How does multi-channel integration work?

Published on: March 26, 2020

Imagine a very simple shop where a merchant sells one product with four available stocks.

When a customer comes in and buys one, the merchant has to update his stock count from four to three. If he decides to put the remaining products on sale, he has to take note of the new marked down price and perhaps recalculate a new cashflow, then update his sales channels, inform the marketing and sales staff, etc.

A big task, but possible.

Of course, as a business scales up, more factors get added into the mix and the workflows get more complicated.

But the underlying concept is that each aspect of the business has to be connected in order for data (stock count, pricing, discounts, etc.) to reflect consistently and accurately across the company and in all processes.

Multi-channel integration takes care of this on the larger scale.

Unlike the basic example above where the merchant can probably get away with keeping a mental tally of things, most modern e-commerce businesses need different systems to manage a variety of data, such as:

  • An enterprise resource planning (ERP) system, which typically handles data on accounting, operations, logistics, sales, marketing, and customer relationship management;
  • A product information management (PIM) system, which is used to collect, customize, manage, and distribute product information across different channels; and
  • An inventory management system (IMS), which tracks inventory levels and sometimes warehouse movement.

On top of these, there are other internal systems like a physical store’s point-of-sale, and customer-facing platforms including your webshop, mobile app, or listings in other marketplaces like Amazon, Zalando, Miinto, etc.

All these systems need to have a way to communicate with each other to keep data synchronized and up-to-date.

Multi-channel integration provides a technology solution for this by establishing the logic by which each system transfers and receives data, and then automating the whole process.

To better understand how it works, it’s worth looking into how it compares with alternative means of connecting different systems:

1. Manual transfer of data

At the most basic level, different systems can “communicate” through a manual transfer of data either by traditional copy + paste, or exporting data from one system and importing the file to another.

Obviously, these manual processes defeat the purpose of adapting business systems like PIM or ERP in the first place—these systems are meant to eliminate tedious manual tasks, so resorting to a manual transfer between them and any other system just brings back the extra time and effort you were supposed to save.

2. Point-to-point connection

A point-to-point connection is established by directly integrating one system with another, i.e., a 1:1 relationship—for example, connecting a webshop to a separate inventory management system (IMS). In this setup, when an order is placed on the webshop, the IMS can also be automatically updated with the new stock count.

This type of integration works well with two systems, but can easily get unwieldy as you adapt more.

In the diagram above, each system is connected point-to-point with one another, resulting in a complicated web of lines that represent data transfers among the systems.

Adding a new e-commerce site Webshop C will further make the whole setup complicated especially if it needs to be connected to each existing system too.

Also, a software update to just one of these systems could require you to update five different integrations, which can be costly in the long run.

While a point-to-point setup does facilitate an automatic exchange of data across the different systems, it doesn’t ensure that such data will always be synchronized and up-to-date.

For one, since data is pulled from and transferred to different sources and channels, consistency can easily become an issue. And with many connection points within just one system, an error in one can affect the accuracy of the data that flows out of the system and distributed to the rest of the channels.

Multi-channel integration

On the other hand, multi-channel integration reduces the needed connection points by having only one platform through which data from different systems are consolidated and then distributed to the channels that need them.

Instead of connecting systems directly with one another, creating different connection points in the process, you’ll only need to establish one connection between a system and the integration platform, which in turn serves as the central hub that connects all systems and channels with one another.

The key point of a multi-channel integration setup is having one integration platform that will be at the center of the whole process. This integration platform can be:

  1. A commercially available pre-built system that contains the basic components you need to set up multi-channel integration, and which you can customize to fit your own workflow; or
  2. Software-as-a-service, where the platform is hosted by a third-party supplier. Often, these platforms already come with pre-built connectors and guidelines like business rules that help you better define the connections across systems.

Facilitating a seamless integration among various systems can be a challenge—in fact, it’s one that we’ve seen many of our customers using three or more different systems face.

At 1902 Software, we’ve built our own component that acts as a base integration platform which can be tweaked and customized according to different factors such as the systems that need to be connected and how data needs to flow across systems (i.e., one-way or two-way).

We’ll talk about this component in more detail further in this guide, but now that you know how multi-channel integration works, it’s time discuss how this kind of setup can help with your e-commerce strategy.

Next: The benefits of leveraging multi-channel integration »