What do we mean by ERP?
First, a primer. Drop Enterprise Resource Planning (ERP) into a search engine and you are likely to be overwhelmed with information – not to mention a bewildering array of choices when it comes to software.
Yet the fundamental goal of any ERP system is (theoretically) simple – it consolidates and unifies disparate business functions and processes. From HR to finance and accounting, order and stock management to customer relationship management, multiple different business departments, which previously operated in distinct siloes with their key information separated off from each other, are brought together with a single shared database.
In turn, this means that those different functions can share information far more easily. This is useful from an efficiency point of view, because it reduces the need for information to be manually copied and duplicated, and can foster greater automation and synchronised reporting. It is also useful from a business intelligence point of view, because it becomes easier for departments to share insights and learn from each other. Accounting can get a more up-to-the-minute view of sales performance and trends, for example.
The role of ERP in ecommerce
Let’s turn to look at ecommerce businesses more specifically. What do they have to gain from implementing ERP software?
The ecommerce sector is both highly complex and incredibly fast-paced – which means that the efficient, accurate and, where possibly, automated sharing of information between business functions makes the difference between success and failure. Customers expect fast and, increasingly, next or even same-day delivery; they expect the products they want to be in stock or rapidly restocked, and they expect accurate up-to-the-minute communications throughout the entire ecommerce process. They expect, also, for ecommerce businesses to keep an accurate and up-to-date record of their previous transactions, offering them loyalty bonuses and promotions where possible, and they expect to be able to communicate with said businesses through a range of channels including phone, email and via social media.
All of this requires ecommerce businesses to manage the seamless flow of information between departments such as warehousing and inventory management, sales and returns, a multichannel contact centre, logistics and delivery. And this, in turn, requires ERP software.
The transformative benefits of ERP in ecommerce
Next, let’s take a closer look at some of the core benefits that ERP software can drive for ecommerce businesses.
The customer is always right
It’s an old mantra. But in the dynamic world of ecommerce, where reputations can be made and broken in moments and customer horror stories are rapidly disseminated via social media, it’s a vital one to keep front of mind.
ERP software enables ecommerce businesses to seamlessly link up their sales, fulfilment, shipping and logistics functions so that they can deliver customers’ orders as quickly as possible. Furthermore, it provides customers with the ability to view available stock and track their order’s fulfilment via a self-service tool or portal. This kind of transparency and customer empowerment is crucial for building strong, long-term relationships and a reputation for reliability.
This is particularly valuable during sudden peaks in demand throughout the year, when ecommerce businesses can rapidly run out of inventory and need to be able to quickly update browsers with stock levels. Indicating that particularly items are running low again increases transparency and can even encourage order fulfilment.
The same ERP integration can enable ecommerce businesses to automatically generate shipping information, increasing efficiency and reducing annual errors, whilst they can leverage historic customer data from sales records or the CRM system to prevent online shoppers from having to enter the same information multiple times. This provides marketing and cross-selling opportunities too.
Ultimately, ERP software enables ecommerce businesses to operate in the most customer-centric way possible.
Enhanced business intelligence
Because, at its core, ERP software unites different business functions, it offers unparalleled visibility into the business, and generates new insights from across the different sales channels of a typical ecommerce organisation. Multichannel ecommerce integration enables retailers to rapidly and intelligently expand their businesses to new channels, as well as to make more informed decisions with regard to hiring and other resource allocation.
ERP software can also automate the reviewing of different options such as the costs for different carriers’ shipping. With almost instant comparisons of shipping estimates at their fingertips, ecommerce businesses can make the best choices for both their customers and their business, and batch orders together in the most efficient and cost-effective way.
Similarly, ERP software which integrates the online store with accounting information can generate far more intelligent and sophisticated business analysis then when the different functions are disparate. Up-to-date balance sheets, open balances, cash flow status and profit and loss statements can be generated automatically based on current financials and online sales.
Many ecommerce businesses are subject to complex legal and financial compliance frameworks, based on international sales and the processing of highly sensitive customer information. ERP software can enable commerce organisations to better manage these requirements, from product tracing and shipping documentation to careful siloing of sensitive information.
Specialist ecommerce modules or functions can allow ERP software to manage state-by-state or country-by-country product regulations, covering elements such as shipping container requirements, taxes and product labelling. The peace of mind from knowing that your business is always compliant – and can always demonstrate that compliance at the click of a button – is invaluable.
From automatically collecting the appropriate taxes according to the products and location of your customers, to ensuring that your financial documentation complies with Generally Accepted Accounting Principles and International Financial Reporting Standards makes for far, far easier business audits.
Powering growing and innovation
Flexible, agile scalability is crucial for ecommerce businesses to operate competitively – and ERP software can unlock the growth they need. By integrating ERP software with the online store, ecommerce businesses can harness better data for inventory and expansion decisions, and handle greater volumes of orders and sales with efficiency and accuracy. It enables tighter control and greater visibility over growing order volumes, and a more sensible, strategic overview of sustainable growth rates.
How to choose the right ERP solution for your ecommerce business
We have seen, then, some of the ways in which ERP software can help ecommerce businesses to leverage and consolidate their data in intelligent and strategic ways, reduce errors, increase efficiency and improve productivity. We have seen how it can improve customer relationships and provide a sustainable platform for growth.
But how can you choose the right ERP solution for your business?
Here are some key factors to consider:
- What are your goals and needs? This may sound obvious, but you need to think carefully about the different functions and departments within your own unique operation, and what they need ERP to do for them – individually and collectively.
- What ecommerce technology do you have in place? This is crucial to ensure interoperability and seamless integration with your ERP software.
- What data and analytics will the ERP software provide? It needs to be accurate, intuitive and available in real-time. Consider how the dashboards can be tailored and customised.
- How does the ERP software scale and grow, and how does this fit with your own business growth plans? Cloud-based ERP is particularly suitable for flexibility and scalability.
- What flexibility is there in terms of pricing, mobile functionality and different users? You want to be able to access your ERP dashboards anywhere, anytime in order to truly harness the information available.
- What does the training and support look like? This is vital for a smooth implementation, but also in enabling your team to get the most out of the chosen solution after
At APH, we recommend SAP Business One to ecommerce businesses. It enables small and medium-sized ecommerce firms to offer their customers seamless products, information and personalised shopping experiences – and enables those firms to harness real-time customer insights and point-of-sale intelligence.
So, what are you waiting for? Get in touch with us today to discuss how ERP software could transform your own ecommerce business.