected numbers of products sold along with prices and gross revenue amounts;
- Sales breakdown report by marketplaces displaying, for each marketplace, expected numbers of products sold along with prices and gross revenue amounts;

Gross profit report for each income line, and overall;

Gross profit breakdown report displaying, for each business line, profit margin after deducting the variable cost and fixed cost associated with the respective business line;
By marketplaces displaying, for each marketplace, profit margin after deducting variable cost;
Subscription breakdown reports showing numbers of acquired, lost and retained subscriptions.

ECommerce Financial Model Features Summary:
-Perform financial feasibility study Ecommerce business
-Works both on Mac and Windows
-No installation needed, ready to use.
-Professional design and suitable for presentations
-Innovative reporting system
-Financial Statements
-On Sheet Instructions
-White Label
-Compatible with Excel 2007 and later versions

This Best Practice includes
1 Excel Model

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