Building a distributed technology stack for your ecommerce operations.
With Jonathan Bellwood & Oliver Rhodes (Descartes Peoplevox), Jason Greenwood (Moustache Republic, HealthPost), Nathan Bawden (Flatspot, Always in Colour)
Coming into the role of Ecommerce Manager at Healthpost, New Zealand’s most successful health and wellness company, Jason Greenwood was asked immediately to provide a ‘State of Digital’ report to his CEO, with a focus on their sales channel mix and their existing technology stack. The conclusion of this 80 page report? Carrying on at the same rate of growth was going to kill the business. With the way they were operating at the time, things were simply not going to handle the volumes and pressures of their ever increasing demand.
This is a familiar scenario for fast moving businesses who sell online: the systems and platforms they get started with top-out at a certain level of scale, as order volumes increase, the finances become more complex, more staff to onboard, train and manage. Recognising the issue is a good start, but immediately the conundrum follows: what next? A primary thought might well be, ‘it’s time for an ERP (enterprise resource planning system)’. A one stop shop to automate the entire back-end process of any business, all in one place, unflappable, unlimited and secure.
But, alongside these benefits, you get some downsides. Expense, complexity, lengthy projects, never-ending tweaks and customization to get it right for you, and then once it’s in, ripping it out or changing one part of the system becomes pretty much impossible. And moreover, ERPs are, at their core, financial and ‘business’ operational systems designed for all manner of businesses: from law firms to accountants, software companies to retailers, wholesalers and pretty much anything else. So as a specialty direct to consumer, online business, your specific requirements and needs might be feeling a little underserved by such a large, generic set up.
Enter the modular approach. Simply put, work out the actual things you need to accomplish, and find the best piece of kit for that task. Then work out how to plug them all together to make sure the information flows. For ecommerce, this means everything from finding and attracting customers, converting them into sales, receiving the sales order information, getting that into the order fulfilllment process, through a warehouse and out through the shipping stage to the doorstep.
Our Hall of Famers and legends have had their say on this topic so I’ll let them take over. We will also get a run down from Peoplevox’s own Oliver and JB.
Nathan Bawden – Head Data Coordinator at Street/Skatewear retailers Flatspot and Always in Colour
Charged with pulling insights and converting them into strategies from the businesses’ various data sources, Nathan found joy in a distributed system and an ecommerce specific BI tool, rather than wrestling with an ERP.
‘The various stakeholders in my business want answers, and they want them quickly, so we have to be fairly nimble. The way we do that: we don’t use an ERP. We funnel all our data into what is essentially a data warehouse, where it gets flattened and transformed so that you can write reports that use disparate data sources, sources that would otherwise take ages to export from the various platforms manually. We use data visualisation tools to create the dashboards and reports so it looks pretty.
Having seen a variety of ways of doing it, we actually came very close to going down the ERP route. What became clear was that ERPs do a bit of everything, but not anything really well. In most cases, you had to plug in another module anyway to make it do what you wanted it to do. They don’t offer a very good cost benefit. Moreover, you may want to change one module of what you’re doing, like moving the reporting module over to a new system, or we might want to do drag and drop queries instead of pure SQL or Python. When you’re tied into an ERP, that becomes extremely difficult. You can go for a set-up using the data out of the ERP with additional services, but then you are paying extra to move the data across, which becomes clunky.
We couldn’t make an ERP work from a cost front, and our biggest pain point was our warehouse systems. That became especially clear when talking to the ERP guys. The main issue was that we were handling so much of the process outside the ‘integrated system’. We want a modular system, and we want to work with the best companies within their sector. We want the best WMS, the best CRM, and the best ecommerce. We also want very good reporting from Glew Analytics, whose SaaS platform and custom reporting we use heavily, that integrates with all the things we need it to. When you go the ERP route, you lose the opportunity to hand-pick who you’re working with and the systems you actually want to use. In the end, it was a no-brainer…’
Jason Greenwood – Founder of flashcards.co.nz, Ecommerce Director for Healthpost and Director of Solutions at Moustache Republic
Jason needed to convince his management team that their back-end systems, at their rate of growth, would break down, be inflexible and unsustainable. Along with this, he needed to unravel a complex technology partnership.
