What is eCommerce ERP? Integration, Benefits, and Types

Picture of Gary Jain
Gary Jain

Founder, Ledger Labs

ecommerce erp

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Can you imagine running an online store where everything you do is seamless? From processing the orders of your customers to managing the inventory, it all becomes flawlessly simple to tackle. That’s how powerful Enterprise Resource Planning (ERP) is. Not to mention, it is one of the most valid reasons why several online stores are integrating eCommerce ERP to unlock its potential to the fullest.

In fact, the global ERP software market is highly forecasted to hit $48.21 billion by 2025. That said, it is growing at a CAGR of 7.88% from 2020 to 2025. If you did not know, implementing ERP started to be considered a best practice for automating and streamlining all business operations into a singular, simple system, as of 2019.

It has already penetrated a lot of sectors to date. For several businesses, especially in the B2B sector, the eCommerce ERP integration has proven to be life-changing. Numerous people agree that it functions more like a strong, extremely effective assistant who handles all of the back-end work, relieving you of the chore. That means, many business owners can now focus solely on their businesses.

As a result, businesses that integrate their eCommerce platforms with a robust ERP system will definitely experience smoother operations, increased sales, and a much better user experience. 

But, what is an ERP system? How is it helpful? Sit tight because we are here with answers you have looked for everywhere. So, here we go!

Understanding ERP Systems

As you know, ERP is an abbreviation of Enterprise Resource Planning. It is a type of software that helps businesses manage and integrate their core operations. Well, many would say that it is the “super organizer” of any company. That means, it brings together several functions, such as order processing, financial management, customer management, supply chain management, human resource management, and many others into one system.

Without an ERP in place, all the departments would need their own system, making it extra hard to share information across different groups. In contrast, if you do have ERP, it makes communication and information sharing much more streamlined across departments, without a hitch. For example, ERP can easily integrate accounts payable, order monitoring, stock control, and customer databases into one data hub. 

That brings us to the question, what exactly is eCommerce integration with ERP. Let’s have a look.

ERP eCommerce Integration

ERP eCommerce integration simply means connecting your business with your ERP system. This connection helps enable all departments in a business to share information, communicate, and work together seamlessly. 

Let’s take a simple example. Imagine you have an eCommerce business that is doing amazing business. But, at the same time, you have to manually update your inventory, handle customer information in different systems, and track orders 

separately. As you can guess, it would ultimately spiral out of control and become too time-consuming to keep up with. 

What else? It would just increase the chances of errors by twofold.

ERP eCommerce integration can be a savior in this situation. With its help, you will see an improvement in data flow and synchronization between the two systems. Thus, there will be more accuracy and reduced silos.

Plus, it can solve the problems you have with manual labor and work across all departments where you operate. In other words, the ERP system takes care of managing the customer data, processing the order, and updating the inventory automatically right when a customer places an order on your website. That means, everything happens in real time without you having to intervene or do anything yourself.

Have more questions?

Need help understanding more about ERP eCommerce Integration?

How does ERP-integrated e-commerce work?

When you are planning for an e-Commerce and ERP integration, you will need to understand three key components: where the data has been stored, how exactly the systems are connecting, and how frequently the data is updated.

Data Sources

  1. Cloud-based systems: In simple words, these are the online systems that make use of cloud technology. It is easy to set them up and use. In fact, the built-in tools make the integration far smoother. In fact, because they operate online, their upfront costs are cheaper.
  2. On-premise systems: These are the ones that are installed and run on the server’s of your company. Truth be told, they do come with more control and customization options. But, the initial costs and maintenance needs are often higher.
  3. Hybrid systems: This is basically a combination of both cloud and on-premise systems. In addition, these are especially more beneficial for companies that have certain security requirements or want to keep data in full control of the in-house team while using the cloud for separate operations.

Integration Methods

  1. Point-to-point integration: Part of the integration method, this connects your ERP and eCommerce systems directly. But, here’s the deal, every connection is made individually. That means, it will be harder to manage it in case you may need to add more systems in the future.
  2. Enterprise service bus (ESB): An ESB is basically a central hub that helps to connect all your systems. This is especially helpful because it makes managing and scaling your integration much simpler.
  3. Integration Platform as a Service (IPaaS): As the name suggests, these are cloud-based platforms that offer pre-built connectors that help integrate your systems seamlessly. 
  4. Third-party integrators: These are external service providers that help connect different systems. 

Data Synchronization Frequency

  1. Real-time synchronization: Herein, the data is updated almost instantly between your ERP and eCommerce systems. Well, this helps people make sure that all the information is proper and current at all given timeframes.
  2. Batch synchronization: In this case, the data is updated according to predetermined timeframes, like once a day or every hour. This approach reduces system load by processing data in batches, making it especially useful for non-urgent data.

