Despite the challenges builders’ merchants faced in the first half of 2020, we’ve seen some impressive examples of diversification, with businesses adapting to meet a change in customer demand and maintain revenue streams. Chris Fisher, UK Operations Director at ECI Spruce, explores how ERP systems have been integral in helping many merchants get back on their feet.
Under normal circumstances, you would expect tradespeople to drop by their local merchant on a fairly regular basis. Whether they’re ordering supplies for the next big job or picking up last minute items part way through a project, all merchants rely on these customers to generate a substantial level of revenue month-on-month.
Unfortunately, lockdown forced the closure of building sites up and down the country, meaning these loyal customers disappeared almost overnight as their projects were put on hold.
During the same period, thousands of UK homeowners looked to smarten up their homes and gardens, with reports suggesting a cumulative spend of a staggering £50 billion on renovation during lockdown. While this wasn’t a substitute for lost income for all merchants, this surge in consumer demand created a real opportunity for those who were able to quickly alter product lines and move their operation online.
Of course, for merchants considering the implementation of a cloud-based ERP solution or the introduction of an ecommerce system, there are a number of factors to be considered before investing.
Despite merchants being allowed to re-open several months ago, many are now faced with tighter profit margins and are being forced to cut back wherever possible. To ensure their operation remains profitable and they can continue serving their local tradespeople, some have looked to deploy ERP solutions, designed to automate many of the day-to-day functions that were previously draining time and increase overall productivity across the business.
Prior to Covid-19, it was common for merchants to send out invoices in the post, keep paper records of customer details, receipts, invoices, collection or proof of delivery notes, and then inevitably lose time searching for this information at a later date. Not only is this inefficient, it can also lead to poor customer service — a customer would not be impressed if their order was processed incorrectly, went missing or arrived later than anticipated.
An ERP system can solve many of these problems, allowing you to store and send out records, receipts and proof of delivery notes electronically — avoiding costly oversights or administration errors. Sending an invoice online takes seconds, with customer details and order history automatically saved in your system, ensuring all invoices can be processed and paid in a timely manner.
The BMF Key Performance Indicators Report 2020, highlighted how in the past year merchants have actually witnessed debts being paid in a shorter time frame and are able to identify bad debts earlier, allowing for a more proactive approach to help reduce the level of bad debts impacting profit — a trend attributed mainly to the introduction of ERP systems.
Via ERP systems, all transactions are automatically linked, giving your team instant access to everything they might need on one single database. This means staff working on the shop floor can quickly pull up information while chatting to a customer, helping to secure a sale or increase order size.
Once you have an ERP system up and running, you’ll be in a strong position to consider integrating ecommerce into your operation. It’s important to ensure the right systems are in place to avoid ecommerce feeling like an add-on creating extra work for your team, who have to juggle orders, track deliveries and manage the restocking process. You’re unlikely to retain customers if they turn up looking for a product listed online, only to find it’s already been sold.
Products like ECI Spruce are designed to eliminate the admin headache that can come with a poorly managed e-commerce platform. Operating on one single system, you and your team have full visibility of real-time stock levels, ensuring you order materials in line with demand and also, allowing you to make the most of any bulk buying discounts.
With one of the deepest recessions on record looming over us, timber and builders’ merchants need to work hard to set themselves apart from local competitors, attract new customers and retain existing ones. The implementation of a specialist ERP system can help your business evolve and adapt in line with buying trends, streamlining your day-to-day working and opening up new revenue streams through the implementation of ecommerce.
For more information on ECI’s Spruce business management software for builders’ merchants, go to www.ecisolutions.com/en-gb/builders-merchants-software/spruce