ERP for Ecommerce | Importance, Benefits, and Features

Last updated on April 13th, 2022 at 12:35 pm

As an ecommerce business owner, your goal is to scale your business—whether you’re B2B, B2C, or D2C. However, as your operation grows, more processes are put into place. Soon, things become much more complex.

At a certain level, you can manage your business effectively using separate inventory management, customer relationship management, and accounting systems. If you continue to grow, you’ll soon need more than these disparate solutions can provide.

If you don’t implement an enterprise resource planning (ERP) system that integrates seamlessly with your ecommerce platform, your business may be at risk. A cloud-based ERP for ecommerce can act as a total retail operations platform and connect your business processes for a seamless, future-proofed solution that will increase your ecommerce business’s productivity and boost revenue.

Keep reading as we explore some of the benefits of ecommerce and retail ERP for online stores, including must-have solutions and how to select the system that will work best for you.

ERP Functionality in Ecommerce

Your daily business processes likely already include things such as managing inventory, taking and fulfilling orders, tracking financials, providing customer support, and processing returns. As you can imagine, these tasks become harder to manage as your ecommerce business grows.

Most ecommerce software systems rely on solutions that have been cobbled together over time, utilizing methods and technologies that are disconnected. As your business becomes responsible for more and more data, you must integrate your ecommerce software into an ERP system. This will help you automate your current processes and avoid future data issues.

Depending on your business, there are various ways you can integrate ecommerce software and retail ERP. For example, you can use the ecommerce software’s API to take complete control over the integration process or use a pre-integrated third-party solution with out-of-the-box functionality. Alternatively, you can use an ERP with native integration (where the ERP’s API is available to the ecommerce platform), which allows you to modify the integration to meet demand as needs change.

Enterprise companies need ERP systems to manage complex processes efficiently. While ERP is popular in traditional retail businesses, it can be a game-changer for ecommerce business owners looking to automate these processes. ERP functionality can make it easier to communicate with vendors and customers. For example, an ERP integration can also automatically communicate to your customers after they place an order—such as alerting them when there is a delay or their item(s) have shipped.

ERP for ecommerce software can assist with order and sales management by automatically calculating shipping costs or creating shipping labels after an order is placed.

Ecommerce ERP can come in handy for inventory management, as well. When an item goes into production or arrives in your warehouse, your ERP can update your inventory count and prevent stockouts or overselling. Your online retail business runs seamlessly with safeguards like these, ensuring up-to-date inventory levels and happier customers.

Benefits of ERP for Ecommerce

As online stores continue to thrive and brick-and-mortar retailers are less prominent, ERP needs for online retail have been steadily increasing—including the need for pre-built integrations that supply ERP functionality.

When considering the cost of an ERP system for ecommerce, know that successful integration can lead to revenue benefits that far exceed the implementation cost.

Let’s take a look at some of the benefits of integrating retail ERP into your ecommerce business system.

Data Consolidation

ERP solutions can help you manage inventory and processes effectively by consolidating data from multiple sources. As customers engage with your store online, you can pull valuable data in real-time, which you can then use for more accurate reporting and forecasting. You can make more informed decisions about replenishing inventory or which products to keep in your catalog with a complete view like this.

With better data, you have additional process visibility, which allows you to generate robust reports to learn how your business is performing.

Advanced Process Visibility

Speaking of process visibility, when considering ERP for ecommerce, you can’t underestimate it. ERP software typically comes with dashboard functionality. You can customize your dashboard to contain product status, finances, and resource allocation information. You can quickly identify bottlenecks and improve processes to facilitate business operations by achieving complete visibility.

Improved Online Experience

When your customers are happy, they’re far more likely to continue doing business with you, which is a key benefit of ERP for ecommerce.

When your ERP system integrates with your ecommerce platform, current and potential customers always have access to complete, accurate data. They can check item availability, order status, shipping updates, and more—whenever they choose. This increases customer retention rates and reduces the risk of frustration stemming from incorrect pricing, stockouts, or out-of-date product descriptions.

Ecommerce Process Automation

An ERP can help you boost revenue and productivity by automating business processes—your employees can spend more time on essential tasks if you can take the more manual ones off their plate. You can also reduce human errors caused by finger slippage and double data entry.

