digital infrastructure map 2020

E-Commerce Infrastructure Explained

Welcome to the BlackBook Consulting guide to E-Commerce Infrastructure for 2021. This guide will spell out in (relatively) simple language and concepts how you can build a fully-fledged e-commerce infrastructure for the online side of your business. It will help you avoid expensive, time consuming mistakes. Knowing your CRM’s from your ERP’s is valuable knowledge in the 21st century.

Why is this important?

Your e-commerce infrastructure is one of the biggest ‘must have’ investments you can make in any size of business or organisation looking to move product over the internet. The cumulative cost in time, manpower and money of implementing an integrated commerce infrastructure across the web can be huge.

Aside from the cost of actually building your e-commerce infrastructure, there are the implications for the costs of running your business. Your e-commerce function wont run itself, and the marketing and merchandising alone takes a lot of time and effort to get right.

You’ll also have the increased costs of picking & packing, shipping / freight costs, and most of all, *stock control*. Aside from the transactional side of e-commerce, it is the stock control function that is most overlooked, and can often provide the most return on investment if a solution is implemented correctly.

Lots of ‘experts’ will say you can do e-commerce on the cheap. Of course you can. If your business is small and nimble enough for you to manually do most things, no problem. But if you’re growing – you MUST automate as much of this as you can to stay profitable and retain some sanity.

I’ll be clear on this – if you get these systems wrong, it can cripple your organisation, cost you tens or hundreds of thousands in wasted investment, and delay the progress of your efforts by years.

Terminology

To help you understand what we are talking about, and to give you a crash course in e-commerce digital infrastructure, you need to know the basics. Here are all of the key terms and descriptions of the systems you need to know about to get e-commerce right in 2021. (How they fit together in a typical situation, is shown above in our handy map.)

This is the bit of a website that you can SEE and USE as a visitor. Whether it is used for sales, information delivery, or engagement, it is referred to as the ‘front-end’. The phrase ‘wireframe’ is used to describe the layout and design of the front-end and the various pages that it includes.

The ‘back-end’ is the phrase used to describe the control functions inside your website, that dictate how it works, and what it looks like. These control functions are either controlled directly by code (bad move) or via what is known as a ‘Content Management System’, or CMS. This is literally a desktop publishing system that allows you to control your website.

An e-commerce system is the part of a website, that acts as your ‘shop’. It controls transactions, product merchandising, sales promotions and other transactional elements. E-commerce as a topic is huge, but in any digital system, when referring to e-commerce software, it discusses the ‘shop’ bit.

A CRM system or Customer Relationship Management System is software that allows you to manage and control customer-specific records of most interactions you have with those customers. Set up properly, they can revolutionise how customer service and sales activity is delivered. Set up wrongly, they can be an expensive millstone around the neck of your business.

Marketing Automation systems are just that. They send the emails, sort out the social media posts, and monitor the lifecycle status of your customers, as a general rule. Not all of these systems do the same things, or in the same way. If your organisation is customer-centric and heavy on marketing follow-through, they’re a must. They’re one of the best sources of customer data analysis you can get.

Email Marketing systems control how you engage with customers or other stakeholders through email. Simple enough right? Think again. Email marketing is fraught with dangers, complications and common misconceptions.

From server blacklisting to deliverability failures, it’s very easy to get it wrong. Standalone emailer platforms are very useful, but it’s increasingly common for this function to be handled by CRM’s, E-Commerce systems, or more usually Marketing Automation systems. Do this right, or dont do it at all.

Enterprise Resource Planning software is the BIG ONE. This is the software that oftens runs entire corporations. Ranging in size and complexity from low level small business capability to globe-spanning reach, they’re typically very expensive.

But that expense means that these systems can cover ALL other functions mentioned here, or only some if you wish. Big names like SAGE, Netsuite, SAP, Microsoft and others offer these systems.

Of all e-commerce infrastructure investments, these are the ones that require the most consideration, investment and time.

Without an accounts-ready ERP system, it is crucial that a semi-automated Accounting system is in place to handle the accounting of all transactions and taxable processes in your organisation. Doing this manually introduces huge margin for error, and requires a lot of manual entry and data replication for your accounts team.

Thankfully, most software available now makes this function MUCH easier.

For your customers, a stress-free, convenient and transparent shipping process is crucial to repeat purchase and satisfaction.

Which is why a well-thought through shipping control system is required. They can often be a bolt-on or addition to other systems like your ERP, E-Commerce system, or WMS. But there can be occaisions where an integrated separate system is better. 3PL companies often now provide their own tailored and effective solutions for this.

If you’re manufacturing anything in volume, it can pay huge dividends to control the process in detail with a Material Requirements Planning system. Allowing unprecedented manufacturing SKU stock control, and often providing buying integrations and WMS functionality, they’re very useful.

But they’re also too often very difficult to integrate into other systems, and require strict, clear manufacturing and stock control processes to be observed. Implement with care!

