Traditional ERP System vs 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 is the one that lets your online store operate. The transaction of money (funds) is also a part of eCommerce. 

ERP systems are a kind of software tool 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, accounting, etc.

The ERP system combines all the databases across the department 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.

Running a business is all about juggling things from finance to operations, sales to marketing. The ERP system aims at consolidating the 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

Read more: Enterprise Resource Planning

ERP monoliths are not tailored to a specific industry or line of business, so the quality of the eCommerce integrations often falls short of expectations. They are built based on older technology not keeping up with 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 the webstore that need additional data transformation and real-time analysis. On hinging your whole multi-channel business to an inflexible system like this, you risk non-compliance, listing errors, and other mistakes. It would 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 lead to disruptive changes to your business.

eCommerce software is the system allowing your online store to operate. The eCommerce software may include business tools like inventory management, accounting, and email marketing.

In simple words, 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.

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 would provide solutions through software, and on adding the hardware, it becomes a PaaS. These are 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.

So, being a business owner, if you keep asking questions like “what is software testing?” or “how coding works?” then it’s the last option. These services charge on a monthly basis and transaction fees but provide full support when required.  

2#. On-Premise Platforms 

It’s hosted locally by the retailer and managed by the IT department. On-site professionals would fix any problems as they occur, add new features, and do manual updates.

If you have your own internal IT team, then it’s an excellent option for you. It allows firms to gain more control over the site and create their custom storefront solution.  

Read more: How Small eCommerce Stores can Declutter their Operations?

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 will 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 Supply Chain Management Platform or an ERP
• A 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. A dedicated inventory management software specializes in a particular function 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.

Businesses often choose to use an all-in-one or ERP as it offers everything you need to manage 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 as eCommerce softwares do.