Your Ecommerce Website and ERP Should Work Together
Gone are the days when having a simple website to sell your goods is enough. Today’s ecommerce website owners need an integrated solution which allows them to compile, analyze and report on the full scope of their data in order to make insightful decisions for strategic growth. For many online retailers that have a multiple channel sales strategy, an ecommerce website is only a piece of the data management puzzle, so they turn to an enterprise resource planning (ERP) system to fill in the missing pieces to complete the puzzle.
That sounds like a lot of industry jargon, so let’s break that down. ERP comes in many shapes and sizes, however they inherently serve the same purposes for ecommerce website retailers. Site owners get a single, unified view of their customer, inventory, sales and order information, and that’s only part of it. Integration brings it all together where many online retailers, once they’ve implemented ERP, never look back.
It can be difficult to fully grasp how your ERP works together to communicate back and forth for up-to-date and accurate data, especially with all the ERP and website platform options you have available. Whether you’re using Microsoft Dynamics, NetSuite/Oracle, Sage, SAP, or any of the other ERP softwares, implementing these systems needs to be done with skillful planning in order for data to move between the systems properly.
ERP and Site Data – Two-Way Communication?
Not always. Yes, the purpose of integrating an ERP system into your ecommerce website is so they communicate with one another to provide you with valuable insight. While the communications between systems is often a two-way street, there are specific scenarios or data points in which you may not require it to do so. At the onset of your ERP project, you should determine which of the specific data points you need sent in both directions. This will not only make your implementation much smoother, it reduces your risk for cost overruns, missed deadlines, and overall success of the project.
Here’s how your website and ERP work together:
|Data Point||ERP To Website||Website to ERP|
|Product Stock Levels||x||x|
|Offline Invoice Information||x||–|
*There are several ways to integrate these two systems. When considering an integration supplier, make sure to take at least the following flows of information into account.
You can’t begin to outline how your two platforms will communicate with one another without determining how certain conditions will be automatically handled. Some data points will require specific logic be configured to dictate how data is managed.
For example, what happens if someone places an order on your website and they already have an account in your ERP? Do you want the website to handle fixing this problem or does your ERP recognize the issue and solve it? An agency experienced with these integrations will be able to point out the typical pitfalls.
How Website & ERP Communicate
Once you’ve determined which data points are needed, next you’ll decide how it will be transferred between your ecommerce and ERP platforms. You’ll have to start with your web development company and ERP partner, since they’ll determine whether they prefer API, web service, XML file, or flat file transfer.
ERP to Website Integration Recap:
- What data needs to go from your ERP to your website?
- What data needs to go from your website to your ERP?
- How will you send data from one to the other?
- What are your business rules?
- Will the website or ERP handle the business rule logic?
- Does the development company have ERP integration experience?
In my experience integrating an ERP systems, it is really easy to get your head spinning about an individual data point flows from an ERP to your website. Thus, the easiest way to determine this information is to break down all data points into specific categories such as product data, product inventory, order details, order updates, customer information and offline information. This way, by understanding how these 6 specific categories data flows between the two systems, it is much easier to understand how all data flows between both systems.
6 Examples to Easily Understand a Two-Way ERP Ecommerce Integration?
Example 1: Product Data (Pricing Rules)
Product Data – ERP to Website (Yes)
Overview: Product data integrations allow you to change pricing from the ERP system in a much more efficient way than doing it manually.
Example #1: Simple Pricing Change
I want to change pricing from $80.00 to $50.00 because we are having a sale/need to get rid of excess inventory this weekend.
Explanation: Change price for a product from $80.00 to $50.00, do this in the ERP system, and it will automatically sync to the Ecommerce Platform Market place
Why does this benefit me? I go into the ERP system and change all the Style number prices from $80.00 to $50.00, in one instance. Because the ERP system is so efficient, it will automatically change each style number size variant (i.e. S/M/L) and color variants (blue, black, gold, yellow). Because the ERP system can handle more complexities then an ecommerce platform can, as well as has multiple channels connected besides your Ecommerce Platform, you can do this all in one place.
Product Data – Website to ERP (No)
Explanation: Note, if you made any changes to the website in the back-end of the Ecommerce platform, the price would NOT change in the ERP system. For example, you can change the price from $80.00 to $50.00 in the Ecommerce Platform, but that doesn’t mean that it will sync back to the ERP system.
Product Data – FAQ/Questions to Consider
What would the manual process be without an ERP system? Why don’t just make the change on the website? For every product variant, not just sku/style, you would have to go into the back-end of your Ecommerce platform and change the prices.
I am still intrigue, how can this task save me so much time?
This simplifies how you manage price for all of your market places (online & offline). Let’s say that you’re a Apparel retailer that sells online as well as offline at your brick & mortar store. It is going to be easier to make your pricing updates in your one unified ERP system, rather than updating both your Ecommerce and Brick & Mortar system.
What is a SKU? By definition, a stock keeping unit (SKU) is a number assigned to a product to identify its variants (price, size, and colors).