The Role of ERP in eCommerce

There is a broader role of ERP for eCommerce. Let’s have a look at it:

Streamlining Operations and Processes

An ERP system is known to integrate several business processes. This, further, enables seamless operations and enhanced efficiency. That being said, it centralizes data, which allows stronger decision-making and slashes operational redundancies big time.

Enhancing Inventory Management

ERP systems can give you much needed visibility into inventory levels. As a result, businesses can make sure that they always have popular items in stock. This is especially helpful for businesses that have faced the risk of stockouts or overstocking, time and again.

Automating Order Processing and Fulfillment

ERP can help big time in order processing and fulfillment due to the adoption of automation. This can mitigate the risks of manual errors and speed up the process. Plus, there is no doubt that this can result in faster delivery times and better customer reviews.

Improving Customer Relationship Management (CRM)

ERP systems can also broadly improve CRM. That’s because it offers a unified view of customer engagement and their history. Companies can use this to better serve their clients, strengthen client relationships, and personalize their services.

Financial Management and Reporting

An ERP system helps you streamline all financial operations taking place. In fact, it gets you the most accurate and real-time financial data over time. It also means that it guarantees compliance and helps make wise decisions by facilitating improved financial planning, budgeting, and reporting.

Benefits of ERP eCommerce Integration

A study concluded that ERP solutions actively cut overall operational costs by 23% and administrative costs by 22%. In fact, the fundamental goal of an ERP is to integrate core business processes, streamlining operations on the go. That said, you can imagine the huge benefits that come from having an eCommerce ERP system. 

Here’s a more detailed rundown:

  1. Real-time data synchronization: ERP systems are best known for unifying several tasks into one whole platform. This simplifies the job and also reduces the number of errors you would make otherwise. As a result, you get to save time, lower your costs, and also build up better efficiency.
  2. Improved operational efficiency: When you have an ERP in place, it instantly simplifies your tasks, such as financial management, order management, and inventory tracking. This helps you focus more on your core business activities.
  3. Enhanced customer experience: As you can guess, ERP systems also offer order tracking and efficient customer support that only strengthen loyalty of those buying from your online store.
  4. Better inventory control and supply chain management: Having an ERP also means that you get better control over your supply chain and inventory. Thus, it leads to a reduction in stock outs or overstock circumstances, resulting in supply chain optimization.
  5. Scalability and growth support: ERP systems help eCommerce companies expand. They make it easier for businesses to grow by scaling with more transactions, goods, and sales channels.

Types of ERP Systems

ERPs typically fall into three system models, each with different integration and use. Let’s have a look:

Generalist  

This is a type of system designed for broad use across numerous industries. Most essentially, they focus on areas such as procurement or financial management that are similar across different sectors. But, here’s the thing, even though they might not be very flexible or customizable, they work well for the intended use.

Modular

Modular systems, as sophisticated as the name sounds, enable the implementation of certain components as required. That means, eCommerce businesses, among others, can choose only the parts they need. It is great if you have specific use cases and particular requirements.

ERP Suites  

ERP suites combine various eCommerce platforms and add-ons into a single, all-inclusive program. They are appropriate for complex organizations looking for effective, all-in-one solutions. What else? They also offer a wide range of functionalities you may need.


Also Check-out: Unraveling Ecommerce Financial Reporting with Netsuite

Types of eCommerce Solutions

Just like ERPs, you can choose from various ecommerce solutions as well. Here are some of them you must be familiar with:

Connectors

As the name suggests, these are basically pre-built integration modules or plugins that help link your eCommerce platform with a certain type of ERP system.

Add-ons

Add-ons are typically the extensions or modules that help “add” extra functionality to your existing eCommerce solution. Thus, it complements the capabilities of the ERP system.

Middleware

In simple words, middleware serves as a “bridge” or “intermediary” that helps connect your ERP system and eCommerce platform to enable communication between them.

Custom-Built Integrations

Businesses that inherently have special requirements or complicated processes can use custom-built integrations that are tailored to specific needs.

Native Integration

This is a real-time web store management solution that is directly integrated into your ERP. Herein, it uses its logic to make updates based on ERP data.

That being said, these ERP integrated eCommerce solutions differ in their ready-to-use functionality and compatibility with specific eCommerce platforms and ERP systems. 

That brings us to the next question. What are the features of ERP and eCommerce integration solutions? Well, let’s have a look.

Key Features of eCommerce ERP Solutions

Without further ado, let’s get straight to the point and look at the features of eCommerce ERP solutions:

Centralized Data Management

Centralized data management is one of the core features of eCommerce ERP software. Nonetheless, it helps businesses understand and track their inventory, customers, orders, and finances appropriately. This can be a big help in guaranteeing consistent data, streamlining processes, and avoiding duplicates.