Essential Features for Ecommerce ERP

While ERP software vendors offer a variety of features, certain ones are more important for ecommerce businesses than others. As you weigh options, look for ERP solutions that provide the following:

  • Customer relationship management
  • Retail accounting and reporting
  • Inventory management
  • Product information management
  • Shipping, distribution, and warehouse management

Let’s look at each of these features in-depth, so you know what you’re looking for in an ERP solution for ecommerce.

Accounting and Reporting

When you use multiple platforms to manage your business, your data is siloed—your teams operate within a vacuum. This means that your accounting software must do its job without access to accurate financial reporting data. As a result, you can’t trust your numbers and must perform regular, manual audits to stay up-to-date.

With financial management software equipped with an ERP integration, you can tighten your ecommerce business’s profit margin. You can enjoy features such as automatic invoice reconciliation, which allows you to ditch manual, time-consuming spreadsheets.

Inventory Management

The solution you choose must provide inventory management capabilities. This will allow you to offer a wide variety of products and facilitate a large number of sales. Without the right software in place, it is easy to make errors when conducting business. When considering features for ERP for an ecommerce business, make this a priority.

Customer Relationship Management

Acquiring a new customer can cost five times more than what it takes to retain an existing one. Customer relationship management (CRM) software helps improve customer satisfaction by informing your customers up-to-date on new products and services—as well as current promotions and discounts.

Customers return when they feel like their needs are being met with factors such as tailored advertisements, online support, efficient shipping notifications, and more. They will return to buy products from companies that offer these services in addition to reliable customer service. For example, consider the difference between purchasing an item from Amazon versus a smaller retailer. You may like the smaller retailer, but they don’t provide quick, accurate shipping information. Many customers will choose Amazon for the brand’s positive reputation related to its delivery schedule, in addition to its easy return policy.

An ERP’s customer management capabilities lead to more empowered customers, which leaves your sales team free to explore other growth opportunities.

Product Information Management

Today’s ecommerce industry is all about providing omnichannel experiences, which makes centralizing product data and product visibility critical for success. An ecommerce ERP solution will store data such as product pricing, attributes, product content, shipping label information, and more. Centralizing this data and having a single source of truth allows you to push accurate information out to multiple channels at once.

Shipping, Distribution, and Warehouse Management

Many online retailers operate using a dropshipping business model, which allows them to sell products online and source them from a vendor or supplier that then ships the item to their customer. This is ideal, as it will enable you to sell various items and increase retail sales without requiring a large amount of inventory space.

However, when working with vendors, it’s essential to be able to visualize your fulfillment workflows and supply chain. When considering a solution, ask yourself how it will streamline the process—making it easier to get an order from online to shipping to your customer.

How Will Your Business Processes Change When Implementing ERP for Ecommerce?

Your company needs more than a standard ecommerce platform and supporting apps to operate smoothly. Today, companies use more and more systems to manage their business operations. Smaller companies deploy an average of 73 apps, while larger enterprise companies average 175. These mobile applications and cloud solutions account for inventory management, finances, human resources, supply chain management, CRM, and more. This introduces the need for a single, master data source.

Before you begin to check out ERP solutions for ecommerce, consider the type of data you have, how much, and what needs to be synchronized. For example, stock levels are important if you sell physical products, but you don’t care about this type of data if you sell services.

As you explore solutions, pay attention to how often data is synced between sources and understand your needs. While inventory availability may need to be updated each hour, other data may only need to be synced once daily. If you sync too often, you can end up doing more harm than good, so prioritize syncing for the items that matter most.

As you map out the data that must be synced between your ERP solution and ecommerce platform, consider product information, inventory levels, customer information, orders, pricing, shipping costs, and more. Divide each data type into categories depending on how often you update them. For example, if inventory levels must be updated each hour, map out this category first. Next, you might map out orders, followed by product information and pricing.

Grow Your Ecommerce Business With a Total Retail Operations Platform

If you’re looking to scale your ecommerce business, integrating or replacing your current system with a cloud-based ecommerce ERP may be the answer. You can connect and automate your procedures, processes, and data to ensure a more efficient business and profitable future with the right solution.

When you’re ready to learn how Flxpoint can help you reduce human error, boost online sales, tighten margins, and deliver a better customer experience, talk with an expert today.

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