kgmc india

23 Apr 2020

Complete Guide on Marketplace Reconciliation for e-Commerce Sellers


Accounting & Compliance

Overview of E-Commerce Reconciliation

India is rapidly growing in e-retail with internet penetration which is increasing day by day. It is an expected increase in internet user base up to 60% of the population by 2022 in India as per the data available in the public domain.  Thus, e-Commerce marketplaces are not only preference or alternate for sellers, but it is a necessity to scale their businesses. The marketplaces are aggressively increasing their seller base by providing ease of on-boarding process. On the other hand, sellers can sell their products through marketplaces very easily. Hence, bicameral growth in e-commerce is bound to grow.

The business owner gets order so frequently that operational activities become high priority and recording and matching of transaction stay at back foot. The volume of transactions in e-commerce is generally so big and so complex that a person having normal acumen of financial literacy, can not handle it. Therefore the matching of the transaction, which is called reconciliation, should be on top of the list of to do’s of the business. It has a direct impact on the bottom line of the businesses.

Why payment reconciliation is a challenge in e-Commerce?

Each marketplace has different from each other in terms of their commission structure, payment terms, fees, return policies, penalties, and other charges. It becomes literally a cumbersome for a seller to keep track of multiple structured things at various marketplaces, especially deductions that marketplaces make before paying their sellers. Despite the availability of multiple eCommerce software solutions in the market, matching of transaction and payment reconciliation is a major challenge that many sellers still facing today.

e-commerce marketplace reconciliation

What is the business owner’s worry in dealing with Marketplace/ Aggregator

The many sellers on marketplaces are generally not able to figure out simply their profit or loss on the business. This is just because of the cumbersome process of getting reconciliation done with multiple marketplaces.  The many sellers are struggling to find out the answers of very simple questions which a business owner should always know, such as:

  • Are we making money or losing money?
  • What is my sales summary?
  • What is my payment summary?
  • Are we getting money against our sales?
  • Are they deducting extra charges from our payments?
  • Are we getting sale-able returns or damaged returns?
  • Are we getting money against our claims?
  • Whether the penalties deducted are as per SLA?

KGMC e-Commerce Reconciliation Services

The reconciliation work for e-commerce business includes the process of reconciling orders, receipts, various charges and deductions, returns, etc. We, KGMC provides e-commerce reconciliation services to sellers who are selling their products either through marketplaces or their own websites.

Depending upon the requirement of the organization, we can discuss one time or regular assignment. Some of the possible areas of reconciliation could be –

Order reconciliation

This gives us clarity on the total order status. Through this recon exercise, the one will be able to see that how many orders have been received, successfully delivered, canceled, returned, etc. of each marketplace for a particular period say monthly.

POS reconciliation

This recon gives us details of the sales summary for the period. From the total sales, how much is paid / to be paid via COD, Credit Card, Online payment, etc. This summary is useful to pass the necessary accounting entries related to revenue booking along with GST liability.

Payment reconciliation

It gives us the order wise details against which the payment has been received and against which the payment is pending to be received. It also reflects the payment received in the next cycle say 15 days, and expected payment in the next cycle.

Charges reconciliation

This gives us the details of various charges such as commission, shipping charges, reverse shipping charges, warehouse fees, discounts, etc. It also gives us the clarity at the order level whether the charges are as per the terms or not.  The orders upon which excess charges have been levied will be identified and reflected separately.

KGMC India e-Commerce Reconciliation Services

Penalties visibility

Although it is not a separate reconciliation, it will be covered under charges reconciliation. However, it gives us the details of the amount deducted due to penalties clauses as per the SLA signed with the marketplaces.

Returns reconciliation

This is a very important reconciliation activity. It gives us the summary of returns in different categories such as returns in saleable conditions, damaged conditions, claimable or not claimable. It also gives us further details of claimed returns against which payment received or not received.

Profitability analysis

It gives us marketplace wise operational profit and loss in summarised form. It also gives the profitability at the product level. This report assists in making strategic decisions such as product quality improvement where losses are due to more returns, shaking in selling prices where the cost of goods sold is going at a high level, etc.

Get in touch with us to know more.

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