Inventory Management

If you have an eCommerce business, you would want things to be as streamlined as possible. Having said that, ERP systems can effectively manage inventory across several stores, offer you real-time visibility, and also automate the restocking process like a breeze. In exchange, this makes supply tracking easier, order fulfillment simpler, and stockout prevention possible. As a result, inventory management becomes a breeze, without you having to lift a finger

Order Management

You may not realize in one go how much order management actually entails. That’s where ERP comes in. It simplifies the burden of managing orders, checking their updated status, processing returns, and product exchanges. Plus, it also helps you keep an open line of communication with your customers. With that in mind, this whole process just expedites the purchasing process, raises client satisfaction, and helps in order processing.

Customer Relationship Management (CRM)

When you have centralized customer data, it becomes easy to track your contacts, segregate customer profiles, and customize marketing efforts. This, in turn, just strengthens CRM. As you may know, when you personalize the interactions with your customers, you can boost their loyalty and have them purchase again from you.

Financial Management

You will always have updated and appropriate financial data because of ERP. How? ERP can help your business automate billing, financial reporting, budgeting, and payment processing – all in one place. This is one of the most important aspects because you can efficiently track your cash flow and have accurate financial data all year round.

Integration with eCommerce Platforms

One of the primary features of ERP systems is that they can seamlessly integrate with your marketplaces and online stores. On a good note, it can help business owners like you prevent any type of data entry error, and unify eCommerce operations.

Read More: Ecommerce Accounting Guide for Small Business Owners

Choosing the Right ERP for eCommerce Business

Choosing the right ERP system is incredibly important if you want smoother business operations and to scale without worry. So, let’s have a sneak peek into how you can choose the right ERP for eCommerce:

1. Understand your needs

The first step is to go through your current systems and figure out the struggles. It can be absolutely anything, from order management to inventory-related issues. This is where you consider your business goals. Are you planning to introduce new products or venture into untapped markets?

2. ERP Functionality

Now, start looking for features that actually cater to your specific departments, such as, marketing, accounting, and inventory, among others. In fact, also make sure that the ERP can adapt to the growth of your business. That means it should be able to handle increased transactions and business loads. Plus, you also need to ensure that it flawlessly integrates with your existing eCommerce platform and other business apps.

3. Vendor and System Considerations

Consider your deployment options too! Well, cloud-based ERPs do come with a lower upfront cost as opposed to on-premise systems. Plus, it is also easier to maintain. Along with that, make sure the ERP system has a user-friendly interface. This can shorten training time by half and help your team leverage the system well.

This is just the tip of the iceberg, actually. There is a lot more to this. Some of the additional tips you need to keep in mind include:

  1. Setting a realistic budget
  2. Request and get hands-on demos
  3. Understand and decode user feedback

Some of the best ERP for eCommerce include Oracle NetSuite, Microsoft Dynamics 365, Odoo, SAP Business One, and Acumatica, among several others. These ERPs are distinct from one another and address various business requirements. 

Nevertheless, here’s the deal: With good days, there has to be bad. That being said, let’s have a look at some of the challenges of eCommerce ERPs.

Challenges of eCommerce ERP

While it is true that ERP eCommerce has several benefits, it is also equally true that it comes with its own set of challenges.

  1. High initial investment: The initial costs you have to bear for ERP systems can come off as a major thud, including the software, hardware, and their total implementation. Often, it can be especially burdensome for small to medium-sized businesses.
  2. Complexity and Customization: ERP systems need careful planning and implementation because they are extremely intricate. Often, it can become technically difficult to customize the entire system to meet your needs.
  3. Data migration issues: Data consistency and data cleanup are two big names here. Nevertheless, migrating your data from your old systems to the new ERP can be a real hassle at times. Ensuring consistency while also cleaning up redundant data is a tedious task that requires careful consideration.

But, here’s the thing, once you address the bigger problems in the room, you will have a successful ERP implementation. In fact, it will lead your eCommerce business to a stronger future later in the day.

Bottom Line and Key Takeaways

So, there you have it. After everything we have discussed until this point, it is more than clear how important ERP integrated eCommerce is for your business. It can help you scale, grow, and sustain – without the fear of missing out in any department. It is like the ultimate toolkit you need to keep an eye on everything. 

Imagine how seamlessly you can keep track of your inventory, handle customer relationships, monitor cash flow, and manage orders. Everything at the same time.

One of the major benefits of having an ERP is that you can gain real-time data, right at your fingertips, anytime and anywhere. That means, you can have updated data at all times and keep your operations running without a hitch in the background. Plus, you can also make wise decisions based completely on real-time, up-to-date information.

If you have more questions, you know who to reach out to. The Ledger Labs is just one consultation away. Our experts have more than 12 years of experience and can help you in every aspect. We make sure you never leave without the answers you are looking for. So, get in touch now and book a consultation!

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