May 4, 2021
When It’s Time To Move to an ERP Software
This blog post was originally published by Deliverr, which is now Flexport. The content has been adjusted to fit the Flexport brand voice and tone, but all other information remains unchanged. With the merging of Deliverr’s services (DTC fulfillment, B2B distribution, and Last Mile delivery) into Flexport’s existing international freight and technology services, we’re now able to provide merchants with true end-to-end logistics solutions spanning from the factory floor to the customer’s door.
As a mid-market seller, it’s easy to get so caught up in the day-to-day that you don’t realize it’s time to move to an ERP software and streamline all the tools you’re juggling.
An ERP software can be game-changing for an online seller, but knowing the ideal time to switch is crucial for delivering the maximum benefits vs. the outgoing costs.
In this article, we’re here to help by talking you through the key indicators you’re ready for an ERP software and the top tools to consider.
The benefits of an ERP
ERP (enterprise resource planning) software is a tool that brings your entire eCommerce operation into one system. This results in centralized data, optimized fulfillment, streamlined processes, and integrated business functions.
“There are four key benefits for eCommerce businesses moving to an ERP.” – Dave Shaffer, Head of Products at Pipe17
According to Dave Shaffer of Pipe17, these are the main benefits of migrating to an ERP software, especially for online sellers.
- Financial control – ERPs give you better insight into finances across your whole business. For example, you can quickly see the cost of goods sold while calculating the average margin by sale channel.
- Centralized sales channels – an ERP software centralizes multiple sales channels into one system. You spend less time navigating between different marketplaces and more time providing customers with a standardized and streamlined service.
- Better product development – by integrating your primary business functions, you optimize the product development process. For example, you can see raw material lead times, optimize shipping methods for cross-border shipments, and calculate product availability for B2B sales. '
- Inventory efficiency – an ERP software that integrates your fulfillment systems enables you to provide complex and unified inventory management rules across multiple sales channels.
4 Signs it’s time to move to an ERP
Let’s face it; these are benefits all eCommerce sellers can enjoy. However, ERP software is an investment, so your online store must be at the right stage of growth to deliver a substantial ROI.
While this largely depends on your business vertical, projected growth, and finances, there are three key signs that indicate it’s time to move to an ERP software:
1. You’re hitting 1,000+ orders per day
eCommerce businesses processing more than 1,000 orders per day generate the revenue and work that calls for an ERP system.
Your current systems are working at maximum capacity to source stock, list items, process sales, fulfill orders, and handle customer service queries. At the same time, your business is running accounting software, HR tools, and demand forecasting reports.
In other words, you’re juggling a lot of different systems and could benefit from them being unified.
2. Your revenue has hit $25+ million and is still growing
“An ERP is really expensive, and most brands can’t afford it. Typically, companies have $25–50M in sales before they implement an ERP.” – Aditi Dash, Navigating ERP for CPG Brands
Another way to look at your sales volume is by dollar amount. As companies grow, financial management and controls become a key consideration to safeguarding your business.
Once you hit a certain threshold of dollar revenue, you need to keep a closer eye on the flow of money coming in and going out. These are under the spotlight when a company puts a focus on unit economics, margins, and profitability. Once you’ve hit a high enough revenue without solid systems in place, ERP implementation is usually driven by the CFO.
3. You’re commissioning your own eCommerce platform
eCommerce stores with significant growth plans will eventually outgrow Shopify and commission their own eCommerce platform. Think about it, large department stores all have a tailored system of tools for selling online.
If you’re at this stage of your eCommerce business journey, now is the ideal time to move to an ERP software. By commissioning your own eCommerce platform and ERP software simultaneously, you can optimize your integrations and seamlessly migrate your tools at the same time.
4. Things are slipping through the cracks
eCommerce business owners managing manual processes, different systems, and fragmented channels at the same time often make mistakes. Things fall through the cracks, and it’s no surprise.
If your current eCommerce set-up has blinds spots that are causing financial or reputational mistakes, it’s time to get a handle on everything by streamlining your tools into an ERP.
What leads up to an ERP?
But what if you’ve not yet started your eCommerce business – should you jump in straight away with an ERP?
The typical eCommerce business journey to an ERP looks a little something like this:
- You sell on an online marketplace, such as Amazon.
- You expand to multiple marketplaces, such as eBay and Walmart.
- You create your own eCommerce website using a platform such as Shopify or BigCommerce.
