Digital Marketing & PR | AI Aficionados

Digital Marketing & PR | AI Aficionados

Riding the Pros and Cons of Integrating ERP Systems with E-commerce Platforms

Digital Giraffes Website Development
LPancreas web app

After one more frustrating meeting with developers and vendors, in an effort to figure out how to implement ideas and processes for our client’s e-shop, I ran a search on Google about Connecting your ERP with your e-shop (or e-commerce platform, WooCommerce in our case) to see what others are dealing with and how they’re resolving for it. I got an extensive list of results, mostly promotional. Companies offering bridging, API, or ERP integration services. All 3 phrases are common across the board. Didn’t find any articles on how deeply frustrating and time-consuming the process is for all parties involved and whether it’s worth your sanity.

Yes, in the end it’s worth it -for all the reasons I outline below- but no one talks about the obstacles. We’d thought we’d like to share a warning on the challenges it involves. Challenges for the client, the e-shop marketer, and finally for the ERP provider and bridge developer (especially when these last two are different companies).

Some Context… the Client

One of our current clients, a construction tools and materials supplier, already had an e-shop but agreed with us when we suggested they connect it with their ERP so they can update prices and stock, on the fly, for all platforms — brick-and-mortar shop, e-Shop, and a third party marketplace slash price comparison portal. The company owner believes in digital transformation and its importance in increasing online sales. Once agreed on the path, many sides had to get involved in order to implement the project. We, as the marketing team, requested the implementation of essential functionalities that would help the e-shop raise its sales and customer satisfaction; then it was the ERP provider who had to make changes to the existing ERP setup in order to accommodate the requested changes; a third party company that specializes in ERP – e-commerce integration; and at least three people from the client side who had to learn the new functionalities and update all the data so they can be pulled into the site’s WooCommerce platform and displayed properly. To summarize, the final goal was to update all existing products in the e-shop, inputted by hand years ago, with data from the ERP. We wanted the same look and feel, same titles, same descriptions — which already were very good — a new category tree, and the addition of several more fields to hold information such as order tracking number, coupons, cross-sells, etc. Not easy to get everything working perfectly, but to our surprise the hardest part was getting every person involved to collaborate. Dealing with years of entrenched thinking, vendor lock-in, and client expectations is a tall ask. You need patience and persistence but you get there in the end, hopefully with as few losses as possible.

So, as one of our front-end developers often says, “Grab some popcorn and listen in”…

What is ERP e-commerce integration and how does it work?

ERP e-commerce integration refers to the process of connecting an e-commerce platform (e.g. WooCommerce) with an ERP (enterprise resource planning) system. This allows for a better flow of data and synchronization between the two systems, improving accuracy and minimizing siloes in the process. It enables real-time data syncs, as well as a centralized management of orders, inventory, and customer data. Having said that, the people involved in updating the ERP and e-shop may not always be the same people -it is common for companies to outsource their e-shop upkeep- meaning that it’s best to have one central system that inputs products, descriptions, prices, stock etc. which then gets distributed to the e-commerce site and any connected marketplaces (Amazon, Skroutz, BestPrice).

Advantages of ERP and E-commerce Integration

To begin with, one of the most crucial benefits is data consistency. A combined system ensures data uniformity across all departments, eliminating discrepancies and enhancing overall data reliability. Prices and other product information are up to date since they’re always sourced from one central system. Another key advantage is in inventory management, as integration offers real-time updates, ensuring that all departments have accurate inventory data. This eliminates instances of selling products out of stock, revenue losses, and disappointed customers. It also allows for the management of stock for each individual platform, for e.g. you might want your physical store to have the last 3 items of a product but your e-shop to show out of stock.

Order processing becomes automated, which is faster and reduces errors. All data, like customer information is added at the ERP end, including improved order management data, like order tracking codes, coupons, or personalized offers that can be added on the ERP side. Subsequently the ERP e-commerce bridge will update the e-shop platform, for e.g. WooCommerce, which can then deal with emailing and updating the client with the order/delivery process and incentives offered to buy more.

Finally, streamlined financial information is an additional advantage. Real-time financial data ensures that the company has a clear and accurate picture of its finances, reducing risks of manual data entry errors, not to mention the analytics data gathered.

Challenges in ERP and E-commerce Integration

Despite these compelling advantages, it’s essential to recognize the challenges that businesses might face during such integration. The complexity of implementation is a significant concern, as it necessitates meticulous planning, execution, and usually specialized expertise.

Another considerable challenge is the cost. The expenses can be substantial, including initial setups, bridging, customization, ongoing maintenance, and potential upgrades. Most businesses have a service contract with their ERP provider which is helpful since they have an established relationship and both sides have already worked together in the past. Furthermore, there’s the cost of employee training, which can lead to temporary productivity dips during the transition. Additionally, there may be resistance from employees who are comfortable with the current systems.

The risk of lost data during transfers or even data breaches increases with integration, as it involves the communication of two different servers. Processes that involve checks and security measures can prevent these potential problems. There’s also a risk of vendor lock-in, which can restrict flexibility and potentially increase costs.

Other potential drawbacks include integration incompatibilities, system performance issues, and the increased complexity in managing updates. Not all ERP systems and e-commerce platforms are designed to integrate smoothly. Some may lack necessary APIs or have differing data formats, causing technical hurdles and inefficiencies. The integration of an ERP system can place an additional load on an e-commerce platform, potentially impacting its performance. If not managed properly, this could lead to slower load times and a less responsive user interface. With system integration, updates or changes made to one system can impact the other. This can make the update process more challenging and may lead to system downtime.

Finally, the integration process can be time-consuming, which may redirect resources from other crucial business areas.

Novel Advantages of ERP-integration with e-commerce

Despite the complexity and challenges, there’s more to integrating an ERP to an e-commerce site, and these novel advantages are what excite us.

A novel trend is AI-driven predictive analytics, which uses past data to forecast future sales and customer buying habits. By using past patterns and trends, it could predict future sales, ideal inventory levels, and even potential customer buying habits. This can drive strategic decision-making and promote business growth.

There’s also the potential for a more personalized customer experience using real-time data from the ERP system. For example, by knowing your customer’s past orders and preferences, you can recommend products or offer personalized deals.

Businesses can also track sustainability efforts more accurately, integrating environmental considerations into their strategies, like better shipping options.

Emerging technologies like Virtual Reality (VR) and Augmented Reality (AR) Integration also present exciting opportunities for enhancing customer experience. For instance, a clothing store could pull in real-time inventory data to show customers how different pieces would look on them.

Blockchain integration could allow for verifiable tracking of goods from supplier to consumer, enhancing trust in the supply chain to the benefit of the vendor.

Is it worth the effort?

In summary, the decision to integrate an ERP system with an e-commerce site should be made after carefully weighing the advantages, the potential challenges, and the business’ path to growth. A thorough risk assessment and cost-benefit analysis could be important to determining whether this integration will yield the desired results. As we already mentioned, with careful planning, execution, and willingness to build change, the integration of such systems can drive strategic decision-making, promote growth, and enhance the overall customer experience.
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