ERP in E-Commerce

E-commerce as the new normal: Online trade is booming

According to the Federal Association of E-Commerce and Mail Order Germany e.V., E-Commerce is the new normal. With a total turnover of 107 billion euros in 2021, every seventh euro spent by private households went into online retail; if you subtract grocery purchases, it is already every fifth euro.

Online retail has been booming for years, and the corona pandemic has once again provided an additional upswing. Just as in stationary retail, there are also differences in E-Commerce in how retailers are positioned.

Start-ups, small business owners and top dogs: The diversity of online retail

There is no such thing as a typical online retailer. There are big retailers like Otto, Zalando or wayfair. There are also retailers who operate both: online and stationary. These include, for example, Mediamarkt, Lidl, Ikea and Tchibo. Some online retailers started out with pure E-Commerce and, thanks to their great success, have now also opened retail stores such as notebooksbilliger.

Of course, in addition to well-known online retailers, there are also a variety of small shops, which mostly specialize in special niche products. Since the boom in social media, a new form of online shops has been added; retailers who sell exclusively via Instagram or Facebook.

The online retail sector is therefore very diverse. What all retailers have in common, however, is growth. If you look at the growth in online retail over the last 20 years, you can see a hundredfold increase in turnover. In turn, this growth is also leading to changed processes for many online shops.

When the online shop reaches its limits

Large online retailers have a different structure and different processes right from the start. Inventory management, ordering processes or warehousing and logistics are designed for large sales and sales right from the start. The situation is completely different for small retailers who start their business from their living room at home or a small local shop.

With these shops, a simple shop backend is initially sufficient to process orders. Logistics is often still a foreign concept in these cases; the incoming orders are still personally packaged and shipped by the boss.

And then comes growth. Smaller retailers often notice for the first time during peak loads at Christmas or other occasions that their previous system is reaching its limits. Inventory management and warehousing then come under just as much pressure as the entire ordering and shipping process. Returns or complaints must be processed, purchasing must negotiate different prices and margins, and warehouse logistics barely keep up with the high number of orders.

It is precisely at this point that online retailers are faced with the question of how they can best represent the processes that have changed as a result of strong growth.

ERP for automated processes in E-Commerce

When it comes to ERP, most entrepreneurs think of a powerful piece of software for large companies or large corporations. But that is only partly true. Of course, ERP systems have been in use at large corporations for a long time and not only support purchasing, production or the finance department. The top dogs in the ERP sector are often used in these large corporations. This entails high costs that are impossible for a smaller online retailer to represent.

However, a lot has happened on the ERP market in recent years and there are now a variety of ERP systems that are not only tailored to the needs of large manufacturing companies. Since then, leaner ERP systems, which have a modular structure, have also helped small and medium-sized companies automate their workflows and processes; E-Commerce companies also benefit from this.

The advantages of an ERP system lie primarily in automating processes across departments, creating more transparency and relieving employees.

Logistics and purchasing are linked, accounting automatically receives invoices from orders and the warehouse is better prepared for peaks in certain products at specific times. In addition, evaluations can be carried out across all departments. Thanks to predictive reporting, department heads and management can plan the company's strategy much better.

Another advantage of these leaner ERP systems: scalability. If, as an operator of an online shop, you need further functionalities, these can usually be flexibly integrated. License management for users is also often more flexible and can be better adapted to the growth of the company. Since most systems can also be booked as cloud software, there are also no high IT costs for your own server infrastructure.

Conclusion: ERP systems are becoming the basis for growth in E-Commerce

An ERP is no longer a major investment that only large corporations can afford. SMEs in the eCommerce sector in particular benefit from a growing number of lean ERP systems, which grow with them thanks to high scalability. As a result, it is not only companies with global production, purchasing and branches that benefit from automating processes.

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