- You outgrow your eCommerce website and look to build your own front-end website while keeping your Shopify or BigCommerce shopping cart.
While you can use an ERP at any point in this journey, it really comes financially viable and beneficial at stage four. This is when you start adopting what’s known as headless commerce – using different front-end and back-end systems to provide the whole eCommerce experience.
The top ERP tools to consider
The good news about migrating to and using an ERP software is that there are plenty of tools to help. You can find some popular ERP and supporting tools below.
NetSuite SuiteCommerce is a single commerce platform that connects your eCommerce and in-store POS to synchronize order management, inventory, merchandising, marketing, financials, and customer service.
Microsoft brings a full suite of resource planning tools for every department, from sales and marketing to HR and finance. It enables you to engage with customers across channels, and connect and unify customer-centric retail experiences with adaptive technology.
Acumatica is a complete Cloud ERP solution for your management needs. It’s a connected business platform that enables companies to put customer success at the heart of their operations.
Shogun Frontend is a website builder that powers you to create a web storefront that’s entirely customized and handled separately from your back-end. Importantly, Shogun has incredibly fast loading times of sub-second, allowing you to enhance the customer experience.
Bolt is a lightning-fast, one-click checkout that integrates seamlessly with your front-end website. Customers don’t have to enter passwords, usernames, or personal data, and sellers get a zero fraud guarantee.
Fast is another one-click checkout that doesn’t require passwords and claims to be the world’s fastest. Like Bolt, Fast seamlessly integrates with your front-end website.
Shop Pay is Shopify’s version of an accelerated checkout. It lets customers save their shipping and billing information so they can check out faster on Shopify and Shopify Plus stores.
Pipe17 connects and synchronizes your entire eCommerce operation in real-time, including your sales, order, ERP, 3PL, EDI, fulfillment tools, and sales channels. Typically an ERP implementation requires a platform for connectivity and Pipe17 is a connectivity platform designed specifically for eCommerce.
Example tech stacks
With so many technologies and tools to help eCommerce businesses, it can be challenging to know the best tech stack for your business right now. However, these examples should help:
When you’re starting out
At the beginning of your eCommerce journey, you’re usually armed with an online marketplace and a growing list of customers.
Therefore, your technology needs are relatively simple and include:
- The online marketplace
- Repricing software
- Accounting software
- Email automation tools
As you get more established
As your eCommerce business grows and you expand to multiple sales channels, your requirements for tech grow too, including:
- An eCommerce platform and payment gateway
- Multi-channel management software (incorporating listing, order management, and inventory management)
- Shipping label software
- Marketing automation (including cart abandonment tools, live chat, drip-feed campaigns, etc.)
During explosive growth
When your eCommerce store starts rapidly scaling, that’s when your tech stack can get real big. Examples of tech needed to fuel and sustain explosive growth include:
- A bespoke front-end website
- A one-click, integrated checkout
- CRM system
- Inventory forecasting and planning tools
- Inventory distribution tools
- Reward program tools
- Ad management tools
How to allocate fulfillment as you grow
And let’s not forget about fulfillment.
When your business starts generating significant revenue and experiences explosive growth, it’s time to split fulfillment. By that, we mean changing the way you handle D2C and wholesale orders.
For example, a seller might start their eCommerce business using Deliverr to handle both D2C and wholesale orders. Once that seller hits significant order volumes, they can move wholesale fulfillment to their own warehouses (where speed isn’t of the essence) and use Deliverr for all D2C fulfillment (providing fast and consistent delivery across the country).
Moving the fundamentals of your eCommerce business to an ERP software is a tremendous step in your business’ journey.
We hope this guide has provided you with a little more insight into the tools required for an ERP, the signs of needing an ERP, and the technology and fulfillment models to help you get to that stage.
The contents of this blog are made available for informational purposes only and should not be relied upon for any legal, business, or financial decisions. We do not guarantee, represent, or warrant the accuracy or reliability of any of the contents of this blog because they are based on Flexport’s current beliefs, expectations, and assumptions, about which there can be no assurance due to various anticipated and unanticipated events that may occur. This blog has been prepared to the best of Flexport’s knowledge and research; however, the information presented in this blog herein may not reflect the most current regulatory or industry developments. Neither Flexport nor its advisors or affiliates shall be liable for any losses that arise in any way due to the reliance on the contents contained in this blog.