ERP for E-commerce: Definition, Features and Benefits

Staying ahead in today's competitive e-commerce landscape isn’t easy. Beyond well-priced and enticing stock, it requires efficient operations, streamlined processes, and exceptional customer experiences. Which is where an ERP for e-commerce comes in.  

An Enterprise Resource Planning (ERP) system integrates and manages key business functions such as inventory management, order processing, finance and customer relationship management. It acts as the backbone of your business, providing a centralized platform to streamline processes, gain insights, and drive growth. 

In this guide, we’ll look at how an e-commerce ERP empowers online retailers to overcome operational challenges, enhance efficiencies, and deliver exceptional customer experiences. We look at the key features and benefits, discuss different ERP solutions, and explain the difference between an ERP system and a Digital Operations Platform.

We’ll also emphasize the importance of adopting a modern and headless ERP solution to stay agile and competitive in today's rapidly evolving digital world. Let’s jump in!

What Is an ERP?

An ERP system acts as a centralized platform that integrates various organizational functions and departments, enabling seamless coordination and streamlining of business processes. 

Statista forecasts that the global market for cloud ERP software will see a CAGR of 13% up to 2025, reaching $40.5bn. Clearly, businesses place enormous value on having an ERP system - and for retailers, that means one tailored to e-commerce operations.  

By leveraging an ERP system, e-commerce businesses can achieve greater efficiency, accuracy, and scalability. With real-time visibility into crucial data such as order status, inventory levels, and customer information, retailers can enhance their decision-making processes and provide great customer experiences. 

An ERP system tailored for e-commerce empowers online retailers by providing a comprehensive solution to manage their operations efficiently. By leveraging an ERP system, businesses can gain a competitive edge in the dynamic e-commerce landscape and drive sustainable growth.

>> 12 E-Commerce Trends of 2024: Experts Share Their Predictions <<

Understanding the Challenges of E-commerce Operations

Running a successful e-commerce business involves navigating through a unique set of challenges. From order management to multichannel sales, online retailers face a complex landscape that demands efficient operational management. Understanding these challenges is crucial. 

One of the most significant hurdles in e-commerce operations is effective order management. According to an industry survey, the vast majority of retailers are seeking to improve order accuracy (97% say this is a moderate or high concern), meet customers’ needs (97%), speed up order fulfillment times (89%), and deal with multiple order fulfillment channels (85%).

>> Composable Order Management? You'll Need an Orchestration Layer for That <<

Successful online retailers know that efficiently processing and fulfilling orders, tracking deliveries and managing returns is essential for improving customer satisfaction and retention. 

Inventory control is another critical challenge. As sales channels and order volumes multiply, it becomes increasingly difficult to maintain required stock levels. The dynamic nature of e-commerce demands seamless omnichannel operations. Managing sales across various distribution platforms, such as online marketplaces, social media, and websites, requires integrated systems and real-time data synchronization. 

By addressing these challenges head-on, online retailers can enhance operational efficiency and customer satisfaction, which ultimately leads to increased revenues and business growth. 

Key Features of an ERP for E-Commerce

An ERP for e-commerce comes with a range of powerful features specifically designed to streamline operations and drive efficiency. In this section, we'll delve into the essential features that empower e-commerce businesses to thrive.

1. Order Management: You can efficiently process and track orders from multiple sales channels in a centralized platform. Automated order workflows, real-time order status updates, and seamless coordination with shipping carriers streamline order fulfillment, ensuring timely delivery and customer satisfaction.
2. Warehouse Management: Accurate inventory control is crucial for e-commerce success, and an ERP system provides robust inventory management capabilities. Retailers can maintain optimal stock levels, prevent overselling or empty shelves, and implement inventory replenishment strategies based on real-time data. This minimizes holding costs, maximizes product availability, and enhances overall supply chain efficiency.
3. Customer Relationship Management (CRM): You can effectively manage customer relationships with an ERP. By centralizing customer data, retailers can comprehensively view customer interactions, preferences, and purchase history. This enables personalized marketing campaigns, targeted promotions, and improved customer service, fostering customer loyalty and driving repeat purchases.
4. Accounting: Financial visibility and control are essential for e-commerce businesses. An ERP system integrates financial management, enabling retailers to accurately track revenue, expenses, and financial transactions. With features like automated invoicing, expense management, and financial reporting, businesses can gain insights into their financial health, optimize cash flow, and make informed decisions.
5. Product Information Management (PIM): PIM solutions revolutionized multi-channel sales by streamlining the process of selling on multiple platforms. Rather than struggling with creating and managing listings across various sites, a PIM provides a centralized “source of truth” that can be effortlessly edited and updated across all channels. With a PIM solution, companies can maintain consistency and accuracy while saving time and effort in managing their product information across different sales channels. Say goodbye to the hassle of manual updates and embrace the power of a PIM system for seamless multi-channel selling.

