Choosing Operations Software for Your E-commerce Store
Operations software is the easiest way to track and manage your business processes, ranging from warehousing inventory to employee paperwork. Operations management streamlines processes to ensure a return on every part of your business. The right tools give even small businesses the ability to collect and utilize data to make smart choices.
Choosing the right operations software for your e-commerce store can be difficult. With dozens of options available for every part of your business, it can be difficult to decide what you need, what features you need, and how much it should cost.
E-commerce operations typically require three types of operations software; enterprise resource planning (NetSuite ERP), inventory management software, and warehouse management software. To help you gain an understanding of the tools that make up an efficient e-commerce business, we're going to take you through the why, what, and how much of each.
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Choosing an ERP for e-commerce
ERP software like NetSuite is responsible for handling day-to-day business practices, paperwork, and tasks or processes. Enterprise resource management typically works by automating repetitive tasks, automating paperwork and forms, and collecting data to manage product planning, purchase orders, manufacturing, service delivery, inventory, shipping, payment, and finances. Some solutions will include additional features like payroll and HR.
Your ERP should meet your specific business needs, which typically means that it must be designed for your industry. For e-commerce, you need specific features for inventory management, cross-channel synchronization, order processing automation, etc.
Why You Need ERP for Operations Management
ERP enables you to automate processes, reduce time spent per product order, and collate data to see what you are spending, where, ROI. This can allow you to scale without investing heavily in new employees to manage growth, analysis, and paperwork. For most e-commerce, your ERP should also synchronize your data and inventory across all your channels.
At its most basic, a good ERP gives you the tools to make your business more efficient, so that you save money and have happy customers.
What Does ERP Cost?
Most ERP systems are priced per user and you can expect to pay an average of $10,000-$150,000 total.
You can also consider Software as a Service or SaaS solutions, which charge a monthly rate, typically based on users and demand. SaaS has several advantages, in that you are not purchasing a version of the software, but rather licensing access to the software so that you receive updates and new features as they appear.
These solutions can vary a great deal in cost depending on scope and features. For example, the most basic ERP will handle one or two functions for a very small business and will cost roughly $50-$150 per month. Better ERP will handle dozens of interconnecting tasks and offer automation, and will typically start out between $1,000-$4,000 per month.
Inventory Management Software
Inventory management is one of the most important software solutions for e-commerce, because everyone has inventory they need to track. If you choose an ERP solution with built-in inventory management, you won't have to purchase it separately.
Some e-commerce businesses choose to purchase inventory management rather than ERP at first, largely because it is more cost effective. However, you won't get business management tools for automating, data collection and analysis, accepting and processing orders, order management, or managing purchase orders and other paperwork.
Good inventory management software should include solutions for tracking inventory in multiple locations or warehouses, integration with shipping services or solutions, sales analysis and management, cross-channel synchronization, and integration with accounting software.
Do You Need Inventory Management Software?
If you don't already have it, the answer is probably yes. Inventory management software is considerably more efficient than alternative solutions like spreadsheets, and they can save you money while speeding up internal processes because it's easier to track what you have and what you're selling. If you're not sure, perform an internal audit and pay attention to errors, stock-out events, and order processing times. Inventory management can help in all of these aspects.
How Much Does Inventory Management Software Cost?
Like other types of operations software, inventory management solutions vary in price depending on the features and scope of the program. Most solutions, like QuickBooks Online Plus are relatively affordable at around $50 per month. You can usually expect general inventory-only operations software to range from about $25-$200 per month for SaaS.
Warehouse Management Software
Warehouse management software is important for managing goods in their physical locations so you can see where they are, prepare them for shipping, and ensure manage the warehouse logistics. A good WMS will offer a variety of features including multi-warehouse support, third-party logistics integration, FBA integration, product scanning, and integration into your inventory and accounting solutions.
What's the Difference Between Warehouse Management Software and Inventory Management?
While warehouse management and inventory management are closely related concepts, inventory management revolves around managing your actual stock. This includes maintaining the optimum level of stock, preventing sell-outs, and reducing costs by changing how much of a product you order.
Warehouse management software is designed around managing inventory in your warehouses. This includes:
- Receiving goods into the warehouse and tracking where they are
- Preparing and creating records of shipments received
- Identifying which goods have been received
- Labeling goods
- Organizing goods
- Storing goods and keeping track of where they are and if they have a lifespan
- Pick and pack
- Tracking when goods have left the warehouse
So, while inventory management is about how much inventory you have and why, warehouse management is about what you have and where. Both functions are essential to good operations management.
What Does Warehouse Management Software Cost?
An early stage e-commerce company should expect to pay between $400 and $1,000 per month for warehouse management. Some solutions will be more affordable while others will be more expensive. However, prices can range significantly higher depending on the number of warehouses you operate and the number of employees using the software.
Choosing the Best Operations Software for Your Business
Operations software enables you to handle business processes, automate tasks, and manage highly complex processes such as inventory, accounting, and data – which you can then use to improve processes, reduce costs, and provide better service. However, there are no one-size-fits-all operations software solutions and you will have to choose an option based on your business needs, size, and budget.
We recommend that you:
- Perform an internal audit to determine where you need software solutions.
- Identify features that you need (I.E. integration with your barcode scanners or your accounting application)
- Determine a budget. You can typically calculate this based on what your current solution is costing you, and what you likely save using the software. Your operations software should offer a return on every dollar you spend, even if you won't see it right away.
- Review options that meet your needs and test them before you commit to a purchase.
Operations software allows you to scale your e-commerce store, because it cuts time-consuming manual management and recording, so you can support increased volume and channels, often at a fraction of the cost of hiring employees to handle the same tasks manually. However, it is crucial that you take the time to review your needs and choose solutions that can offer a return while allowing you to grow.
For many sellers, the largest pain point for operations software is finding a single unified solution, which allows you to reduce costs down to a single subscription.
For more info on useful software solutions, check out our guide to the best order management software.
Skubana is a full-service e-commerce operations solution, unifying tools including inventory management, warehouse management, and ERP. Our operations software offers a full package of back-end solutions including order processing, shipping, inventory management, warehouse management, FBA, vendor management, cross channel analytics, real-time synchronization, and automation to help reduce costs and human error across all channels.
Interested? Book your free demo to see how it works.
Chad Rubin is the co-founder and chief executive officer of Skubana, a multichannel e-commerce software the enables brands to unlock growth by unifying their back-office operations.