According to the German E-Commerce and Distance Selling Trade Association, e-commerce is the new normal. With a total turnover of 107 billion euros in 2021, every seventh euro spent by private households went to online trade; if you subtract grocery shopping, it is already every fifth euro.
Online trade has been booming for years, and the Corona pandemic has provided an additional boost. Just as in stationary trade, however, there are also differences in e-commerce in terms of how retailers are positioned.
Start-ups, small entrepreneurs and top dogs
There is no such thing as the typical online retailer. There are the big retailers like Otto, Zalando or wayfair. There are also retailers who operate both online and stationary. hese include Mediamarkt, Lidl, Ikea and tchibo, for example. Some online retailers started with pure e-commerce and have meanwhile also opened retail shops due to their great success, such as nootebooksbilliger. Of course, in addition to the well-known online retailers, there are also a large number of small shops, most of which have specialised in specific niche products. Since the boom of social media, a new form of online shops has emerged – retailers who sell exclusively via Instagram or Facebook.
So the online retail industry is 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. This growth in turn has led to changes in the processes of many online shops.
When the web shop reaches its limits…
Large online retailers have a different structure and different processes right from the start. Merchandise management, ordering processes or warehousing and logistics are designed for large throughput and turnover from the very beginning. The situation is completely different for small traders who start their business from their living room at home or a small local shop. For these shops, a simple shop backend is initially sufficient to process the orders. Logistics is often still a non-starter in these cases – the incoming orders are still packed and shipped by the boss himself.
And then comes growth. Often, smaller traders realise for the first time during peak loads at Christmas or other occasions that their previous system has reached its limits. Merchandise management and warehousing then come under pressure, as does the entire ordering and shipping process. Returns or complaints have to be processed, the purchasing department has to negotiate different prices and margins and the logistics in the warehouse can hardly 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 map the processes that have changed due to the strong growth.
ERP for automated processes
When thinking of ERP, most entrepreneurs think of a powerful piece of software for large companies or conglomerates. But this is just one part of the story. Of course, ERP systems have been in use in large corporations for a long time and support not only purchasing, production or the finance department. Often, the top dogs of the ERP industry are used in these large corporations. This goes hand in hand with high costs that are not at all affordable for a smaller online retailer.
In recent years, however, a lot has happened in the ERP market and there are now a variety of ERP systems that are not only tailored to the needs of large manufacturing companies. Slicker ERP systems with a modular structure have recently begun to help smaller and medium-sized companies automate their workflows and processes – even e-commerce companies benefit from this. The advantages of an ERP system primarily lie in the cross-departmental automation of processes, the creation of more transparency and the relief of employees.
Logistics and purchasing are linked, accounting automatically receives invoices from orders and the warehouse is better prepared for peaks in certain products at certain times. In addition, evaluations can be carried out across all departments. Thanks to forward-looking reporting, department heads and management can plan the company’s strategy much better.
Another advantage of these leaner ERP systems: scalability. If you, as the operator of an online shop, need additional functionalities, these can usually be integrated flexibly. The licence management for users is usually more flexible and can be adapted better to the growth of the company. Since most systems can also be purchased as cloud software, there are no high IT costs for your own server infrastructure.
An ERP is no longer a big investment that only large corporations can afford. Especially SMEs from the eCommerce sector benefit from a growing number of lean ERP systems that grow with them thanks to high scalability. Therefore, not only companies with global production, purchasing and branch offices benefit from the automation of processes.