Key Benefits of an ERP for E-Commerce

An ERP system offers several advantages for e-commerce businesses. From improved operational efficiency and enhanced inventory management to seamless order processing and data-driven decision-making, the benefits are significant.

Here’s a look at some of the key benefits: 

1. Centralized Data: Online retailers can centralize their data and have a single source of truth for business operations. This enables real-time visibility into key metrics, such as inventory levels, order statuses, and customer data. Having centralized data empowers businesses to make informed decisions, identify trends, and respond quickly to market demands.
2. Increased Efficiency: Automating repetitive tasks and streamlining workflows can significantly boost operational efficiency. Manual processes such as data entry, order processing, and inventory management are automated, reducing human errors and saving valuable time. Increased efficiency leads to faster order processing, improved productivity, and reduced operational costs.
3. Enhanced Customer Experience: A key benefit of an ERP system is its ability to deliver an exceptional customer experience. Businesses gain a holistic view of customer interactions and preferences by integrating customer data across departments. This allows for personalized marketing campaigns, targeted promotions, and improved customer service. The result is increased customer satisfaction, loyalty, and repeat business.
4. Improved Profitability: By optimizing inventory levels, businesses can reduce holding costs, minimize stockouts, and avoid overstocking. Accurate demand forecasting and inventory management contribute to better resource allocation and cost control. Additionally, data-driven insights provided by an ERP system enable retailers to identify and leverage profitable sales channels, streamline operations, and make informed pricing and revenue management decisions.

Challenges of Implementing an ERP for E-Commerce

Implementing an ERP system brings its fair share of hurdles. From complex implementation processes and integration issues to managing resistance to change and considering the costs involved, navigating these challenges is crucial.

Let’s look at some of these challenges in more detail:

1. Implementation Complexity: Deploying an ERP system requires careful planning, extensive customization (which is sometimes not possible), and significant coordination across departments. It involves mapping existing processes to the ERP system, data migration, and training employees on the new system. The complexity of implementation can lead to delays and frustration. 
2. Integration Issues: Integrating an ERP system with existing systems can present challenges. Compatibility issues, data mapping, and ensuring seamless data flow between systems require technical expertise and careful integration planning. Data migration and the need to align different systems can lead to data inconsistencies and potential disruptions. 
3. Change Management: An ERP system often involves significant changes to processes and workflows. Employees may resist these changes due to fear of the unknown or a learning curve associated with new systems. Changing management strategies, effective communication, and comprehensive training are crucial to address employee resistance and facilitate a smooth transition.
4. Cost Considerations: ERP implementation and ongoing maintenance costs can be substantial. Licensing fees, customization, training, and infrastructure requirements contribute to the overall cost and difficulty.

Types of ERP for E-Commerce

The specific needs of each business vary, and in the new world of composable commerce, it's possible to take a "best-of-breed" approach to the solution you choose. Let's look briefly at the different types of ERP systems available:

1. On-Premises ERP: Traditional ERP systems are installed locally on a company's servers, offering complete control but requiring substantial upfront investment and ongoing maintenance. Changing these systems is hard.
2. Cloud-based ERP: ERP software hosted in the cloud, which offers scalability, flexibility, and accessibility from anywhere. It eliminates the need for extensive hardware infrastructure and provides regular updates and maintenance by the vendor. Actindo is a cloud-based headless ERP system, also known as a Digital Operations Platform. Read our complete guide to Digital Operations Platforms.
3. Hybrid ERP: Hybrid ERP combines the flexibility of cloud-based solutions with the control and security of on-premises systems.  