How is a Product different than a SKU? A product describes each design that you have. For example, a long-sleeve t-shirt is an example of a product. A long-sleeve SKU would be a Medium long-sleeve t-shirt.
Example 2: Product Stock Levels (Back Orders)
Product Stock Levels – ERP to Website (Yes)
Overview: Real time product stock level sync allows for up-to-minute live updates of inventory between your ERP system and your webstore.
Example #2: Do Not Allow Backorders
A customer visits your e-commerce store and places an order.
Explanation: A customer visits your e-commerce store and places an order. But, where does your e-commerce store get the product and inventory information from? Businesses often maintain all the basic product information in the ERP system and it is the central hub where the inventory information is maintained. Without this information syncing between both systems, all your online & offline market places cannot work effectively.
How having this integration will help your business? Why is this important?
- Product and Inventory sync will minimize back orders, improve customer’s shopping experience, makes it easy to sell on multiple channels, build trust and confidence with your customers, make managing product information easier, help in efficient inventory management, pave the way for omni-channel experience, and more.
- Also consider – The inventory information sync can be taken to a different level when the inventory is managed and maintained in multiple warehouse locations. This would then require businesses to maintain the warehouse and inventory information in ERP system and then sync the information back to the e-commerce system. This again is an advanced functionality and requires you to go beyond the basic inventory integration.
What are the risks of not allowing backorders? How will my business lose money?
- Lost business: If a client sees that you cannot deliver a products before a competitor, he most likely scenario is that they’ll cancel the order and go to a competitor.
- Lost time: The time it takes to manage the inventory, and solve backorder issues, can be a serious concern if you aren’t using an inventory management system that offers you up-to-the-minute data.
- Extra compensation for shipping: In many cases, it may be company policy to cover expedited shipping to the customer when they’ve had to wait for a backordered item.
How does this benefit my business? With integration, your e-commerce and ERP systems will always be in sync with each other and you can very easily avoid scenarios like these noted above.
Product Stock Levels – Website to ERP (No)
Explanation: When a customer places an order on your Ecommerce Marketplace, that order information is sent back to the ERP system for order fulfillment. However, the Order Quantity that is bought is sent back to the ERP system will there the Order Quantity will subtract to the inventory levels in the ERP system, rather than the inventory stock level updating in the ecommerce marketplace before it is sent back.
Why not? The inventory on the Ecommerce Marketplace is not updating after the order is made, it first needs to go back to the ERP system, and then the ERP system than sends the updated inventory back to the Ecommerce Marketplace. So yes, the order quantity is sending to the ERP system, but the Inventory data inside the Ecommerce Marketplace is not sending anything. This is because what if an order is placed on your online channel as well as another channel you have. The Ecommerce Marketplace doesn’t dictate the inventory levels, the ERP system dictates the inventory levels. That is why the order details and not the inventory levels are sent from the Ecommerce Marketplace to the ERP system. Make Sense?
Product Stock Levels – FAQ/Questions to Consider
What would the manual process be without an ERP system? Why don’t just make the change on the website? Every time there is a new order, you would have to manually update both the ERP system and ecommerce platform. Another terrifying thing is having to go update stock levels every time there is a refund, edit to an order, damaged shipment, etc.
Do you allow backorders? A seemingly simple question, however, if you DO NOT allow backorders – inventory management should be prioritized high on your list of features. You will want to ensure customers don’t place orders for items you don’t have in stock.
What are some questions to consider regarding backorders?
- Do you want to have back order capability on the product style level and/or product variant level?
- Do you want to automatically adjust stock levels when editing an order?
- Do you want to automatically adjust stock levels when an order is refunded or cancelled?
- Show stock level to customer on product page?
- Show out of stock message to customer on product listing pages?
- If so, do you want to show the estimated shipping time? For example, product is out of stock, show the message “Backorders: Expected to Ship 12/14”
Example 3: Order Details (Ecommerce Order)
Order Detail – ERP to Website (No)
Explanation: Because you cannot create online orders in the ERP system.
Analogy/Explanation: Customer walks into a store, they can make an order at the store, but the customer itself cannot create the order in the ERP system itself. The same logic applies for online orders, as the order that the customer creates needs to be created on the online marketplace.
Order Data – Website to ERP (Yes)
Overview: As transactions are placed via your ecommerce site, this integration will bring the order into your ERP system. This is the most common integration point and will allow you to fulfill orders more efficiently. This integration typically includes three data points-customer data from the order, the specific items that have been ordered, and the shipping method
Example #3: Online Orders Processes to ERP System
You have an e-commerce and ERP system but they are not integrated. Because of your marketing efforts, you witness a lot of traffic on your e-commerce store and orders start to flow in. Because your e-commerce and ERP systems are not integrated, you manually transfer orders from your e-commerce system to your ERP system for fulfillment (probably towards the end of the day). Remember, because of manual data transfer, you can only sync a limited number of orders between the two systems. As the number of orders grow, to ensure quick turnaround time the only alternative you have is to use manual labor to sync data between the two systems. This way, your business is always limited by the number of orders you can sync between the systems and is not an ideal situation.
