Managing Inventory Across Channels (Xero + A2X)

The fastest way to kill an ecommerce business is to sell stock you don't have. The second fastest way is to not know your true profit because you aren't tracking Cost of Goods Sold (COGS) accurately.

If you are selling across Shopify, Amazon, and eBay, managing inventory in a spreadsheet is a recipe for disaster. Here is how to professionalize your inventory accounting.

The "Periodic Inventory" Method (For Smaller Sellers)

Most small sellers do not track COGS on every single sale inside Xero because it creates too much data. Instead, they use the Periodic Method:

1. Purchases: When you buy stock, code the invoice to "Inventory Asset" (Balance Sheet), NOT "Cost of Goods Sold."
2. Stocktake: At the end of the month, do a stock count to determine the value of stock remaining.
3. Adjustment: Run a manual journal to move the difference (the value of stock sold) from the Asset account to the COGS account.

This gives you an accurate Gross Profit figure for the month without needing complex software.

The "Perpetual" Method (For High Volume)

If you are doing high volume, you need automation. You cannot wait until the end of the month to know your margins.

We recommend using tools like A2X or Cin7 Core (formerly DEAR).

• A2X: This sits between your sales channel (Shopify/Amazon) and Xero. It calculates the COGS for every payout batch and posts a summary journal to Xero. This keeps your P&L accurate in near real-time.
• Cin7 Core: This is a full Inventory Management System (IMS). It becomes the "source of truth" for stock levels, syncing availability to all channels so you never oversell.