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ERP Is Not The Answer
Don’t get us wrong: ERPs work well for accounting and finance, so by all means, consider using NetSuite or SAP or whichever company for your financial systems. But when it comes to managing your inventory, you need best-in-class software that has been specifically designed and maximized for DTC brands.
So you want an Enterprise Resource Planning (ERP) system. You’ve earned an ERP system. You’ve worked and grown and succeeded, and your inventory is growing beyond your current capabilities. Now it’s time for an ERP to manage your inventory management and fulfillment processes.
Don't do it.
ERPs were purpose-built for accounting and finance teams. As those teams took on more operations responsibilities, ERP manufacturers added features and modules to support them. Originally designed for enterprise-size organizations, they are now widely used by smaller companies. But at their heart, ERPs are enterprise solutions that move at enterprise speeds.
Does that sound like you? We didn’t think so. ERPs are the opposite of the direct-to-consumer (DTC) business model, where millions of customers place one or two orders for one or two items. What’s more, to use an ERP for inventory and fulfillment, you’d have to adapt your best practices to shoehorn your procedures into the confines of a rigid, old-fashioned, one-size-fits-all ERP.
It goes against everything that has made you a DTC success: Being agile, learning quickly, adapting on the fly.
A Solution for the DTC Era
ERPs are not meant to be the kind of inventory and order management solution that DTC brands need. The truth is this: Inventory management never ends and is always changing. Inventory will always be a headache. An archaic ERP inventory management system will only add to the pain.
Speaking of pain, Gartner estimates that 55% to 75% of all ERP projects fail to meet their objectives. Don’t get us wrong: ERPs work well for accounting and finance, so by all means, consider using NetSuite or SAP or whichever company for your financial systems. But when it comes to managing your inventory, you need best-in-class software that has been specifically designed and maximized for DTC brands.
“ChannelApe was built in the era of DTC,” says Mike Averto, ChannelApe’s founder and CEO. “We’re built to be really fast, really agile. We can handle flash sales, we can handle increased order volume as a result of promotions or celebrity endorsement, and we can handle everything within the working day to keep inventory—and orders—accurate. At the end of the day or month or quarter, we can even feed that information directly into an ERP to reconcile everything.”
If the Shoe Fits, Can They Buy It?
One of our phenomenal DTC footwear brand partners turned to us because, once upon a time, a princess wore their shoes. Tens of thousands of people descended on their website to buy those shoes. Customers placed what they thought were successful orders for these now highly coveted shoes. Boy, were they excited: Their princess shoes would be arriving any day.
Their ERP made a promise to these customers on the brand’s behalf. It turned out to be a promise on which the brand couldn’t deliver. Because of its inadequate, asynchronous inventory management component, the ERP had sold shoes that didn’t exist, and the brand had to go back, issue refunds, and tell more than 50% of their customers they couldn’t have their princess shoes after all. Because of their ERP, the brand overpromised, oversold and under-delivered. It was a customer service debacle.
If the brand had been using ChannelApe's real-time inventory visibility solution, as they do now, their inventory would have updated live. As soon as the last unit of a certain size shoe was purchased, the website would have shown it was out of stock, and customers would not have been able to add it to their cart. Maybe a bummer for princess wannabes, but not a broken promise or a terrible customer service experience.
According to a recent consumer survey conducted by ChannelApe, some 70% of consumers are reluctant to buy from a brand that has failed to deliver due to an inventory error. Successful brands need the right partner to make sure such mistakes don’t happen. Converting consumers into customers is hard enough—who wants to deal with decreased conversion rates for reluctant consumers?
It’s time to take ERP off its pedestal and leave it to the accountants. ERP wasn’t made for inventory management, and it certainly wasn’t made for your DTC company. The effects of good or bad inventory management ripple throughout your business. You need a solution that suits your business model, something flexible and agile and speedy and reliable. Just like you.
Learn more about the common pitfalls of ERP for a DTC brand.