‘When we started looking at back office systems (for Healthpost), an ERP was something we understood and already had as a business, even though it may have been substandard. It was also on-premise, not internationalised, and plugged into our Order Management Platform, built by the agency that built our ecommerce site. We were joined at the hip! They had built Magento, the OMS, and all the custom integrations and owned all of it, including the connection to the ERP. My #1 priority was to derisk that situation, find a way of decoupling the stack, and get to a place where we adopted SaaS solutions for every possible function in the stack. We wanted to be a SaaS first business.
It took some evangelising and explaining to the rest of the company: we’d get API connectivity, no more worries about infrastructure… all those issues we had been dealing with. I asked, do you want that to go away?! Eventually, we came to the point of looking at what systems to replace or add to. We knew we needed to eliminate the ERP and bring in a CRM, and we wanted to build an unlimited-scale system. Cost is always a consideration for these major pieces of work, but moreover, for us, it was less about cost and more about getting total scalability AND flexibility.’
Jonathan Bellwood – Founder of Peoplevox and VP Industry Solutions, Descartes
‘Here’s an analogy for you. Consider the human body. We have a heart, a brain, and multiple organs that are all separated. We do not have one core component that serves everything. We can switch things out and focus on one thing at a time, to repair! A D2C business should be very similar to their systems. Don’t have one thing that serves everything, it won’t do it very well, and it’s a single point of failure. A hip replacement is somewhat less painful than a whole core system replacement because otherwise, well… you would die.
So, I’d encourage you to look for the best-in-class, for the stage you are at, with a good amount of foresight for what’s around the corner for your business and your growth. It may be that you have a ChannelAdvisor for the marketplaces, a great ecommerce web platform from one of the well-known brands, a dedicated warehouse system, and a dedicated carrier management platform. And all of these can tie together nicely now. Not long ago, they didn’t!
The argument used to be, at least from the ERP companies, that you should go for an all-in-one as you wouldn’t be able to combine a variety of different platforms. I’d argue that these ERP platforms are now totally irrelevant for D2C businesses, as they do so many things that aren’t needed, creating excessive overhead. With a best-in-class approach, you can focus on the different things you need at the different phases of growth and switch things out when necessary, based on how your business is progressing.’
Oliver Rhodes & Lindsay Brush, from our Glew Peoplevox Webinar
‘What we are finding, and is being proven more over the last two or three years, is that the distributed technology stack is ‘coming of age’. The key component is something like a Glew Analytics to layer on top of it all, to drive your most important metrics. It really is ok to do various tasks, like raising purchase orders, in different systems, rather than trying to shoehorn it all in one place, so long as you have the data easily accessible.
For example, we know that Netsuite, for ecommerce companies, only tells part of the story as it’s a platform very much driven by financials. If you want your ‘data conversation’ to be driven by the finance teams, then, fair enough, Netsuite can be the answer. However, we know the best brands have data conversations driven by merchandising teams or holistic ‘business analysts’, and they look far beyond the finances. They want to know what’s in the warehouse, how the marketing platforms perform, etc.
It’s the modern, direct-to-consumer brands who have really simplified their offering and, in turn, simplified their lives and their tech requirements by deciding on a strategy of selling their products on their own websites and fulfillling the orders themselves. They are the envy of wholesalers and more traditional retailers, who, through the added requirements of bulk shipments, store replenishment, and B2B fulfilllment, alongside retail stores, have created a complexity of set-up and are more often than not stuck into a rigid technology relationship.
The other question that comes up a lot is ‘at what point do I need an ERP?’. Well, Gymshark scaled to £100mn without one! The ERP itself is not the prerequisite for this ‘scale’; it’s the access to the data. And the two are separable with a modular, distributed set of systems. Then immediately, the comeback to this is, ‘well, I don’t need any more apps; I’ve got too many already’. I call this app fatigue… It is brought about by the apps that sit around the Shopify front end, where you can sign up online for less than 100 bucks a month and are often interchangeable.
On the other hand, systems like Peoplevox or Glew transform a business’ operation. They are solutions rather than tools. The core functionality is done well, rather than nice-to-haves that might work. And at that $5-10mn, not only do you need to be thinking about putting solutions in place, rather than plug-and-play tools, for the functionality, but moreover, for the next phase of potential growth, you want to be working with suppliers who are specialists in their field, be that analytics, shipping or packing workflows, who will work with you to get you to that $50mn mark, rather than working with a set of apps and never speaking to anybody.’