What is Enterprise Resource Planning and How is it Useful for Ecommerce?

Have you ever heard of the acronym ERP? If not, it’s time we take a look into it, because ERP could turn your business into a more effective and efficient organization. To start, the acronym ERP stands for Enterprise Resource Planning. Sounds somewhat generic, right? Well, let’s take a look at what it means and how ERP helps you out in the ecommerce world.

Enterprise Resource Planning: What Is It?

Enterprise Resource Planning refers to a software that brings together all facets of an operation. These tools integrate functions like marketing, HR, logistics, and customer service, all with the intention to make processes more efficient.

An ERP software automates the core processes by collecting orders, delivering reports on these orders and gathering and storing information to make each of your departments effective.

In short, an Enterprise Resource Planning software has the ability to cut out unnecessary tasks and jobs, essentially minimizing the amount of work each person in your organization has to complete. This saves you money in the long run.

The Components of an ERP System

Think about all of the current software for your company. You might have a customer relationship management tool, a website, accounting software, supply chain management modules, HR systems and email marketing tools. Wouldn’t it be nice if one system brought all of these processes together?

That’s what Enterprise Resource Planning does for a business.

And after all of that, ERP systems deliver information after accumulating it into a large database. For example, a CEO may go into the software to obtain data or information on the following:

  • Payments made by customers
  • Outsanding payments
  • Shipment statuses
  • Products and inventory
  • Supplier relationships
  • Details on customers and how your company targets them

What Types of Companies Generally Use ERP?

Large corporations take advantage of ERP far more frequently than mid-sized and small businesses. Why is this the case? Most small businesses could benefit from these tools, but it generally comes down to money. Enterprise Resource Planning requires a significant amount of cash, since the majority of software options are designed for organizations that have the means to spend large sums on a monthly basis.

Overall, your best bet is to wait until you scale up and accumulate more income to support the spending on. After all, even articles focused on sharing small business ERP options stick to the same pricey solutions.

The Primary Reason Businesses Utilize ERP

Although connecting all processes and tools in an organization seems interesting, the primary reason companies turn to this is for the automation. After all, automation launches several opportunities for saving money, becoming more efficient and even allowing you to reallocate your labor force elsewhere.

How ERPs Come Into Play for Ecommerce Organizations

ERP for ecommerce comes into play far more frequently than one might assume. Building off the previous section, we should look into an example of what we mean by automation.

Let’s say Company ABC sells gardening products through an online shop. Initially, the company owns several software modules for completing various tasks throughout the sales and supply chain process. For example, a customer comes to the store and checks out. The website sends them a receipt and captures their email. Company ABC has both shipping and marketing processes in place, but none of them connect with each other.

Therefore, an employee must check to see if the product is in stock, then mark the item as bought so the warehouse or supplier can go and package it up.

Then, someone must notify the shipping company and send out a shipping confirmation email with a tracking code.

Finally, your company wants to bring the customer back to the store, so they have an email marketing person who sends promotions to the list of emails in the database.

How Enterprise Resource Planning Does a Better Job

Now let’s say that our hypothetical Company ABC implements an Enterprise Resource Planning software. The tool integrates all of the processes, from marketing to shipping.

A customer stops by your gardening supply store and throws a few items into the shopping cart: a shovel, gloves and work boots. She clicks through to the checkout page and makes the purchase. With the integrated software, a receipt gets sent to the customer, and no one has to check to see if the items are in stock or not.

The warehouse automatically receives a notice to package the products. All of the packaging and shipping supplies are printed and ready to go. When the package departs from the warehouse, an email automatically goes to the customer to give them a shipment tracking code and maybe a few links to related products. The system handles the majority of email marketing that doesn’t need to be customized.

Not to mention, all customer support interactions before and after the purchase get logged into the software, showing the customer history and other information about the user. HR taps into this flow as well, since the software displays all of the interactions each customer support rep has had. Therefore, HR goes back to evaluate which of the people they should give promotions to.

Like we said, the whole key behind Enterprise Resource Planning is automation. In the end, a company gains efficiency and hopefully more money.

Does Your Company Need to Take Advantage of Enterprise Resource Planning?

Like we talked about above, the majority of small business owners either don’t know about Enterprise Resource Planning, or they have no interest in paying the large sums of money. That said, a few options exist out there, and when you utilize integration tools like Zapier and Automate, your ecommerce resource planning becomes much easier to manage.

So, does your company need to take advantage of Enterprise Resource Planning? Yes, it most certainly does. However, we recommend looking for affordable solutions so you don’t end up breaking the bank in the infancy stages of your store. Go for an Enterprise software when you have the means.

If you have any questions about Enterprise Resource Planning for ecommerce, let us know in the comments section below.

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