ERP ecommerce functionality has been steadily growing in importance as online businesses flourish, and brick and mortar retailers become less prominent. Integrating your company’s ecommerce platform with an ERP solution can help your business increase productivity, retain customers and boost revenue. Integration capabilities are available as prebuilt portions of ERP software or through modules or add-ons.
In this article, we’ll look further into some of the benefits of ERP ecommerce integration, the common features to look out for, how to enable the functionality and how to select the solution that works best for you.
Table of Contents
- What Are the Benefits of ERP ECommerce Integration?
- Which ERP Features Are Especially Important for ECommerce Businesses?
- What Are the Methods of Acquiring ERP ECommerce Functionality?
- What Are Some of the ECommerce Platforms that Integrate with ERP Software?
- Will ERP ECommerce Integration Continue to be Important in the Future?
- How do I Find the ERP ECommerce Integration that Makes the Most Sense For my Business?
What Are the Benefits of ERP ECommerce Integration?
There’s a range of benefits that ecommerce businesses can realize with the successful implementation of an ERP system. Because ecommerce businesses conduct operations quickly and at a high volume, a dedicated solution equipped with automation capabilities and tie-ins to financial information can have outsize benefits. Here are some of the unique positives that ecommerce businesses should look out for upon integrating their online platform with an ERP program.
One of the main benefits of ERP integration for companies that conduct ecommerce operations is the centralization of sales information from different areas. Omnichannel functionality is a key aspect to consider when looking for a solution, especially if your company conducts sales in multiple locations (brick and mortar stores, online, catalogs, etc.)
It can be difficult to keep sales information organized, especially when it comes from several disparate platforms. That’s why ERPs consolidate the information to make insight development more efficient. After all, an automated system is made more accurate with the inclusion of all relevant data points. For example, if the demand from your brick and mortar stores isn’t accounted for when forecasting material needs, you may end up with an inadequate amount of product that doesn’t meet customer demand, therefore causing you to lose out on potential revenue.
ERP software is known for its ability to increase operational productivity by connecting various workflows and automating the exchange of information. Some ERP programs can also automate functions such as bank reconciliation and the sending of shipping notifications. By boosting productivity, businesses can conduct more operations in the same amount of time and increase output. You can also optimize workflows through automation capabilities, which can lead to less time wasted correcting human errors or spot-checking documents.
Every business is constantly looking for new methods to generate revenue. The ways in which ERP solutions can aid ecommerce businesses in gaining more profit vary from actual cash in hand to implicit revenue benefits related to increased productivity, automation, etc. For example, by automating certain business functions, employee time can be spent on other tasks. A study by Nucleus Research found that the average amount of benefits that a business receives for every dollar spent on an ERP system is $7.23. Therefore, a successful ERP ecommerce integration can lead to revenue benefits that far outweigh the initial cost of implementation.
Improved Customer Relationships
Many ERP systems include CRM functionality either out of the box or as an add-on module. With these capabilities, ecommerce companies can leverage a centralized repository of customer information, which enables your reps to more effectively tailor sales leads based on past sales, demographics, etc. There is huge sales potential online; a recent study found that Americans spend 36% of their shopping budget online, and this number is likely to grow as ecommerce businesses and technology proliferate.
Some ERP programs also automate the process of tracking shipments and sending notifications when a product has reached its intended destination. By streamlining these processes, your company can create a more positive impression in a customer’s mind, leading to a greater customer retention rate.
Process Visibility and Management
Process and project visualization are incredibly important when looking at different ERP ecommerce options. Customizable dashboards that contain information related to finances, project status and labor allocation are often available in these systems. By making insights easier to see and putting them into an easy-to-understand graphical format, users can quickly identify bottlenecks and make company decisions to facilitate operations.
Which ERP Features Are Especially Important for ECommerce Businesses?
ERP vendors offer a variety of different features. However, some functions are more important for ecommerce businesses to have in their ERP solutions than others. Here are some of the capabilities that are especially beneficial when it comes to ERP ecommerce tools.
Customer relationship management is important to any business, but for ecommerce companies, it can be the difference between customers choosing your store versus one of the thousands of others that operate online. CRM tools can help you cultivate leads and keep users coming back to your site. Customer retention is incredibly important. A Forrester study found that recruiting new customers costs five times as much as retaining existing ones. An online help desk, tailored advertisements and efficient shipping notifications are some of the factors that keep customers coming back.
Consider the difference between using Amazon to purchase a scarf versus an independent retailer that may have a scarf that you like better, but that doesn’t provide accurate shipping information. In this circumstance, many customers would go with the scarf on Amazon due to the dedicated delivery schedule and the brand’s positive reputation. Additionally, easy access to customer service is a benefit for many customers. Have to make a return? Clicking a button to get connected to a representative immediately is far easier than going through a phone chain in search of an actual employee to talk to. Think about your preferences as a consumer, and work to meet those standards in your business to boost customer retention.
Without real-time, efficient financial data, your software solutions are operating within a vacuum. This is why financial management and accounting tools are the core component of ERPs. Financial data is key to centralizing processes and developing efficient forecasting models so that you can plan for material reorders and anticipate delivery lead times. You can also use financial information to select vendors to work with and to follow up with customers who owe a balance.
Ultimately, financial management is a key component of ERP solutions for any business, and the tighter your profit margins are, the more likely you are to benefit from it. If you already use accounting software for your ecommerce company, you should consider integrating it with a greater ERP ecommerce functionality so that information is specialized and insights are reflected across departments more easily.