The ultimate in stock control, Warehouse Management Systems are fast becoming obsolete because of ERP’s and MRP’s. That being said, if you’re not manufacturing, and you dont have the requirement for a full ERP, then a WMS is a rational choice.

WMS’s make sure that you know how much of your stock is where, when, and in what capacity. They’re especially useful when shelf life, batch control and obsolescence are critical to your operation. Like an MRP, a WMS requires clear and strict adherence to stock control practices in the real world.

Usually only needed by HUGE organisations, a data warehouse can revolutionise how you leverage the digital gold that is data. If they’re implemented correctly, they can provide huge competitive advantage by providing leads, innovation and insights that nobody else has – because it’s YOUR data.

Like an ERP, this is massive-scale digital infrastructure, and not be to implemented lightly, as they usually have to be plugged in to ALL areas of an organisation to have the desired effect.

Integration Types

For software to be able to work together and talk to each other successfully, you need what is known as an ‘integration’. I have classified these under three different categories, neatly explained for you here. When specifying integrations, the three key considerations are:

  1. How effective is the integration? Does it cover all of the data fields I want it to transfer?
  2. Am I able to control its settings without resorting to coding? Can I control the data flow direction myself?
  3. Who is going to maintain it? The vendor of the software being integrated? A third party integration developer? Do we have to ourselves?

The options shown below are not always available for integrations, and sometimes you are limited to only one option. It is this issue that causes the single biggest hurdle to implementing an integrated digital e-commerce infrastructure. It is so serious, that it can often dictate which software you choose to do a job in the first place. This is why using a planning map to plan everything out before making a single purchase (similar to that shown at the top of this article) is absolutely necessary.

Native Connection

A ‘native API connection’ is a built-in connector between one piece of software, and another. It literally means the software is designed to plug’n’play with another program. Updates for native connections are handled by the software provider.

Plug-In Connection

A plug-in integration is enabled by the presence of a bolt-on piece of software that expands the existing functionality, but isn’t present normally. This is important, because required updates for this software are not handled by the native software provider.

Custom Code Bridge

The most complex, and typically difficult to maintain integration, a custom code bridge is literally a special piece of software created to integrate two or more pieces of software via a ‘bridge’. You or your developer is responsible for updating this and ensuring it works.

Start with WHY?

There are three types of focus around E-Commerce that you should consider, when specifying an integrated e-commerce infrastructure:

Organisational Efficiency Focus

If your organisation is facing high costs from e-commerce activity because of the volume you’re receiving, this is your focus. You’ll want a streamlined, automated, robust system that reduces pick & pack times, minimises shipping problems, and takes out manual data entry & duplication.

Customer Experience Focus

If you’re in a sector that is highly congested, and you require customer loyalty to survive, then the customer experience focus is for you. Ensuring customers get everything they want, by actually knowing what they want through data collection and analysis is key here.

Marketing Effectiveness Focus

If your focus is to achieve a ‘broad’ sales footprint online, by selling through marketplaces and affiliate channels, you’ll need an unusual system which can cope. This means a focus on integration and fulfillment is key, but with a strong CRM / Marketing Automation element.

It’s important to note that all three areas should really be a focus for you – but you can only achieve that if you have the budget, the expertise and the manpower. So unless you do, pick the focus that is most relevant to your organisation. Having the courage to admit that your organisation cannot be all things to all people is an important step in growing it successfully.

The Fundamentals

Unsurprisingly, any e-commerce infrastructure relies heavily on the fundamental parts of the operation. I’m going to get controversial here. It is my view that the fundamentals are:

  1. The Front-End – You’re going to need a shop window / website that is well built, user-friendly, and highly optimised for search engines.
  2. The Back-End – The control panel for your website needs to be easy to use, and contain all of the programmable functions you need.
  3. The E-Commerce System – This needs to be simple to use, well-tested and secure, and provide solid reporting functionality for your shop.
  4. The WMS – You need a system that records your stock levels, your stock condition, and that controls your stock-out criteria for reordering. (If your products are downloadable, it’s a different story.)

Including the WMS here is controversial because it branches out of the standard coverage of most e-commerce system specifiers. Many companies that provide e-commerce systems purposefully often try to exclude WMS from their specification, because it complicates the project, and can seriously erode their margins if they’re not sure how to price it. The idea of integrating an e-commerce system into other systems is absolutely terrifying to many agencies – this is the e-commerce development criteria that separates the basic from the brilliant partners.

Every single e-commerce function built in 2021 needs to have these fundamental components. Your whole system will rely on them early on – so get them absolutely right.

*It is possible to build a very basic WMS function into your e-commerce system, which is something I’ll explain elsewhere.*

Section Guides

Here, we have listed a set of guides for you to compare and contrast the leading platforms that cover each of the technology headings above. It’s not exhaustive, and certainly things will change as the software is upgraded and developed.

These articles are a work in progress (it’s a huge amount of work) so please be patient for me to create and publish them.

Need help with your eCommerce Digital Infrastructure?

Get in touch via the form below, with Ben at BlackBook Consulting to have an initial consultation to build or improve your eCommerce operation from the ground up.