My Process For Selecting E-Commerce Software
An efficient e-commerce business has a surprising number of moving parts. All of them need to work together for the business to function.
Marketing, order-taking, packing, shipping labels, inventory management, reports and accounting processes all have to just work. Not only that, but because e-commerce is a hugely competitive sector, everything has to be done to manage costs and maintain margins. That means a high degree of automation is required. In turn, that means the business is very dependent on the software used.
I am currently going through a process of looking to replace or upgrade a few key software packages in my e-commerce business, so thought it might be interesting to outline the process - if the post proves interesting to all of you out in Hive-land, I might do some follow-ups covering specific pieces of software. But for now, it's just a quick outline.
When I go through the process, I ask myself a number of key questions, and try to get an idea of what the answers look like;
What is the software for ?
This is the initial question. If I am looking at a new piece of software, it is either because I have identified a problem that needs to be solved, or an existing piece of software needs to be replaced for some reason.
For example an existing package might have increased in cost to the point where there's no return on the investment, or it might have been "updated" in ways that just don't work with the way we work.
The real question here is "how does this improve the business and make our lives easier ?"
What functionality does it need ?
Here, I'll sit down and write a "wish list" of all the functionality the new piece of software could have. Then I will ruthlessly identify what is a "must-have" and what is only a "nice to have". It is very easy to be seduced by shiny new things, but if a package can't do the basics, it's not just a waste of money it could actually harm the business.
What else does it need to connect with ?
This is important ! Every part of an e-commerce business needs to work together. Sometimes it's enough that a csv can be exported from one package, manually edited and then re-imported into another.
But other times, the process just has to be automated. For example, our back-end inventory and order management software must be able to automatically pull orders in from the various sales channels and update the inventory levels across all of them as close to real-time as possible.
What does the ROI look like ?
At the most fundamental level, the return on investment boils down to a cash value. Admittedly at this stage, it's often a "finger in the air" kind of exercise !
While in some cases it's a simple calculation ("new marketing software should generate £x additional sales per month at a cost of £y"), in most cases the ROI will be more indirect.
An example might be that it speeds the order picking process up by 10%, in which case the ROI won't just be a reduced wages cost per order, it is likely to also be an increase in capacity because we can process more orders in the same time without having to employ additional staff.
Other times, the benefit may be virtually intangible. If a new software package changes a process to reduce my stress levels, I still count that as a worthwhile return on investment !
What does the integration process look like ?
There is no point in buying new software if it isn't going to be used properly.
When I am looking to bring in a software package, I'll usually end up short-listing two or three of the most likely candidates. A key factor on which one is likely to work best for us is to look at the configuration requirements, and the training documentation.
If initial configuration looks more complex than it ought to be, it suggests that ongoing maintenance and updates are likely to be painful. If the documentation is poor, it suggests that it will be hard to train staff and easy for them to make errors using the software.
What are the risks ?
The final thing I look at is are the risks.
- Is bringing in a new software package going to be a distraction from day-to-day operations, or have a significant opportunity cost ?
- What happens if there are configuration errors ?
- Is there a risk of it failing to integrate with other systems and processes ?
- Is there a chance that staff won't understand it or find it too complex to learn ?
- What happens if the package stops working at some point, or the company that makes it goes out of business ?
- Are there any regulatory or compliance issues I need to be aware of ?
While there are a huge number of possible risks, and as many of them as possible need to be considered, I approach this question from a perspective of identifying the risks without getting hung up on them, and then seeing what mitigation can be put in place to solve them. I'm actually more interested in longer-term issues than the inevitable short term pain that goes with trying to set up any new process or software package !
So what do you think - is there anything I've missed ? If you are in business, what key factors do you look at when selecting software ?
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