One of the most essential features of ERP ecommerce platforms is inventory management capabilities. Two aspects that separate the needs of ecommerce businesses from those of brick and mortar retail locations are the volume of sales and the number of products available through online companies. Therefore, it’s easier to make mistakes due to the high volume at which ecommerce organizations conduct operations.
David Dozer, the CTO of Blaze IT, said, “From a feature/function standpoint, order management and inventory management are the most important area of ERP for ecommerce companies. As soon as a customer places an order on your website, you need to have the ability to fulfill that order in a timely fashion. This means that inventory levels need to be accurate. In this sort of environment, speed and accuracy are key, so having the real-time information that an ERP system offers is imperative to a successful ecommerce business.”
Many ecommerce businesses participate in dropshipping, which is when a company sells a product online and then orders it from a third-party vendor that ships the item to the customer. This enables ecommerce businesses to offer a variety of items without requiring a large inventory or a vast warehouse space.
Laurie McCabe, a co-founder and partner at SMB Group, said, “Everything involves the delivery of something, so you want to be able to look at how the fulfillment workflows work.” For example, you will want to ask yourself if a program makes the pipeline from getting an order online to shipping easier. McCabe also mentioned that it’s important to look for tracking functionality from the different carriers that your business uses to fulfill orders. “A lot of ERP solutions partner with UPS or FedEx, so it’s good to look for that,” McCabe said.
What Are the Methods of Acquiring ERP ECommerce Functionality?
There are a few different ways to align ecommerce needs with ERP systems. Data migration is essential when considering the method that works best for your business, along with any existing functionality or software programs that your company already uses. Here are some of the ways you can gain both ERP and ecommerce capabilities for your business.
The easiest way to gain ERP ecommerce capabilities is through a solution that offers these features out-of-the-box. This means that little to no integration is needed to get the functionality and connectivity up and running. This is a simple way to gain all of the ecommerce functionality you need if you’re not planning on integrating new capabilities into an existing system.
If you already have an ERP in place that doesn’t have ecommerce capabilities included, you may need to opt for an add-on to gain the features that you need. However, if you want to start over with a new ERP solution or are looking at implementing this software for the first time, you might wish to consider vendors that have ecommerce abilities as a prebuilt part of the solution.
When looking for ecommerce capabilities for an ERP platform, prebuilt functionality is nice, but it shouldn’t be the end-all-be-all of your software search. Many vendors provide easy integration with ecommerce functionality through add-ons or modules. It takes more legwork to customize your solution to enable these features, but it could be worth it if you find an ERP system that meets most of your requirements aside from prebuilt ecommerce functionality.
When considering add-ons, you’ll want to ensure that the ecommerce functionality is specific to the platform that your company uses to make sales, whether it be Shopify, eBay or Amazon. ECommerce integration availability varies amongst software vendors, so it’s essential to look for compatibility in this area before making a selection.
What Are Some of the ECommerce Platforms that Integrate with ERP Software?
ECommerce businesses use a variety of platforms to conduct business. Here are some of the ecommerce websites that are most popular and, in turn, are typically the targets of ERP ecommerce integration.
Will ERP ECommerce Integration Continue to be Important in the Future?
The answer to this question is a resounding yes. A study from the United States Commerce Department found that the total market share of online retail sales in February 2019 was higher than that of general merchandise for the first time ever. This means that more and more people are going online to make their purchases, which likely doesn’t come as any surprise to you. Sure, some purchases that require more extensive decision-making may still be made primarily at brick and mortar locations, but as technology becomes more sophisticated, users become more comfortable with making larger purchases online. A Shopify report estimates that global ecommerce sales will reach $4.8 trillion by 2021. This is up from $1.3 trillion in 2014.
David Dozer said, “Where we will continue to see progress is the integration between ERP and ecommerce. Today there are a lot of middle-ware solutions that move data back and forth between systems, but as ERP systems evolve and begin to adopt modern technology, I foresee a lot more ‘direct’ integrations where the shopping cart side and the ERP side are exchanging and syncing data in real time via APIs.”
How do I Find the ERP ECommerce Integration that Makes the Most Sense For my Business?
Finding the right cloud PLM software for your business starts by evaluating factors such as your company’s requirements, your budget and the industry that your organization is in. Laurie McCabe said that the most important factor to consider when choosing a solution is to see how easy it will be to connect to existing systems that are already in place. She also recommends speaking with other customers who have connected the ERPs you’re considering with the ecommerce platform that your business uses to see if it’s a good fit.
Your requirements list is another essential part of your software search. After all, if a vendor doesn’t provide the functionality that’s necessary for your company’s operations, why spend time considering them? It can be difficult to create a list of everything you need or want in a system, which is why we at SelectHub have made this easy-to-use requirements template to help you find the vendors that are best suited for your organization. Our team is also available via phone at 877-692-2896 or through email at [email protected] to provide you with personalized recommendations.
Contributing Thought Leaders
David Dozer is a business consulting and IT specialist with more than 15 years of experience in the enterprise software realm. He has dedicated his career to helping clients find and implement software solutions that meet real-world business needs. In his current role as CTO of Blaze IT LLC, he focuses on helping small companies with their digital operations. David is also a member of the SelectHub Thought Leader program.
Laurie McCabe brings more than 25 years of experience in the IT industry to her current role as Cofounder & Partner, SMB Group. Laurie has built widespread recognition for her capabilities and insights in the small and medium business (SMB) market in several areas, including cloud computing, mobile solutions, business solutions, social networking and collaboration, and managed services.