The simple answer is... it depends.
Generally speaking, it depends on what size you are now and how professional you want to be.
It really depends on how big you are now, how big you plan to grow to and how many transactions you think you will be conducting monthly. There is a bit about how much you like Xero and how many other systems it is integrated into (but that shouldn't be the most important factor).
Here is one clear answer - if you are a small web-store and you really don't want to grow too much but want to give a reasonable customer experience (and reduce the amount of admin time you have too) then integrating with Xero will help with reducing the amount of administration and errors associated with back office admin. So, that can be good.
The larger you are (or want to be), trade up
Don't get us wrong, Xero is a great product and for many small businesses it provides more than sufficient functionality and capacity. However, just like most systems aimed at smaller businesses, it is limited. Typically, the limitation is in how many transactions it can handle in a month.
If your site is holding large volumes of stock and is undertaking too many thousands of transactions per month, then performance will degrade and it will affect business (as the purchase part of transactions take longer and longer to complete).
What we are saying is the larger the site is or will be, then the better it will be to select an ERP system which is larger, more powerful, more capacity to manage transactions and control multiple stock movements.
Want to stay as a 'hobby' business?
If you have a cheap ecommerce website then this is not going to be a problem. This is all about making cost-effective investment in systems when it is necessary. If you are never going to over-expand then this is never going to be a problem for you.
Somewhere in the middle
If you are somewhere in the middle where your transaction volumes are going up but are not huge, then you have to consider whether making this investment is worth it or not. The case will then come down to things like basket value and profitability. The bigger the value of your transactions and the margin that you are making dictate whether you should make the investment. Ironically, we are talking about high value and low margin (if your margin is low then it is very important that your system has lots of capacity to produce dynamic margin reports 'on the fly').
Any other factors to take account of
We have talked about volume of transactions, volume of stock, average basket value and margin. And, of course, we have indicated whether your site will grow in the future. These are the most important factors you need to evaluate.
Beyond these, you need to look at price. We have looked at the operational reasons when one would look to change. All investments like this have to make sense financially and the difference in investment is considerable. Even the largest investment in Xero is unlikely to cost more than a few thousands per year and moving to the next level will be considerably more.
One last thing you might want to consider is whether at some point you will use a marketing automation software system (such as Hub Spot) for content marketing. You might want to consider picking an accountancy package which can integrate into both the e-commerce platform and the marketing platform to get the most out of them.
At this point you probably need an ecommerce agency to help build the business case and then, if you decide to trade up, to help with the integration. There are other accountancy platforms out there and Xero - although very popular - isn't necessarily the best choice depending on your circumstances.
If you liked this blog post then you might also like this previous post too: http://inbound.itqsolutions.net/blog/4-ways-to-tell-if-your-erp-system-is-now-overloaded