12 May, 2022

Traditional ERP systems vs cloud-based ecommerce software

Ecommerce, also called electronic commerce or internet commerce, is a business model that lets you buy and sell goods and services over the Internet. So, ecommerce software allows your online store to operate. The transaction of money (funds) is also a part of ecommerce.

ERP systems are a type of software used to manage enterprise data. ERP systems help different organizations in dealing with various departments of an enterprise. It takes care of departments like inventory management, customer order management, production planning, shipping, and accounting.

ERP systems combine all databases across the company into a single database and can be accessed by all employees of the enterprise. It helps you in the automation of the tasks involved to perform a business process.

We will learn about the fundamental differences between the two systems in this article to help you make a better choice.

What is an ERP system?

Running a business is all about juggling things from finance to operations, and sales to marketing. ERP systems aim to consolidate back-office processes into one system. They help you track, share and store information across various departments, and ensure that all the employees rely on the same data.

Popular ERPs like NetSuite, Oracle, SAP, and Microsoft Dynamics are traditional business management systems with accounting at the core. To keep up with the changing tide of retail, there are many integrations for ecommerce solutions like:

Warehouse Management Systems (WMS)

Order Management Systems (OMS)

Inventory Management Systems (IMS)

Supply Chain Management (SCM)

Product Information Management (PIM)

Product Lifecycle Management (PLM)

Customer Relationship Management (CRM)

Business Intelligence (BI)

Customer Experience Management (CX)

Human Resources Management (HRM)

Shopping carts like Shopify

Challenges of ERPs in ecommerce

ERP monoliths are not tailored to a specific industry or line of business, so the quality of ecommerce integrations often fall short of expectations. ERPs were built based on older technology and have not kept up with the ever-changing marketplace requirements or the level of innovation that ecommerce software regularly delivers.

Most ERPs are built for back-office purposes. They are not meant for customer-facing sites like a web store that require real-time transactions and analysis.

By hinging your whole multi-channel business on an inflexible system like this, you risk non-compliance, listing errors, and other mistakes. It could cost you the right to sell on marketplaces like Amazon.

ERPs require major financial and time investments. Apart from annual subscription fees, you may face up-front and support costs running into hundreds of thousands of dollars. Plus, it may take years to implement an ERP system fully and that could lead to disruptive changes to your business.

What is ecommerce software?

Ecommerce software is the system that allows your online store to operate. Ecommerce software may include business tools like inventory management, accounting, and email marketing.

Put simply, ecommerce software lets you list products for sale and accept payments online. But, most online businesses usually need more than the bare minimum, and ecommerce software adds other business management tools.

The best ecommerce software has all the basic tools you need to get started, with an ecosystem of upgraded tools and platforms that you can use as your business grows.

Types of ecommerce software

There are mainly three types of ecommerce software:

1# Software-as-a-Service (SaaS) and Platform-as-a-Service (PaaS)

Both of the above offer ecommerce solutions via the Internet. SaaS provides solutions through cloud-based software, and if adding hardware, it becomes a PaaS. These are both straightforward options for those who are not tech-savvy.

Additional design and custom features may require some developer skills. But, patches, updates, and new features are dealt with automatically.

These services charge on a monthly basis and may include transaction fees, but provide full support when required.

2# On-premise platforms

These solutions are hosted locally on servers by the retailer and managed by their IT department. On-site professionals are required to fix any problems as they occur, add new features, and do manual updates.

If you have your own internal IT team, then on-premise may be an excellent option for you. It allows firms to gain more control over their site and create their custom storefront solution.

ERP vs ecommerce software

Let’s compare ERP systems with inventory management software (an ecommerce software) as an example to get a better idea.

While researching inventory management software online, you may end up on a site that aggregates a list of providers like Capterra or GetApp that helps you compare features, benefits, and prices.

So, you can usually group your options into two main categories:

All-in-one platforms such as a supply chain management platform or an ERP

Dedicated warehouse and inventory management software

An all-in-one solution may sound enticing as it offers “full stock” in one place and can manage multiple systems and processes using one software solution. A dedicated inventory management software specializes in specific sales and accounting functions and integrates with a wide range of other software.

So, the choice depends on either using software that does everything but doesn’t specialize in a specific area or using a stack of specialized software with integrations to one another.

Conclusion

Businesses often choose to use an all-in-one or ERP as it offers the ability to manage all administrative tasks in one place. But, as all-in-ones are so focused on managing so many things at once, they often lack the level of granularity required to fully handle inventory and warehouse processes like ecommerce software can.

If the idea of a cloud-based SaaS solution for inventory and order management is one that appeals to you over an ERP, schedule a demo of Cin7 here and we’ll show you how it can be your centralized resource for managing sales, inventory, accounting, warehousing and fulfillment.

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