How an Ecommerce ERP System Addresses Key Online Brand Challenges
ERP Software / September 2024
What Is an Ecommerce ERP?
An Ecommerce ERP system is the integration of ERP Software specifically designed to function in an e-commerce environment, offering features and capabilities that combine back-office functions like inventory management, stock control, and finance management.
The combination of two highly sought-after markets (ERP valued at $1 billion and ecommerce forecasted at $8.1 trillion) enables online brands to take control of their back-end and customer-facing data in one synchronised system. This creates opportunities to achieve ecommerce-led goals, such as:
- Building customer trust by providing good experience and service
- Growing sales by meeting customer demand and expectations
- Increasing brand awareness to improve traffic and customer retention
The rising demand for Ecommerce ERP is justified, with brands seeing an increase in conversion rates, returning customers, and sales. 45% of B2B ecommerce owners planned to integrate their operations with cloud-based ERP systems in 2023, while 35% have an integration plan for this year.
There are also more targeted ERP systems available to ecommerce business owners such as Apparel ERP Software and Fashion ERP Software, offered by vendors such as WFX (WFX ERP).
How Does ERP Ecommerce Integration Work?
Ecommerce ERP integration is the process of connecting an Enterprise Resource Planning system with an Ecommerce platform. This integration exists via connectors, ERP add-ons/modules, or middleware platforms and is targeted at both ecommerce brands with or without an existing ERP system.
Ecommerce connectors are specific plug-ins provided by an ecommerce platform that helps to connect a platform to an ERP system seamlessly. These are common with platforms such as Shopify, WIX, BigCommerce, WooCommerce, and more.
Ecommerce ERP Features Prioritised by Retailers and Brands
Inventory Management
Integrating inventory and stock management data enables real-time updates that sync across physical and online stores. The data stored for each piece of stock is vast and saves time when locating inventory in warehouses or stockrooms.
Order Processing & Fulfilment
The entire order processing cycle is automated, this saves time when picking and packing orders and helps to minimise shipping times.
Customer Management/CRM
An integrated CRM feature enables brands to enhance the overall customer experience. All customer data is stored in one centralised database, making it easy to provide a personalised experience and manage customer support interactions.
Financial Reporting
An invoicing and accounting ERP feature ensures all financial data is recorded accurately in real time. This helps e-businesses keep on top of accounts payable and accounts receivable, and to analyse customer sales and trends.
Product Information Management (PIM)
A PIM system should be considered alongside an ERP system when a retailer has multiple products and variations. Essentially, PIM will act as a central storage system for all products. For example, by installing a Product Information Management ERP, the retailer BooHoo supercharged its inventory processes by reducing order fulfilment time from 10 minutes to 30 seconds and scanning 60,000 SKUs daily.
How to Find the Best Ecommerce ERP Software
The best way to find the right ERP system for your ecommerce and brand operations is by using our sophisticated software finder tool. Simply select your key ERP requirements below and select the product that best matches your needs.
What Are Your Key ERP Requirements?
4 Ecommerce Challenges That Prompt ERP Integration
The goals of an ecommerce brand are to build trust with existing customers, increase brand awareness to attract new customers, and increase revenue. However, there are several challenges e-business owners face that can hinder objectives:
Challenge | Without ERP | With ERP |
|---|---|---|
Inventory Management | Increased risk of errors, manual stock tracking, bad customer experience | Automated inventory tracking, accurate stock levels, automated ordering processes |
Competition | Falling behind competitors, not meeting customer expectations | Levelling the playing field, access to the latest technology and features |
Customer Expectations | Poor customer service experience, manual support only provided when online | Quicker customer support, seamless omnichannel support, 24/7 Chatbots with AI ERP |
Data Security | Open to hacks and data leaks, unable to analyse key data | Secure and encrypted data files, disaster-proof capabilities, ability to analyse and act on data trends |
1. Inaccurate Inventory & Stock Levels
For product-led e-businesses, inventory levels must be kept up-to-date and accurate, particularly those that balance their online stock with brick-and-mortar stores.
Essentially, inaccurate inventory management gives the impression of poor customer service by offering a product that isn’t available. This provides a poor customer experience resulting in low customer retention rates and poor brand imaging.
The introduction of an ERP system can automate the entire inventory management process. It identifies the quantity of a product, updates the stock level, informs the Inventory Manager of low stock levels, and places an automated order with supplies.
A success story is retailer, LockNLube. They used an ERP to improve the time spent on inventory management by 70%.
2. Keeping Up With Competition
Ecommerce is a fiercely competitive market, with 95% of purchases expected to be made online by 2040. This requires e-businesses to keep up with the latest technology and trends to compete. But factors such as budget, time, and capacity all play a part in a company’s ability to do so.
One solution is to deploy software tools, ranging from affordable SaaS solutions to top-of-the-line bespoke packages. The affordability of software has levelled the playing field for e-businesses, allowing start-ups to compete with enterprise brands.
Now, almost 70% of top economic performers use some form of software to keep up with competing businesses.
3. Meeting Customer Expectations
Customer expectations are always growing, with the majority expecting scenarios such as a good mobile shopping experience (after all, 91% make online purchases using smartphones), helpful 24/7 customer support, a live chat feature, an easy ordering process, and more.
To achieve brand objectives, meeting customer expectations is critical. ERP ecommerce Software provides the features to meet most of today’s customer demands, including greater control over omnichannel support and enhancing the customer service experience.
4. Ensuring Data Is Secure
Ecommerce businesses collect highly confidential data, including customer details, historical transactions, and user behaviour tracking. As well as noting GDPR laws for storing this data, e-businesses need to ensure that their systems can not be hacked by external parties and their data leaked.
For online retailers without a secure system, most data will be collected on spreadsheets and stored locally. Although some ecommerce platforms, such as Shopify and BigCommerce, provide extra layered data security measures with a subscription.
ERP systems provide a secure and trusted place to store copious amounts of data, they also have the reporting and analytics tools that enable brands to get the most out of their data by analysing buying trends and optimising the customer experience.
How an ERP Ecommerce Process Flow Looks Like
A typical product-based ecommerce process flow consists of several stages such as an order being placed, processed, and shipped. With an integrated ERP system, the process becomes more agile and time efficient, like so:
- Order Captured: Once a customer places an order on-site, the ecommerce platform captures customer details such as delivery information, quantity, pricing, and payment method.
- Data Sent to ERP: The customer’s order details are then synced with the connecting ERP system, updating relevant records such as inventory levels and transactional details.
- Inventory Management: The ERP system automatically checks the availability of stock for the ordered items and either reserves the items for picking if they’re in stock, or generates an out-of-stock message for the customer.
- Order Fulfilled & Ready For Shipping: The ERP system generates a picking list for warehouse staff with details such as item location, quantity, and packing instructions. Shipping labels are generated and the order status is updated, informing the customer that their item is ready to be dispatched.
- Shipping & Logistics: The item is scheduled to be picked up by third-party logistics or couriers and loaded into the correct shipping container or bag.
- Payment Processed & Order Complete: Once communication with the payment gateway has been authorised, the system automatically generates an email informing the customer that their order has been successfully received and shipped.