eCommerce Considerations for Foodservice Distributors: ERP Add-On vs. White Label Platform

Dave Foreman

With technology permeating every aspect of our lives, the latest generation of foodservice operators are becoming increasingly comfortable placing orders and conducting business with their distributor partners through web-portals and apps. According to Gartner, 8 in 10 B2B sales interactions will be digital by 2025.

IFDA and Pepper recently published a paper on the perspectives on ecommerce prevalent in the foodservice distribution industry. IFDA found that executives at the largest national broadline distributors credit eCommerce initiatives with double-digit revenue growth and improved efficiency. 

With more mobile app-based eCommerce solutions available today, the ease of accessibility and positive business outcomes resulting from eCommerce investments make them impossible to ignore.

IFDA outlines the four avenues that foodservice distributors can take toward implementing an eCommerce strategy:

  • Invest in developing a homegrown eCommerce solution
  • Purchase an eCommerce add-on module from your ERP provider
  • Adopt a “white label” eCommerce platform
  • Enlist on an eCommerce marketplace

In their research, IFDA found that most foodservice distribution executives considered the investment required to develop, implement, and maintain a viable homegrown ecommerce solution to be cost prohibitive.

IFDA also found that executives are wary of food distribution marketplaces, which are fairly new and untested in the industry. Many food distribution executives expressed specific concerns around the risks associated with pushing their long-term customers to communicate via a marketplace which might enlist their direct competitors rather than maintaining that relationship directly.

That leaves foodservice companies with two primary options: add an eCommerce module onto the ERP solution OR adopt an eCommerce platform that works with their ERP solution.

eCommerce ERP Add-On Modules

Most Enterprise Resource Planning (ERP)s designed for the foodservice distribution industry offer a basic online ordering component that can be activated for an additional cost.

Benefits:

  • Cost-Effective – Not only are these add-on modules low cost, but implementing them is quick, requiring little additional project costs and no added integration costs.
  • Convenient – Having a single software solution provider can simplify communication and project coordination.
  • Saves Time – Your ERP system provider should already understand not only your requirements, but also the nuances of your business, which can help streamline implementation.

Considerations:

  • Basic Functionality – These solutions typically offer solid, basic functionality without advanced feature sets like marketing and growth tools.
  • Slow Development – Due to the variety of modules competing for development resources at ERP companies, support and development for eCommerce add-ons can be slower than those delivered by eCommerce specialized solutions. Additionally, the add-ons may lack a modern look and feel.
  • Difficulty Changing – Making a change to the ERP platform that your foodservice distribution organization is using can be daunting on its own. If your customers are currently using and comfortable with an eCommerce module that is part of your ERP system, it may make your organization less willing to adopt a new solution that could otherwise benefit the business.

According to IFDA, over half of the foodservice distribution executives that were using ERP add-on eCommerce modules have plans to upgrade to a more feature-rich eCommerce solution in the near future.

White Label eCommerce Platforms

White label eCommerce platforms that are integrated into and ERP system are rapidly gaining popularity with independent regional foodservice distributors. IFDA found that most companies choosing this option were doing so as a means of upgrading from their ERP add-on solutions or as a means of moving away from an in-house solution that was no longer meeting their needs.

Benefits:

  • Look and Feel – Foodservice distribution executives who see a highly intuitive experience for their users and customers as a competitive advantage value the premium look and feel that eCommerce platforms can offer.
  • Foodservice Distribution Expertise – eCommerce platforms that support multiple industries often struggle to dedicate as many development resources towards foodservice distribution specific requirements. Finding an eCommerce solution built for food distribution will help ensure the long-term viability of the system and improve the implementation experience.

Considerations:

  • Data Ownership – When working with an eCommerce provider, distributor executives should be aware of the policies surrounding their critical and valuable business data.
  • Integration Expertise – In order for an eCommerce solution to be effective, it needs to be seamlessly integrated with a distributor’s ERP platform, otherwise you risk customers placing orders based on incorrect or outdated pricing or inventory information. Finding an eCommerce provider with experience integrating systems for foodservice distributors, especially if they have worked with your ERP solution, can significantly reduce your risk of error and increase the speed of your implementation.
  • Proven Experience – A truly industry focused eCommerce provider will be able to provide relevant references from clients they have implemented solutions for in similar product categories and, ideally, using the same or similar ERP.

 

One such white label eCommerce provider is Pepper. Prime FoodService Software and Pepper recently held a joint webinar in which they discussed their integration experience and demonstrated how their solutions work together.

View the Webinar On-Demand