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Competitive vs Profitable: how merchants can use ERP software for a competitive advantage

Updated: Sep 7, 2023

Following months, if not years, of market instability and volatile pricing, merchants are under pressure to optimise their pricing and margin management to remain profitable despite needing to remain competitive.

It’s a delicate balance, but there are a number of tools at your disposal designed to help with achieving it.

Merchant margins are often very slim, and when supplier pricing changes rapidly, it easily become non-existent.

As a one-off or conscious choice, that might be OK, but if it’s longer term or across multiple product lines, it’s going to start to eat away at your overall profitability.

"The flexibility and control in terms of pricing; the simplicity; and options available to control our stocks; Merchanter is a gamechanger to our company.”

Mike Tregunna, Build Supplies Ltd.

Obviously there are numerous ways a great ERP system can proactively help you to manage margin, pricing and reduce waste across the business, from stock optimisation to logistics, order processing to customer service. But thinking specifically about pricing and margin protection, here are some of the ways that a merchant ERP system can help you to remain profitable yet competitive in a fluctuating market.

How to optimise pricing and margin management using sector-specific software

Improved pricing accuracy and consistency

One of the most significant advantages of using an ERP system for pricing and margin management is the ability to ensure pricing accuracy and consistency across multiple locations and channels. With a well-designed, sector-specific ERP system, timber and builders merchants can set and manage pricing rules centrally, ensuring that all products are priced consistently across all sales channels.

A system like Merchanter lets you track supplier and market pricing so you can sense-check your own prices and ensure consistency from suppliers, to avoid under- or over-selling products. You can also set up process rules, limits and alerts to keep margin consistent while flagging up significant changes. This improves pricing accuracy, eliminates pricing errors and discrepancies, and ensures that customers receive the same pricing regardless of where they purchase products. With instant access to customer records and visibility of historic transactions, it’s much simpler to apply a consistent approach with customers regardless of who is handling each specific transaction.

Better cost management

ERP systems can really help merchants manage costs more effectively. By providing real-time visibility into inventory levels, supply chain performance, and other key metrics, an ERP system can help businesses optimise their purchasing and inventory management processes. It can reduce waste, both physically in terms of more accurate stock ordering, allocation and logistics, and in terms of time and resource. The overall impact of enhanced cost management across the business cannot be overstated and having clearer visibility of overheads and costs will also help you to set pricing and margins at a more realistic level.

Improved – and protected - margins

By optimizing pricing and cost management, ERP systems can also help timber and builders merchants improve their margins. And with built-in controls that let you set and control margins at the optimum levels, either by customer, product line or product type, you have all the tools at your fingertips to manage and safeguard your margins.

Better analytics and reporting

Being able to see in an instant what’s going on in your business, and having your focus drawn to the gaps and issues quickly, lets you make faster, smarter decisions about how to manage your operations.

Greater insights let you set pricing at the optimum levels, while easy-to-use tools let you experiment to see what works best across the business. It can also flag up supplier issues and customers whose service requirements outweigh the value of their business to help you make informed decisions about who you choose to work with.

With real-time insights into sales performance, inventory levels, and other key metrics, an ERP system can help businesses identify gaps, trends, opportunities, and areas for improvement. This can help merchants make more informed pricing and margin management decisions that improve profitability and drive growth.

Enhanced customer service

Consistency, reliability, fairness and accessibility of information all lead to a better overall customer experience. When you have the information you need at your fingertips, your team can answer questions faster, look up past quotes and orders, and ensure well-informed and reliable logistics communication. Retaining customers is usually more profitable than having to acquire new ones so again, keeping existing customers happier, and finding opportunities to upsell where possible, makes for a profitable and efficient business model.

An industry-specific ERP system like Merchanter can help merchants of all kinds to create efficiencies across all areas of the business. At the heart of any merchant business’ sustainability will always be profitability, so make sure you have the tools you need to make informed, commercially astute decisions across the business.

If you would like to try Merchanter for free, just register here to be sent login details for the online demo system and find out just how easy it could be to build even better business.


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