The global supply chain is at a crossroads, and many smaller distributors are walking a tightrope. They are tasked with managing and fulfilling large orders for their traditional business-to-consumer (B2C) customers while also dealing with a volume of smaller, more complex direct-to-consumer (DTC) transactions from digital marketplaces such as Amazon.
Modern distributors of all sizes are under increased pressure to digitize and automate their operations to remain competitive. In doing so, they also can automate their digital marketplace relationships to gain greater efficiencies and more granular management of each transaction.
Automating multiple online marketplace relationships can present challenges, however, particularly for smaller distributors. Deploying an intelligent digital solution at the core of operations can manage the technical nuances that come with integrating with numerous, disparate online marketplaces.
Ralph Hess, vice president of sales for Navigator Business Solutions, talks with many distribution companies, and he says one of the main challenges that distributors face is automating and streamlining their DTC relationships within online marketplaces. These online marketplaces “all have different commission and business relationship structures from a compensation and pricing perspective,” he notes.
The Technical Nuances of Online Marketplace Automation
Many traditional retailers use electronic data interchange (EDI) connections to exchange data. EDI has been the de facto standard for businesses for decades, governing the way invoices, purchase orders and other back-office documents are transmitted. It comes with its own set of standards that must be adhered to if a distributor wants to get paid or receive a commission, for instance.
Companies such as Amazon and eBay, on the other hand, have their own sets of web services and APIs. In addition, they have their own, often proprietary ways of updating their websites to show product availability.
To fully integrate with a spectrum of retailers and marketplaces, distributors must maintain an intelligent digital core that can seamlessly handle EDI and other types of integrations at the same time. An enterprise resource planning (ERP) solution that can easily interoperate with software capable of handling omnichannel marketplace demands is critical to automating relationships and transactions.
Hess offers the example of how a digital core can help with multiple online marketplaces. In the case of an order placed through a business running on the Shopify eCommerce platform, a distributor using SAP’s Business One ERP solution would immediately see the order and fulfill it through the pre-integrated warehouse management system (WMS). The order would show up as shipped on the Shopify platform, and all subsequent inquiries and tracking would flow seamlessly between the distributor’s system and Shopify. Integrations for credit card processing, shipping automation, warehouse management and eCommerce platform integration would all be handled through the ERP solution at the intelligent digital core.
“Everybody needs to be everywhere,” says Hess, and that is especially true of distributors trying to stay afloat in an exceedingly competitive marketplace. “You need to be everywhere in this digital age to be able to be successful, and that again puts the pressure on the back-office system.”
An additional complication is the sheer volume of transactions distributors must handle within the digital marketplace. Many smaller distributors use QuickBooks for their accounting, but the software can’t keep up with the massive number of transactions and details required for online marketplace transactions. The use of spreadsheets for forecasting and ordering from suppliers is still commonplace as well, according to Hess, and is just not practical for efficiently managing inventory for digital marketplace transactions.
ERP Bridges Back-End Systems and the Digital Marketplace
A mature, robust ERP solution that offers seamless, automated integrations with multiple digital marketplaces is an appealing option for smaller distributors trying to manage a growing volume of complex transactions. The marriage of eCommerce and ERP enables distributors to integrate, manage and optimize their sales while automating and analyzing the flow of data among all channels. Data can then be analyzed and mined for intelligent insights in real-time to pinpoint sales trends and guide overall business strategy and objectives.
Deploying an ERP solution with a full suite of integrations in place also offers a simple path toward growth and expansion as distributors move into new digital marketplaces and pursue new paths to revenue. Since functionality is automated, distributors will benefit from improved speed, greater efficiencies and a decrease in errors. Back-office workers also will benefit from having to do less manual entry and routine tasks, freeing them up to focus on higher-level business objectives.
Maintaining an automated digital core that offers seamless integration with a variety of digital marketplaces also is a massive competitive differentiator for distributors. Thus, ERP is quickly becoming essential for any distributor that hopes to remain afloat in the ruthlessly competitive world of online marketplaces.
“It’s automation in terms of being able to sell electronically, meaning that you’re automating the transaction process for EDI, and that’s a biggie,” says Hess. “Distributors buy stuff and sell stuff. It’s not a complex business, but doing that efficiently is what makes or breaks the business.”
For more on how ERP can help distributors make the transition, download our free ebook, Modernization Guide for Wholesale Distributors.