Why ERP Integration for Subscription Platforms

eCommerce Subscription Platform: Integrations Overview

Integrations for eCommerce subscription platforms are valuable for scaling businesses, as it often allows you to offer greater value at a lower cost.

This is an integral part of operating a business: figuring out what works and what delights your customers, and how to automate that process to deliver that at scale.

One of the best things about integrated eCommerce is that you can leverage these automations to allow your high-touch processes to bolster and reinforce some of these automations.

We’ll be looking at the features, definitions, and pros and cons for eCommerce ERP integration and how this can be powerful for a business.

Optimize Prices with ERP Data Integration

Discounts are one of the most important things to offer with eCommerce subscriptions.

Most companies that have B2B or B2C offerings with quantity-based discounts price those discounts based on some form of the costs of the goods and what profitability they’ll have available.

Usually, that’s going to come from an ERP system. An integration for this improves the accuracy of this pricing data and allows you to have a single source of truth.

Most ERP systems have pricing rules that may have quantity price breaks and specific customer types. Some membership models allow someone to get a discount by purchasing a recurring membership.

Bottom line, by integrating with your ERP, you’re improving the pricing options available. This is true at scale, for large quantities, and for specific customer types.

Figure 1. Alibaba number of items required to purchase.

To visualize this, let’s take a look at some different marketplace websites. On Alibaba (shown in Figure 1), you need to purchase a certain number of items to place an order.

Figure 2. Granger package sizes.

Figure 3. Amazon package sizes.

The examples above show Granger (Figure 2) and Amazon (Figure 3). Granger has a similar model where you must purchase package sizes. On Amazon’s business site, they show the number of units required for you to purchase before you get a discount.

For businesses who want to offer a subscription on their eCommerce platform, offering a discount is an effective incentive to get people to opt into it.

Figure 4. Example of upselling in consumer product from ScentAir.

If we look at the consumer example in Figure 4, you can offer these pricing options, and in the cart, there’s an opportunity to upsell.

Upselling is one of the highest payoff areas of subscription eCommerce. Plus, you can offer them a discount. This is advantageous for the end customer to see the value of the subscription.

With an ERP integration, you can pull this data directly from the ERP, and this matches what’s best for the business. These pricing options aren’t based on an arbitrary decision, but on hard data that’s in the ERP.

Include Pricing Margins

A common thing about ERP integrations that customers will ask is:

“If we have a subscription, and we’re showing a larger price from the ERP, do we need to pull the exact price?”

The answer is no—you can use percentages. You can include a buffer or margin. There are many opportunities to integrate business logic between the value that’s in the ERP and the value that’s presented to the customer. There’s always an opportunity to provide margin and markup within that set of pricing options.

Build Trust with ERP Subscription Integration

Deliver & Communicate Consistently

Consistent fulfillment is another powerful concept for ERP subscription integration. With eCommerce subscription integration, you can provide the replenishment, access, or custom subscription delivery on a set timeline.

If for whatever reason this doesn’t happen, then a lot of the trust that’s built into a subscription goes away. In fact, it can become a major frustration. Subscriptions can be a double-edged sword if you aren’t consistent with delivery.

Therefore, any delays need to be communicated as soon as possible if they can’t be prevented. This gets into the ability to auto-replenish when dealing with subscription-based models, and these are integrated to your warehouse management, inventory management, and overall ERP system.

Use Predictive Models within Your ERP

One of the best things about this is that you can use your predictive models within your ERP to have a solid overall planning of your inventory, purchases, and fulfillment, so you can adjust fulfillment on the fly.

You can look at incorporating AI and machine learning into seasonality if your business has seasonality impacts. You can look at impacts to the overall market for raw materials and factor that in as an input into the model to predict what you need to do.

We recommend this course of action especially if you’re at scale. If you’re not at scale, you want to be at least thinking about these things so you can integrate your ERP system and create predictability.

As you scale up, you’ll need to factor in more inputs, such as things outside of your control, so you can at least stockpile resources or items that are fulfilled a lot in certain seasons, for example.

Optimize Logistics with Subscription Integrations

Leverage Drop Shipping Capabilities

With subscription platform integration to ERP, you can also leverage drop shipping. Many of our clients use drop shipping to do fulfillment. Bringing in drop ship to your integrated fulfillment allows you to scale your business as much as these drop ship providers can deliver on, which in many cases can be quite a lot.

Your integration might be through the ERP system or a combination of your integration to your ERP and a drop ship provider or multiple providers.

The concept you want to look for is allowing your end customers to have a lot of self-service capability. When you have that product fit or value in the market, automating as many processes as possible is key.

Automating processes doesn’t just include having a subscription and the ability to sign up for something but also being able to fulfill and tie everything into your back-office systems so you can deliver on that promise of the subscription.

Warehouse Management Integration

Warehouse management is another key factor. Many businesses we work with have different ways of fulfilling the items, and this can logistically drive profitability.

For example, there may be a shortage of certain items in a region of the country. Because of this, the warehouse there will be low on inventory. However, there may be an abundance of these items in another area. In that case, you’d need to do warehouse transfers.

Ideally, this is something you can automate through machine learning or AI, and by looking at base warehouse and inventory management capabilities.

Tying this back into your eCommerce subscription model allows you to intelligently look at delivery locations and tie that to your warehouse management system, as well as see inventory data for subscriptions on your website.

Whether you have warehouse management and the extent of which depends on your business model. Are you looking at a replenishment model? Or perhaps a curation, where you make customized deliveries? For these types of subscription models, it makes sense to have warehouse management.

Even if it’s just a single warehouse, it can make a huge difference if your inventory management is solid, but it’s hard to do that if your subscription purchases are not integrated with your warehouse and inventory management software.

Therefore, if your team needs this support, we recommend working with a software vendor who has experience integrating subscription purchases and status updates to your back-office systems.

Without these crucial integrations, you may not be able to deliver as consistently on these subscriptions. This would make it hard to gain customers’ trust and scale your business.

Inventory Management for Replenishments and Curations

For replenishment and curation subscription models, inventory management is critical because subscribers will eventually run out of the item.

For example, hotels have toiletries they replenish, and pools have to upkeep the level of chlorine. These are both replenishment models, but there may be some adaptability that’s needed, especially in a B2B offering.

With curation subscription models, you might be delivering something custom for a franchise. That franchise needs to see exactly what inventory is available so they can open three new stores in a new region and have everything they need before opening.

So, they need to be able to rely on your business to fulfill those subscriptions and have up-to-date inventory data.

Another example is buying groups on a group buying platform. If a buying group is delivering something via drop ship and the inventory isn’t available, this will be a huge problem.

This is where integration is absolutely critical. You have to be able to get the inventory levels of your drop ship providers for your curated delivery for those franchises or buying groups. You’ll need to know about these subscriptions that you’re replenishing.

If the chlorine levels are low in the pool and it’s the middle of the summer, this could be a huge problem if you’re offering chlorine replenishment on a subscription.

Having a robust integration to your ERP system and related back-office systems is critical to deliver.

To add the self-service capability your customers need, work with a company that can integrate your ERP with other line of business applications and custom endpoints. This will allow your business to grow and dominate your niche.