The benefits of connecting your e-commerce to an ERP system can have tremendous positive impacts on your e-commerce business
Believe it or not, more than 29 million small and medium-sized businesses in the US still run basic financial software like QuickBooks (2) and 55% still use manual pen and paper processes to manage their logistics (3). However, US consumers are expected to spend more than $900 billion on e-commerce in 2021, nearly 15% of total retail sales (1), which has put enormous pressure on legacy operations, forcing businesses to expand and adapt. At a fast pace, making tasks like manual data entry a way of the past. Because of this 17.9% increase compared to 2020 (1), organizations are trading legacy business processes for more efficient and productive office systems like Enterprise Resource Planning (ERP).
Before I go any further, you may ask what is an Enterprise Resource Planning (ERP) system?
Enterprise Resource Planning (ERP) is software that companies use to manage and automate critical parts of their business. This type of software is important to companies as it helps them in carrying out resource planning. This optimizes the key business processes needed to run their business such as production planning, purchasing, inventory, sales, customer management, marketing, finance, human resources, and more with a single system.
The benefits of connecting e-commerce and enterprise resource planning (ERP) include free flow of communication between business areas, a single source of information, and accurate real-time data reporting.
Therefore, it is not surprising that 50% of companies are planning to update, upgrade or have their ERP system soon (4), especially when it comes to e-commerce. Without the help of ERP, e-commerce orders are prone to problems such as human error. For example, in wrong information about a product, a customer orders an item, but the item is out of stock. Without the correct connection of inventory to e-commerce, the order is placed. Now, this once excited customer is disappointed. Mistakes like this are painfully time consuming and costly but 100% avoidable. According to the National Retail Foundation, revenues in 2020 alone cost companies about $102 billion (6). This represents approximately 11% of all retail sales.
The benefits of linking e-commerce and ERP include automating business processes to reduce risk, eliminating reliance on error-prone spreadsheets, and keeping customer service issues from falling through the cracks as they move across departments.
- One reason this is important is that Shopify finds 70% of customers check reviews or ratings before making their final purchase (7).
Having an Enterprise Resource Planning (ERP) system enables your e-commerce to work for you
Using the same example above, ERPs offer accuracy when it comes to inventory counting. So, if an item is not in stock, the ERP system will notify e-commerce effectively disabling the purchase of said item until it is in stock again. The inventory management found in these powerful systems is designed to provide detailed information, from what is in stock to where it is. This data allows for fast order processing and has been shown to increase on-time deliveries by 24% (9) or help replenish your inventory faster, making sure shelves stay stocked with the right inventory not only when your customers want it but when they need it most.
- Improving back office operations such as order fulfillment should be a top priority as it ultimately leads to increased customer satisfaction, determining whether or not customers are ordering from you again. Research has shown that even just a 5% increase in customer retention can improve profitability by up to 75% (10).
Benefits of linking e-commerce and ERP
- 95% of companies achieve significant improvements after using ERP by reducing operations times, increasing collaboration, and centralizing enterprise data (9).
An Enterprise Resource Planning (ERP) system can be extremely beneficial for your business, as it effectively reduces operational costs by 23% and administrative costs by 22% (9). However, not all ERP systems are created equal. Therefore, when deciding to integrate back office systems with your e-commerce by using Enterprise Resource Planning (ERP), it is very important to consider these key factors.
- What are your industry-specific business needs?
- What type of budget and schedule do you have?
- How flexible a solution do I need?
- Is the system compatible with my existing systems?
- Will the system grow with me as I progress, is it adaptable?
The last but most important key factor is choosing the right implementation partner
For example, Softengine was awarded the 2020 SAP North America Partner Excellence Award due to its ongoing commitment to customer success. Softengine understands the critical role that ERP solutions play in the success of clients’ businesses. Softengine thrives on solving even the toughest business challenges with solutions that benefit its customers in ways that its competitors cannot.