eCommerce today is the fastest growing channel for many customers in mid-market distribution. Many distributors we work with started in eCommerce the same way: they had an existing business, made a website, started selling, and over time, this became a fast growing channel through which they sell and deliver product. The downside, however, is that these systems often live in silos, disconnected from the company’s primary ERP application – where accounting, inventory management, and order processing live.
Some distributors build or rebuild their eCommerce functionality from the ground up directly in ERP, a core component of a software application like NetSuite. NetSuite offers various levels of eCommerce capabilities, from a basic site using SuiteCommerce Standard, to an advanced webstore with advanced search, page load, and responsive design aspects.
Most of our customers, however, choose to integrate an existing eCommerce application with a legacy ERP. Companies benefit by having best in breed for both applications. However, this approach is not without its challenges. The following guidelines are based upon our experiences working with a number of companies to integrate an ERP and an eCommerce application.
1. Think about all your integration touchpoints
A number of records live in your eCommerce application that needs to feed into ERP. Likewise, a number of ERP records need to live in eCommerce. In basic configurations, items, customers, orders feed down from eCommerce into ERP. However, more advanced use cases are likely a requirement in your business. Will shipments generate in ERP, then move to your website? Where will your authorize and capture credit card payments? What about special pricing logic for particular customers, or promotions you are running? While more integrations means more money up front to build out, less integrations might also mean more money spent trying to tie together everything with manual internal processes, which might be slow, inefficient, and actually negate your eCommerce efforts.
2. Where do customer communications live?
Customers today demand notification about everything. Did the order process correctly? What are the tracking numbers? What about payment confirmations? Getting this right is crucial for turning a one-time customer into a repeat customer.
3. Manage your backend accounting
For some customers, eCommerce means more than selling on their own individual website. Today’s eCommerce suppliers also act as merchants on Amazon, Walmart, and a slew of other online marketplaces. This is great when sales start ringing up and product is flying out the door. However, ensuring proper back end accounting is crucial to get a true feel of margins. Most marketplaces take out shipping fees, commissions, referral fees, chargebacks, allowances, and other types of fees. With the Supreme Court’s decision on collecting sales tax last week, this gets even more complicating. Ensuring proper collection of credit card payments, depositing into your bank accounting, accounting for merchant fees, and reconciling your bank statements are all crucial for you to get a true sense of your margins. Factor in online advertising costs, and you might actually be losing money on eCommerce transactions. With a well implemented accounting system, you’ll be able to quickly scale out new processes to ensure proper collection of payments and attribution of product sales, fees, shipping, taxes, promotions, chargebacks, and all the other GL entries we see related to eCommerce sales channels.
