ERP System, ERP for eCommerce, Retail Management System…what do I search for?
It seems to me that when many retailers (usually small to medium) start looking for a back-end management system (what I’ll call it for now) to improve their operations, they seem to want to search for an ERP system. Why is that?
An ERP system is typically NOT designed to meet the needs of today’s modern retail and online businesses. Yet, that is what so many retailers search for when they’ve reached the stage of their business where small business solutions and manual processes just aren’t going to cut it anymore.
Here at SalesWarp, we’ve run into this scenario both during this phase of the ERP search, and unfortunately, after a retailer has already started using an ERP system. What we’ve realized from both of these conversations is that retailers just don’t know of another term that describes the solution that solves these back-end operational needs. I think a big reason for this is that these solutions usually combine multiple offerings, offerings in the past that have been sold separately. Some of these functions include order and inventory management, product and listing management, fulfillment, purchasing and supplier management, warehouse management, shipping, analytics…the list goes on.
When we are fortunate enough to be part of the initial search conversation, we have a high rate of success for closing the deal. The reason for this is that, like I mentioned above, most ERP systems do not have the eCommerce and multi-channel capabilities and integrations that retailers need today to grow and succeed. Many times we are competing, not only against the ERP system, but an order management system and, in some cases, even a channel management system. Why would you want to purchase and integrate three systems when one can accomplish all of your needs?
When a retailer approaches us after they are already using an ERP system, the conversation is usually centered around “I need to connect my online stores to our ERP system”. The reason for this is that most ERP systems do not have the built-in technology (yes they have APIs, but you have to do it yourself or hire a system integrator) to integrate eCommerce platforms and POS systems. This leaves the retailer with processes that are still manual and in many instances, duplicate work because there are still disconnected data sets. In this case, implementing an ERP system still doesn’t accomplish their needs, leads to less efficient processes, higher operating costs, and at the end of the day, the need for additional software.
In some instances, retailers will need a traditional ERP system. One example is when a retailer is also the manufacturer and needs to manage all the raw goods and materials as well as their supply chain. But most retailers (online only and omni channel) don’t typically need the traditional ERP system, at least not if their goal is to consolidate and manage their eCommerce and physical retail channels. In most cases, ERP systems are not able to integrate with eCommerce and in-store POS systems, or only offer this through additional third party integrations and add-on costs, so you still have to manage parts of your operations separately.
Now I’ve seen ERP systems that provide many of the same functionality as solutions like SalesWarp provides. But if you’re not able to connect to and integrate with online and in-store systems, what’s the point? Another advantage of newer retail-focused systems is that they are just that – newer, they are built on newer, more flexible technology, they usually have a better-designed, easier-to-use interface, they are more scalable and give you only the functionality you need. I know ERP systems are powerful and have more functionality than a retail-specific system, but too many times, that functionality is not used, yet the retailer is paying for it. Who wants to pay for something you’re not using?
So this brings me back to what is this solution called and what should retailers search for? If I want to be self-serving (and of course I should be a little here after all it is my blog), I would say “ERP for eCommerce” is a good term, but that is limited to eCommerce. What I want is to create an industry-wide term that allows retailers to easily find the type of solution they really need.
I’ve done some review of our competitors (Netsuite, RetailOps, OrderDynamics) and its seems that a couple of terms stand out. One is “commerce“, the other “omni channel“. So we could have “commerce (or eCommerce) management software” or “omni channel management system” or even “retail management system” could work. I think using any of these options will help retailers find more modern eCommerce and retail solutions that will provide the tools, features and integrations needed to deliver the experience today’s shopper expect.
What do you think works best? I would love to hear your ideas and comments.