WHY YOU SHOULD DITCH LINNWORKS, STOREFEEDER, VEEQO OR EXPANDLY AND GET YOURSELF A AN ERP SYSTEM INSTEAD

WHY YOU SHOULD DITCH LINNWORKS, STOREFEEDER, VEEQO OR EXPANDLY AND GET YOURSELF A AN ERP SYSTEM INSTEAD

Don’t get me wrong, Order Management Systems (OMS) like Linnworks, Storefeeder, Veeqo and Expandly – plus CloudCommerce Pro, Channel advisor and all of the others are very useful tools for collecting multi-channel orders together in one place and processing them. But they all have the same massive flaw when you look at them as a part of your overall business management system.

They don’t include a general ledger for accounting – they have to integrate with a separate accounts system.

APIs are not always the answer

You may think that’s no problem – just use an API, right? – WRONG!

APIs are great for moving well defined data from one system to another – they excel in situations where you want to bring standardised info in more or less the same format across from many different systems, a great example is orders being copied over from sales platforms. The data in each order is the more or less the same and the variations are easy to understand and control in the API software.

The key issue is the database underlying the systems. Where APIs are less effective is where the two systems being connected both require the same information in their database to work well – in that case the API ends up being a tool to keep two databases in sync, and that’s simply not what APIs were designed to do. The diagram at the top of this article shows you the two options for your back end system architecture.

Because an ERP like eTail Support works on a single database for all functions from order processing to accounting the underlying data for the system is guaranteed to be consistent. Orders become Invoices and those invoices are posted directly to the general ledger in the same system.

Two separate back end systems inevitably leads to confusion, duplication and errors

By contrast, if you use a separate Order Management System and Accounts package you have two separate sets of invoice data, one in each system and if you process 500 orders a day – how can you possibly reconcile the two sets of data?

Of course, that’s not the only problem. If you have a separate accounts package and Order processing system, where do you put customer credit notes? In one system, or into both?

How about processing returns?

How do you check supplier invoices to both deliveries received and supplier invoices to make sure that you only pay for what you actually received?

The general ledger is there to provide a cross check on the data that you use to produce your accounts – the data that cross check is vital to getting data out of your system to manage and improve your business  – because you can’t manage what you can’t measure. The reports that tell you how much money you are really making on each item that you tell are vital to deciding how to set your selling prices, if you can’t trust them, you can’t set the optimum price for your products.

By separating data into two different databases, you create the appearance of using a general ledger to validate your reporting, but more often than not you are reporting on incomplete, out of date data.

The ways to get this wrong are innumerable, it all depends on the quality of the integration between the systems, when the integration is good enough you have a perfect copy of the data in both systems and perfect two way synchronisation – but at that point why do you have two systems?

An ERP is simply a better back end system - no ifs, no buts, its better.

Running a single ERP system, rather than a separate Order Management System & Accounts package is just a better solution.

In an ERP system using a single database the rigour of the general ledger ensures that all of the data in all parts of the system is cross checked for accuracy and completeness, this allows accurate reports to be drawn from the whole system.

So that you can get reports that are important to eCommerce retailers, such as;

Profitability by product, Profitability by sales channel or even Profitability by Product AND Sales Channel taking into account the cost of fees, transport, delivery, commissions and advertising.

Can you afford an ERP System?

In the past, many retailers used Order Management Systems with separate accounts packages because they were much cheaper and easier to install, that’s understandable. As I write this Linnworks plus Zero for a company processing 500 orders a day will cost about £2,000 a month while the most popular ERP for eCommerce, Netsuite starts at around £5K per month. Linnworks can be installed by a competent IT guy inside your organisation in a couple of weeks while Netsuite estimate that their system takes 6 months and £50K in consultancy fees to install.

Well actually you can afford an ERP – eTail Support is cheaper than Linnworks!

However, there are a new generation of ‘Third Generation’ ERP systems now available that are designed for eCommerce, like Linnworks et al they are much faster to install and to cheaper to run than ‘First Generation’ ERP systems like Netsuite and SAP but they include all of the features needed to run your eCommerce business effectively without the compromise.

eTail Support is of course, my favourite among the new 3rd generation ERP systems for eCommerce, but others like Khaos Control and Fulfil are good too. No matter which ERP you choose, its time to ditch your OMS and get an ERP.

If you run an eCommerce business you can contact me through linkedin or by email (roger@etailsupport.com) I’m always delighted to talk about how eTail Support can improve your systems, save you money on Software and get you better information to help you manage your business more effectively so that you make more money.