(This post was originally published on November 16, 2012. We’ve updated it for accuracy and completeness.)
Earlier this year, Commerce Department announced that web sales totaled an estimated $304.91 billion in 2014. It’s the fifth year in a row that web sales growth has been close to or above 15%.
Are you ready to handle this kind of demand?
You’re probably not, if you don’t currently integrate your eCommerce channels (Magento, Shopify, Amazon, etc) and your ERP system. In this post, we’ll talk about why companies shouldn’t forgo eCommerce ERP integration needed to truly optimize sales.
Why You Should Integrate your eCommerce and ERP
The need for eCommerce ERP integration is usually overlooked because of cost or the business disruption caused by having to change existing systems. But, the costs become worth it when you see the impact on your operations and customer experience.
When we use the term eCommerce in this article, we’re talking about any channel that allows you to make online sales. This could be your webstore run by Magento or Shopify. We are also including marketplaces such as Amazon and eBay. ERP refers to any system that helps you manage your business data or backoffice operations. This could be a system like Microsoft Dynamics GP or NetSuite.
Integrating your eCommerce sales channels with your ERP system allows you to operate more efficiently as a business. Your main types of data – order, inventory, item, customer, and shipping/tracking – are communicated between your once independent systems.
Some types of integration automatically pass this data between your systems. This eliminates your need to manually enter data from one system to another. While a webstore can certainly operate without connections to an ERP, how many tedious practices do you do now that you wish you could get rid of?
Manual practices such as hand-keying sales orders into your ERP. It’s a pain to update product information in Excel then uploading to your webstore or Amazon. Relying on decimating inventory across your systems by hand, or not being able to do it all, can cause you to oversell.
When these processes aren’t automated, it’s easy to make mistakes. Shipping addresses can be entered wrong. Incorrect inventory levels can lead to overselling. Product information could be incomplete, incorrect, or missing.
Ultimately, your customer experience is at stake, when you don’t integrate.
If you want to be successful online and keep up with increased online demand, your eCommerce strategy should include integration to your ERP, account, and inventory software.
eCommerce ERP integration allows you to easily account for new orders and fulfill them, regardless of where the sale is made. Products and pricing can be managed from one place, allowing you to have accurate and consistent product information.
When you integrate, you’ll enjoy many benefits like these listed below.
Benefits of eCommerce ERP Integration
- Reduce manual entry to save time and increase throughput while reducing errors, when entering order, inventory, item, customer and shipping data
- Streamline inventory synchronization, track updates, and provide accurate inventory levels to customers, without hiring staff to manage these tasks
- Automatically notify customers when orders have been shipped and allow them to track the delivery of products
- Simplify how you manage price and product changes to inventory
- Be flexible enough to add multiple online (webstores and marketplaces) and offline (brick & mortar) sales channels, without losing operational efficiency
- Meet tax requirements with automated tax compliance and eliminate exposure
- Handle increased demand in online orders without extra resources
Picking an eCommerce ERP Integration Solution
Understanding the benefits of eCommerce ERP integration is easy, but actually achieving integration is hard. It could be what has stopped you in the past with undertaking such a project.
With more recent advancements in technology, you now have multiple options to pick from: point to point, multichannel management platform, and a custom developed solution. It’s just about choosing the best one for your business.
This is a common, affordable solution for smaller retailers. For this type of solution, your eCommerce channel, whether a webstore or marketplace, is “pointed” at your ERP to synchronize sales data. There’s no operational platform in the middle of your systems, causing you to choose which system to manage your data in.
While this can be enough for a retailer not expecting, or experiencing rapid growth, it can be limiting to growing retailers. You’ll forgo the flexibility of adding more sales channels as your business evolves. You’ll have re-configure all your point-to-point connectors whenever you add a new channel.
At the end of the day, it ends up being a messy solution that drains resources.
Custom eCommerce ERP Integration
It’s always possible to build your own custom integration between your online sales channels and your backend systems. To do so, you would need to work with the application program interfaces (APIs) available for your systems. You’d need to think about how all your data needs to flow between your systems.
Therefore, customer integration can be complex and expensive. Custom is usually the best approach for organizations who have the right resources and specific requirements to justify it. Most businesses though are probably not truly unique enough to really need to build this type of integration from scratch.
Mutlichannel Management Platform
The best way to achieve eCommerce ERP integration is to use a multichannel management platform. This type of technology is usually cloud-based and provides a platform that sits as an operational hub between your ERP and eCommerce systems. Your main types of data are then synchronized between your systems.
Ideally, the technology uses pre-built connectors for your systems. These connectors make integration and configuration easy and flexible. You can simply add and get rid of channels, through connectors, as needed.
A multichannel management platform is usually pricer than a one-off point-to-point solutions, but can still be affordable. Watch out though for vendors who charge you more as you sell more.
This integration solution is the approach that nChannel believes in, and we sell software to back it up.