4 Key Advantages of a Modern, Headless ERP Solution

A modern and headless ERP solution like Actindo’s Core1 Platform is specifically designed to address the challenges faced by e-commerce businesses. It offers key features that set it apart from regular ERP solutions.

Here’s a look at the specific problems it helps solve: 

1. Centralized Data Management

The data challenges involved in e-commerce are daunting. A crucial aspect of a modern and headless ERP is a centralized data management system. The Actindo Core1 Platform effectively addresses this challenge with its DataHub feature.  

The Actindo DataHub is the heart of the platform, interconnecting all modules and external services. This centralized approach eliminates data silos and ensures consistent and accurate information across the entire business. By integrating all relevant data sources into a unified platform, Actindo Core1 enables e-commerce businesses to have a holistic view of their operations. 

The flexible data model enables automated mapping, transformation, and transfer of complex data to other modules and external systems via the Extract, Transform, Load (ETL) process. The ETL functionality simplifies data exchange, facilitates integration with third-party systems, and streamlines product and order management across channels. 

Actindo's centralized data management system ensures data consistency, accuracy, and accessibility, empowering businesses with reliable information for informed decision-making. It offers seamless integration with new marketplaces and legacy system integration, enhancing operational efficiency and flexibility.  

Actindo’s DataHub is a comprehensive solution that enables e-commerce businesses to thrive in a dynamic digital landscape. 

>> Find out how fashion brands manage their product data efficiently <<

2. Omnichannel Capabilities

With the rise of omnichannel retailing, an ERP solution that supports multiple sales channels is essential. Actindo empowers retailers to seamlessly manage inventory, orders, and customer data across various channels, providing a consistent and personalized shopping experience. 

Actindo's Omni-Channel module connects web stores and marketplaces directly to the platform, enabling centralized management. 

• Product information is only created once in the central PIM, is displayed across channels, and can be easily customized for each channel.  
• Inventory levels and orders are synchronized in real-time, providing a comprehensive overview.  
• The automated ETL pipeline transforms data for every marketplace and connected system, eliminating duplication.
• Orders from marketplaces are processed like online store orders, with status and tracking information automatically shared with customers.  

Actindo's Core1 platform ensures efficient and cohesive omnichannel operations in a concise and integrated manner.

3. Easy Modernization

Traditional IT modernization approaches often involve completely replacing existing systems in a complex project or relying on fragile, hard-to-maintain point-to-point connections between old and new systems.  

However, the Actindo DataHub offers a more efficient solution. It allows legacy systems like SAP R/3 or AS/400 to seamlessly connect to the Actindo Core1 platform, enabling smooth data transfer. This approach enables a step-by-step modernization of IT and facilitates a rapid time-to-market.  

Instead of overhauling the entire system landscape, retailers and brands can leverage a single integration with Actindo to future-proof their entire inventory solution. This provides a streamlined and scalable path towards the future of retail. 

>> Read more about modernizing the IBM AS/400 or iSeries <<

4. Enhanced Customer Experiences

A modern ERP solution enables businesses to deliver exceptional customer experiences. Actindo's Process Orchestration module aids in consolidating and mapping various separate processes within your business into a centralized location. By defining rules for workflow execution, you can continuously optimize operations.  

This approach also facilitates efficient monitoring and troubleshooting. Ultimately, streamlined processes across all business areas lead to expedited order processing, returns handling, and an enhanced customer experience.  

By leveraging real-time data, personalization capabilities, and advanced analytics, e-commerce businesses can understand customer behavior, tailor offers, and provide seamless interactions across touchpoints, fostering customer loyalty and satisfaction.

Summary: ERP for E-commerce 

By overcoming the challenges and leveraging the key features of an ERP, online retailers can streamline their operations, enhance efficiency, and deliver memorable customer experiences.  

Choosing the right type of ERP - a modern, headless solution - is crucial for long-term success. With flexibility, scalability, and omnichannel capabilities, it should empower your business to stay competitive, adapt to changing market dynamics, and drive growth.  

Want to know how you can leverage a modern and headless ERP system for your e-commerce? Get in touch with our experts! 

"We have a clear vision of how enterprise software should be: Companies should be able to grow, scale, and transform dynamically without restrictions - based on a modern and future-proof platform." - Boris Krstic, CEO of Actindo