10 signs you need a retail ERP

Unlike generic ERP systems, a retail ERP is designed for retailers, which means it can easily support the essential features specific to the industry.

At its most basic level, a retail ERP connects the processes that make up your back-office operation, including:

• Omnichannel sales
• Inventory management
• Inventory forecasting
• Fulfillment and shipping
• Customer management
• Accounting
• Returns

By consolidating data in this way, you create a shared database or hub to support all the departments within your business. You’ll reduce human error and save precious time, which can be reinvested in better merchandising, branding, and customer experience to drive conversion rates, and ultimately grow your retail business.

But how do you know when your business needs — and is ready for — a retail ERP? Here are 10 signs that indicate your business needs one right now.

Managing a retail business is tough enough in today’s competitive climate. Throw multiple sales channels into the mix and everything becomes that much more complex.

Managing channels separately creates a perfect environment for inventory misalignment, inaccessible customer information, returns nightmares, and accounting headaches.

Without a retail ERP in place to consolidate all orders and inventory, as well as customer and financial data, that could be your future.

Even if you only sell through one channel, you may find you’re still logging in to multiple systems. For instance, you may handle:

• Order fulfillment and shipping in your ecommerce admin panel or point-of-sale (POS) system
• Accounts, journals, and financial reports in a separate accounts package
• Customer details via a third-party CRM system or even manual spreadsheet
• Marketing from a specialist email marketing platform

These are just a few examples but you get the picture; it’s a lot of clicks (and time wasted) for you and your team.

A retail ERP consolidates all of this within one system that sits at the heart of your retail business

Customer satisfaction is a key component to retail success. But order fulfillment issues can create negative buzz. And according to ReviewTrackers, customer reviews are having a bigger impact than ever.

Compared to before the pandemic, people are leaving more reviews and expecting companies to respond faster. Moreover, customers are less likely to do business with companies that have less than a 4-star rating.

So if your customers are seeing inventory errors, you need to get it sorted. Implementing a retail ERP improves inventory management and customer experience by helping you:

• Track inventory across different locations
• Quickly scan barcodes during the pick, pack, and ship process
• Automate the flow of orders from customer to warehouse
  

If you don’t update your customers in a timely manner, they’ll chase you.

Although your ecommerce website can handle routine communications like order confirmations and dispatch notes, the true value of a retail ERP lies in its ability to help you keep track of orders that fall out of the normal routine, such as:

• Orders flagged as fraudulent
• Oversold inventory you don’t actually have in stock
• Shipping delays when package cutoff times haven’t been met

Whatever the issue (or root cause), your customers need to know about it before their package is late and they’re calling you.

A retail ERP helps you track these kinds of situations and provides you with the functionality you need to quickly send order status updates to customers — in bulk if you need to.

What’s worse than customers chasing their order? Not being able to find their order or customer details when they do.

This is a real issue, especially for multichannel merchants. Whether customers purchase online, in-store, through social media, or at a pop-up or event, they should be able to contact a single customer support center. And they shouldn’t have to play 20 Questions before you can find their order and they shouldn’t be turned away altogether if they don’t have an order number.

You need robust, centralized systems in place to be able to find purchase history information quickly using a variety of search terms like customer name, order number, and delivery address.

A core retail KPI you should be tracking is your processing cost per order, which determines how much you’re paying to get each order out the door.

If it’s costing you more to ship an order than the revenue it’s generating, that’s a surefire way to go out of business.

An efficient fulfillment process and smart warehouse setup will help bring your processing costs down. But you need the right systems in place to be able to facilitate both of those things; a system like a retail ERP.

Alongside your processing costs, another core retail KPI is your perfect order rate, which can track things like:

• If customers receive the right items
• Whether orders are shipped on time
• Product return rates

Without the right systems in place to easily keep track of sales and inventory, you’ll likely see your perfect order rate drop further and further below your targets. 

It’s one thing to have a whole team of people picking, packing, and shipping orders within your warehouse; you shouldn’t have to hire another team to update inventory, order statuses, and accounts journals.

With a retail ERP, you can automate many of your sales processes, freeing up your staff to focus on actually growing and marketing the business.

If you don’t have adequate processes or systems in place to handle a large surge of orders during the holiday season, you could be facing a hoard of overselling issues, stressed-out staff, and unhappy customers.

With a retail ERP solution, you’ll be able to update inventory and accounting in real time across tens of thousands of orders per hour, so you and your team can work on physically getting orders out the door in time for the holidays.

Just like ecommerce, sales tax is a complex beast to tame. Tax rates vary across jurisdictions based on:

• Product taxability
• State regulations
• City and local ordinances
• Customer exemption status
• Sales tax holidays

If you’re manually calculating your sales tax, you’re probably tearing your hair out, or worse, you could face fines for incorrect documentation or underpaid taxes.

A retail ERP that supports automated sales tax integration like Avalara, can help you:

• Reduce calculation errors
• Speed up processes
• Keep your business tax compliant

Tax automation can also help you track where you're selling, where you’re nearing or have met tax obligations, and where you have physical presence or economic nexus. If you’re selling on a marketplace platform, each state has its own rules for when you’re required to manage sales tax and when it’s the responsibility of the marketplace.

A retail ERP and tax compliance program can help you keep all that sorted, so you know where and when you need to file.

If any of the above situations resonate with you, it may be time to implement a retail ERP. Here’s how to get started.

Different businesses require different things. You’ll need a solution with special features if you:

• Sell across multiple channels
• Make both online and offline sales
• Operate out of multiple warehouses or warehouse locations
• Work with large suppliers and wholesalers
• Offer buy online, pickup in store options

These are just a few examples, but you need to capture all of this and more to check whether your chosen retail ERP solution can successfully support you and your unique business.

Alongside your must-have product features, you’ll also need to consider important nonfunctional requirements. These include things like:

• Contractual terms and conditions
• Pricing structures
• Software performance and uptime
• Software implementation
• Support services

It’s important to understand and capture all of these accurately. If a retail ERP project fails, it’s less often because of a lack of features, but more due to poor migration, poor adoption, poor change management, and a lack of ongoing high-quality support when you need it most.

For most retailers, evaluating ERPs is not a common task, so you may be unfamiliar with how to go about it. Brightpearl, a leading ERP, offers a buying guide with a lot of information you can use as you evaluate your options.

The first important thing to remember is that you need to ask the right questions to ensure your chosen vendor is a risk-free, future-proof, and scalable solution.