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The Benefits of Ecommerce ERP
The global enterprise resource planning (ERP) software market is forecast to grow to around $97 billion by 2024.
And there’s a reason for that.
In years past, ERPs were mostly used in enterprise-level retail organizations or B2B ecommerce businesses that had to manage a high level of complexity. Names that might come to mind include Microsoft Dynamics, SAP, Oracle and Netsuite.
Increasingly, however, online businesses of all sizes are using ecommerce business -specific solutions from companies like Acumatica and Brightpearl to integrate and manage critical business workflows.
Using an ERP can help reduce retail organizations’ risk in an uncertain climate, and ERPs can positively impact both merchants’ productivity and profitability.
There are plenty of options out there built specifically for ecommerce businesses that can integrate with retailers’ ecommerce platform, either through pre-built integrations or using APIs.
“By Acumatica and BigCommerce working closely together, our teams are ensuring that we are educated about each other's roadmaps, discussing challenges customers are facing and working together to resolve those challenges. This partnership is making us extensions of the other’s team. Additionally, we are both working together to build the market's best ecommerce/ERP solution.” — Josh Fischer, Senior Manager Product Management, Acumatica
Let’s dig into the details of what an ERP does and how it works, and what you should be thinking about — and looking for — when you begin to evaluate vendors.
What is an Enterprise Resource Planning (ERP) Solution?
Enterprise resource planning (ERP) is defined by Gartner as “the ability to deliver an integrated suite of business applications.” ERP tools integrate a wide range of administrative and operational business processes, from human resources, finance, inventory levels, orders and more.
Essentially, ERPs make it possible for back-office functions to work together, giving retailers a centralized hub for the data and information needed to run their business.
While many small businesses start out using siloed solutions for back-end functionality, as you start to grow, the complexity may outgrow those solutions. Bringing those capabilities together in a unified solution better connects your processes and procedures for smooth, cohesive business operations. “Merchants can grow for years with their ecommerce platform connected to multiple external systems to support back-office tasks. However, there comes a time when you begin to lose control of your data. For instance, customer data like shipping addresses aren’t accurate across all systems, or you’re rapidly growing and you find that managing multiple warehouses is not possible in your existing systems. This is when merchants begin to search for solutions and discover cloud ERPs, like Acumatica.” — Josh Fischer, Senior Manager Product Management, Acumatica
Basics of an Ecommerce ERP
To understand how an ERP and an ecommerce integration works, let’s start with describing some of the back-office ecommerce workflows that ERPs may handle. That encompasses taking and fulfilling orders, processing payments, handling returns, managing inventory, ensuring security, calculating taxes, tracking financials, and providing customer support.
Phew. Let’s pause to take a breath. Your ERP essentially becomes a ledger filled with all your company data — which you can use to analyze everything from inventory production to trends in seasonality.
All of those tasks continue to become more complex as your business scales into a full-fledged operation with a warehouse — or two, or three; a shipping fleet; and multiple employees.
That’s where your ERP solution comes in. Here’s some of the characteristics of an ERP:
Integrates with other solutions in your tech stack in real or near-real time
It acts as a common database for information across all applications
Deployment options include on-premise, cloud or SaaS
You can get an ERP that integrates with your ecommerce platform, either as a pre-built integration or through modules or add-ons. But connecting the two is a no-brainer, because they’ll be able to share data points like:
Product information
Customer information
Orders, fulfillment, shipping and returns
Inventory levels and associated lead time
Various tax regulations
For example, Brightpearl makes it easy for merchants to quickly connect with BigCommerce, primarily because they don’t operate as a classic ERP. “Unlike other ERP systems in the market, Brightpearl’s operating system comes with a world class selection of pre-built integrations and connectors, including an ‘out of the box’ native integration for seamless connectivity to your BigCommerce store. Through our BigCommerce app, you can connect your storefront with the rest of your business, helping to streamline and automate day-to-day retail operations, such as inventory, sales order management, CRM and fulfillment, level up end-to-end commerce capabilities and enhance experiences for your customers.” — Stuart Pick, VP of Global Alliances and Strategic Partnerships, Brightpearl
5 Key Features of an ERP
When you’re ready to integrate your ecommerce solution with an ERP solution, here are a few key features to evaluate within your ERP search criteria.
Finance.
Incorporate real-time data around ecommerce orders into other financial and accounting information, like your accounts payable, accounts receivable and more. For example, when an ecommerce order comes into your ERP solution, it immediately shows up in the sales order and is populated throughout your financial statements. As soon as the payment goes through, it’s recognized as revenue.
Customer relationship management (CRM).
Integrating your customer relationship management function into your ERP centralizes management of leads, contacts, opportunities, accounts, and every related interaction — across the entire buyer’s journey. Regardless of which channel a customer purchases through, your centralized CRM will associate that order with the correct customer. That gives you a unified view of your customers and how they engage with you across channels.
Inventory management.
Integrated inventory management keeps all your inventory up to date in real time, across any number of warehouse locations. You’ll also know where all your inventory is, whether it's in a warehouse location or in transit.
Shipping, distribution and warehouse management.
ERP software solutions can play a role in automating logistics processes after an order has been placed, from calculating shipping costs to creating a shipping label and sending the order to the appropriate warehouse to pick, pack and ship. Warehouse workers can use phones or tablets to perform their tasks, lot and serial number tracking eliminates mistakes, and EDI compliance is handled by third-party EDI software.
Product information management.
Product Information Management (PIM) solutions simplify multi-channel sales, centralize your product information like vendor-specific details, pricing, customer-specific pricing, options and variants, and more. Managing that information in one place allows you to update everything just once and push the information out directly to your various channels.
Does Your Business Need ERP?