Explanation: As transactions are placed via your ecommerce site, this integration will bring the order into your ERP system. This is the most common integration point and will allow you to fulfill orders more efficiently. This integration typically includes customer data from the order, the specific items that have been ordered, and the shipping method.
How having this integration will help your business?
- Orders are probably the foremost reason why most businesses consider e-commerce and ERP integration. There is a lot of synergy between e-commerce and ERP systems as far as orders are concerned – while the orders are accepted in the e-commerce system and the actual fulfillment happens in the ERP system. Moreover, the ERP system also has to take care of shipping, invoice, and payments (accounts receivable, etc.), and inventory (for inventory replenishments and management).
Why is this important? Integration, can not only automate this process but will also reduce the turnaround time (because the orders are synchronized immediately) and losses that are a result of errors that are common in manual data transfers.
What are the risks of not syncing my order details?
- Order information sync will help make your business scalable, will enable you to expand to new markets, minimize order aging, improve customer satisfaction, reduce errors and costs, streamline and automate order fulfillment process, and more.
Order Data – FAQ/Questions to Consider
What would the manual process be without an ERP system? For every order that is made, you manually transfer orders from your e-commerce system to your ERP system for fulfillment (probably towards the end of the day). Remember, because of manual data transfer, you can only sync a limited number of orders between the two systems.
What would the manual/automated (orders are transferred at the end of each day) process be an ERP system? Yes, export a CSV file of all orders from your Ecommerce MarketPlace and then import them into your ERP/Order Fulfillment software.
Example 4: Order Updates (status, shipping tracking)
There is a lot of synergy between e-commerce and ERP systems as far as order updates are concerned – while the orders are accepted in the e-commerce system and the actual fulfillment happens in the ERP system. Moreover, the ERP system also has to take care Order Update Statuses before it can be shipped such as invoices, and payments (accounts receivable, etc.), and inventory (for inventory replenishments and management).
**Note that Order Updates is one of the areas where a 2-Way ERP Integration can become really confusing, so we used the two ways of data flow in this example below:
Order Data – ERP to Website (Yes) & Website to ERP (Yes)
Step 1: Create Online order in website and order details are sent to ERP System (Example 3)
2-Way: Order Details sent to ERP System
Step 2: Ship/Fulfill Order
2-Way: Shipping Tracking Sent back to Ecommerce MarketPlace
Step 3: Customer is able to view order tracking in their account on the Ecommerce MarketPlace. The shipping date, the carrier, method, and tracking number can be integrated to allow customers to know when to expect their order.
Order Updates – FAQ/Questions to Consider
Why does the customer need to view the shipping information in the Ecommerce MarketPlace? Well, where else would they be able to view the order? They need to keep track of shipping information. Further, getting your customers to come back to the site to view the order status/tracking code is a great way to up-sell them on other products you have.
Example 5: Customer Information (i.e. Default Shipping Address)
Overview: Customer has 2 locations, New York and Chicago. New York has been the primary shipping address, but owner wants to change that. He calls sales rep, and wants them to make primary address the Chicago Address.
Example #5: Customer Order Data
A customer who often shops on your Ecommerce store calls your customer service team to change its shipping address and the required change is reflected in the ERP system.
A few days later the user logs into the e-commerce system to order something he/she would expect the shipping address change to be reflected here. Imagine the experience they would have if it is not; because as far as they are concerned they are interacting with your company, not your individual departments or systems.
Customer Information – ERP to Website (Yes)
Explanation: Integrating customer data can include pricing rules/discounts, to allow buyers to purchase at their specific price. Customers may have products that are not available to the general public. They may desire to place orders previously submitted offline on the online marketplace.
Customer Information – Website to ERP (Yes)
Explanation: Make an online order, and create a new address. Call 2 weeks leader to order over the phone, wants to send that to new address.
Why is this Important? Customers are the core of your business; It is absolutely crucial that this data is effectively synchronized. Synchronizing customer information between ERP and e-commerce systems is the first step that propels uniformity in customer experience.
How will this benefit my business? Customer information sync will help you drive benefits like building a 360-degree view of customers, facilitate multi-channel marketing, personalize customer experience, provide self-service customer portals, drive Omni-channel experience, and more.
Example 6: Offline Invoice Information
Overview: This integration will allow customers to see orders that they placed outside of the ecommerce site. This is often left out of initial integration projects, and typically falls in the nice-to-have versus must-have category. But it is a good way to build a relationship with your B2B customer.
Offline Invoice Information – ERP to Website (Yes)
Explanation: Offline orders: ERP to ecommerce. This integration will allow customers to see orders that they placed outside of the ecommerce site. This is often left out of initial integration projects, and typically falls in the nice-to-have versus must-have category. But it is a good way to build a relationship with your B2B customer.
Offline Invoice Information – Website to ERP (No)
Explanation: This is elementary, the whole objective of an offline invoice is to not use the ecommerce platform. Thus you can’t create invoices in the Website, and need to create the offline invoice in the ERP system.