Relying on disparate systems with tenuous integrations functioning through sheer determination and willpower alone, won’t sustain you as you grow out of being a small business. Everyone will suffer from a lack of data, consistency and control.
As ecommerce businesses scale, they have different needs from smaller entrepreneurs and often require solutions like Brightpearl to streamline and automate the much greater levels of operational complexity.
“One litmus test to check if you’ve reached that stage would be to analyze your reviews. 77% of all 1-star reviews are related to issues after the buy button, like delayed deliveries or items being shipped to the wrong place. If you're running out of stock or shipping to the wrong addresses on a regular basis, these mishaps are often down to ineffective manual workflows or human error in the operations side of the house and is a leading indicator that you need an intelligent automated operating system to take your business to the next stage of growth.” — Stuart Pick, VP of Global Alliances and Strategic Partnerships, Brightpearl
Here are some additional signs you may be ready for an ERP:
You’re having trouble scaling: Perhaps you’ve been doing fine with basics, but if your current software solution is limiting your market expansion and ability to grow on a global scale, it may be time for a system that does.
Your tech is a stack of disparate systems:**As technology changes, you’re noticing that your disparate systems don’t work well together. You may notice that your new accounting software isn’t compatible with your old HR system, and you’re tired of wasting time and resources trying to stitch a solution together. You’re falling behind in delivering the best customer experience: If your staff and customers are mobile and your system isn’t accommodating them, it’s time to invest in one that meets everyone’s needs. If you feel like you can’t afford to invest in meeting your customer’s expectations, and you’re not willing to give your staff the tools they need to succeed, you’ll lose them to a competing business pure and simple.
Benefits of an ERP
When people think about ERPs, especially if they’re imagining the complex legacy ERP of the traditional enterprise, they may struggle to see how the benefit to an ecommerce operation outweighs the cost. But with ERP systems built specifically for ecommerce, there are plenty of benefits likely to increase productivity, customer retention rates, and overall revenue. “ERP’s create automated work environments — warehouse management, fulfillment processes, accounting and standard order processing — which help businesses function in a more efficient and effective manner. This then enables merchants to focus on growth activities like adding new products, improving fulfillment times and marketing campaigns. So when employees aren’t bogged down by mundane tasks, they have the flexibility and freedom to be creative, and this is how businesses grow and become more successful.” — Josh Fischer, Senior Manager Product Management, Acumatica
Create a centralized, integrated data hub.
The integration that an ERP system delivers breaks down silos, so you have a comprehensive view of your business. In that same way, it also maintains the integrity of your data, so you can be sure you’re working with accurate information. That singular, data-driven perspective will give you a solid foundation for the decisions that will move your business forward.
Improve reporting and forecasting.
A centralized view of your data means you can see sales, finance, logistics, and procurement data side by side and understand how they all impact each other. Plus, your historical data will be more complete. With comprehensive historical data as well as real-time visibility into trends, you’ll be better able to forecast demand.
Increase operational efficiency.
Introducing the automation an ERP makes possible is the key to process standardization. When your ERP and ecommerce solution routinely exchange data, your staff no longer have to enter that data in multiple places manually. That also prevents errors and saves time.
Here’s an example: when a customer places an order, that triggers the next step of the process, effectively automating order management. Then your system will automatically reflect when the order has been shipped, where it is in the transit process, and how your inventory was impacted. The time saved can be put toward new ways to add value, and you reduce the risk of human error. “Brightpearl is more than an ERP. Our solution supports scalable commerce and our strength comes from our world class selection of pre-built integrations and connectors to third-party apps and services which allows for flexibility when developing your ecommerce experience. The key benefits of Brightpearl is that it allows merchants to save time and regain control over their operation by automating key retail workflows, enabling them to grow fearlessly.” — Stuart Pick, VP of Global Alliances and Strategic Partnerships, Brightpearl
Tighten inventory control.
Real-time inventory visibility is critical to avoid stock-outs and ensure supply. But with improved supply chain and warehouse efficiency you can also streamline your sourcing processes, which can save you money. Better sales forecasting also means that you can better optimize your inventory costs.
Build and strengthen customer relationships.
When ERP systems include CRM functionality, you can combine sales information with rich customer data to, for example, better tailor your messaging and promotions. You’ll be able to see the results of those offers, too, which will help you further optimize your marketing in future.
But marketing isn’t the only department responsible for delighting customers. Your support team plays a huge role in retention and loyalty — and having access to all the information about customer activity and interaction gives them a super power. Customers will appreciate your ability to provide them information they need regarding delivery status and when to expect their purchase.
Optimize the omnichannel experience.
Whether your channel mix is:
Ecommerce storefront + Amazon marketplace
Brick-and-mortar + online store
Ecommerce storefront + Instagram checkout + eBay
Or any other possible combination — you need to be delivering a consistent, cohesive shopping experience with trusted information.
Your ERP integration will ensure you can manage inventory consistently across channels, deliver up-to-date product information optimized by channel, send tailored messages to past or likely buyers at the right times, and more.
Increase visibility of KPIs.
Use your centralized data to create dashboards that give you the sales, marketing and finance information you need at a glance. Customization functionality means you can create unique dashboards for each person based on the data they need. Gain insight and analyze trends faster, easier and in real time.
Wrapping Up
To optimize your online retail business for omnichannel operations, you need to find the best ERP solution for your business needs. Adding an ERP to your tech stack can be a big jump in sophistication — which can add some complexity but also adds many benefits, like:
Improving your KPI reporting
Increasing operational efficiency, both in productivity and spend
Getting a handle on your inventory — supply, demand and cost
Strengthening your customer relationships
The most important thing? Make sure you find an ERP that integrates with your ecommerce platform. BigCommerce has pre-built integrations with several ERP solutions; find out more here.