Ecommerce order management systems (OMS) enable retailers to manage the back-end process of online order fulfillment from the moment of purchase through product delivery. A modern OMS using eCommerce order processing software to help retailers manage inventory in real time, coordinate multichannel sales, initiate fulfillment tasks, routes, print shipping labels, and handle returns.
Automation and integrations built into modern order management systems allow eCommerce vendors to speed up the order delivery process, create a consistent customer experience across channels throughout the customer journey, and aggregate data into a single interface.
Below, we explain how ecommerce order management works, address the challenges inherent in the process and provide some important guidance on what to look for when implementing an ecommerce order management system.
How Does Ecommerce Order Management Work?
Before the pandemic, consumers expected to receive their orders two days after they placed them. During the height of the Covid-19 shutdowns, that time frame shifted, with consumers willing to wait up to 8 days for ecommerce deliveries.
And while many pandemic-inspired consumer shopping behaviors will likely endure long after the crisis is over, shipping delays won’t. In early 2020, the EY Consumer Index revealed that just 21% of the thousands of consumers surveyed forgave retailers for service disruptions from Covid-19.
Meanwhile, hybrid fulfillment methods including buy-online-pickup-in-store (BOPIS), curbside pickup, and ordering online with local delivery remain popular. An OMS utilizing eCommerce order management software makes it possible for the different fulfillment approaches to work seamlessly.
By understanding the step-by-step process inherent in a standard customer’s purchase journey—and the role an order management system plays in each step of the process—retailers can more confidently choose an order management system that works for their business. The following five steps describe a typical customer journey and explain how an order management system comes into play.
- Step 1: Pre-ordering: The online order process begins before the customer’s order is complete, when they place an item in their online bag (causing the system to adjust available inventory). The system may then send out notifications to the vendor about cart activity and abandonment.
- Step 2: Order placement: The customer places an order. Their information is stored (e.g., order history, payment preferences, etc.) in the system. Order placement triggers communication with back-office systems, such as an eCommerce order processing software, sending the order to the warehouse (for example) where inventory can be checked, which may trigger further back-office activity (e.g., generating a purchase order for low-stock items).
- Step 3: Order fulfillment: The eCommerce order management system optimizes order fulfillment based on the order details. This includes selecting the warehouse or store location based on customer proximity/item availability, calculating shipping costs, selecting carriers, printing shipping labels/packing slips, and communicating inventory changes to the warehouse.
- Step 4: Warehouse management/communication: The order management system acts as an inventory manager, automatically ordering more items from suppliers for low-inventory or out-of-stock items. The system also streamlines the shipping process by letting warehouse employees know where to find items, how best to bundle items for shipping, and flagging other relevant details (e.g., fragile items that require extra care).
- Step 5: Shipping management/tracking: Once an item has been packed and shipped, the system alerts the customer that the item is out for delivery. Some systems keep customers informed of an order’s status before it’s left the warehouse (e.g., “your order is being prepared”). Order management systems can also let customers know when their order is ready for pickup at a local store (if it’s a hybrid fulfillment scenario).
- Step 6: Return & refund processing: The OMS instantly processes refund requests and sends out notifications/updates to customers throughout the return/refund process.
Challenges of Ecommerce Order Management
With so many moving parts involved in ecommerce order management, there’s a lot that can go wrong. An ecommerce OMS can help retailers address these challenges head-on, so it’s essential to understand the problems retailers face with ecommerce fulfillment. Here’s a shortlist of the most common issues.
- Human error and process backlog: Human error is the leading cause of inventory and fulfillment issues when it comes to manual process management. Administrative errors like shipping to the wrong address, shipping incorrect items, or shipping the wrong quantity of an item are preventable but costly. Over-communication among retail, warehouse, and administrative workers and departments can slow the ecommerce fulfillment process, causing backlogs.
- Inventory visibility: Disorganized warehouse systems and poor communication with suppliers and vendors translate to shipping delays. Retailers can avoid this common issue by maintaining real-time data about inventory which keeps inventory availability visible across all sales channels and systems.
- Shipping errors: Shipping errors run the gamut from late deliveries to lost packages to damaged products. Shipping mistakes can deter shoppers from buying from you again, inspire them to leave bad reviews, or compel them to turn to a competitor. Incorrect or incomplete information such as the wrong tracking number, the wrong billing or shipping address, and unexpected or surprise fees make for bad shopping experiences and can deter customers from making a repeat purchase.
- Poor communication between systems: The complex nature of omnichannel order fulfillment means that inventory and warehouse systems must communicate. Poor system communication makes it impossible for retailers to track product availability, manage orders accurately, and restock based on actual demand. Tracking inventory in transit is also crucial since poor visibility into the whereabouts of goods leads to shipping delays and supply shortages.
Maintaining high customer satisfaction depends on having good order management processes and ensuring a seamless fulfillment experience. Each of the order management challenges listed above can independently create a poor shopping experience for a customer. Together, they can feel disastrous for a customer who may never give your business a second chance once something goes wrong.
Benefits of Order Management Systems for Ecommerce
An ecommerce order management system can help retailers address common fulfillment challenges by automating many processes and reducing human error. There are clear benefits to implementing an order management system to help fulfill orders efficiently and meet customers’ expectations. Here are five important ones to keep in mind when you’re considering an ecommerce OMS:
- They enable fast and reliable order fulfillment: A modern OMS enables real-time order processing with fewer mistakes. Automation ensures orders are delivered quickly and reliably and gives companies the ability to scale their fulfillment services as they grow (e.g., by offering new fulfillment options like “click and connect” or expanding to mobile.)
- They provide efficient inventory management: OMS’s offer real-time inventory visibility that helps store associates locate items for customers. Real-time inventory tracking means that an online customer can easily access inventory (e.g., purchase the “last item left” online, with accuracy.) Accurately monitoring and managing inventory also helps reduce redundancies, correctly route orders for multi-country retailers, and provide insight into customer buying patterns.
- They centralize the order management process: A key advantage to an ecommerce OMS is the centralized visibility it provides retailers. It is a one-stop repository for the retailer’s operations across all online and offline touchpoints, including fulfillment centers, distribution centers, and warehouses.
- They give retailers real-time access to inventory information: Accessing inventory information in real-time is what makes omnichannel ecommerce fulfillment possible. Real-time inventory visibility avoids bottlenecks and shipping delays by ensuring that warehouses and stores are stocked with high-demand items. It also enables retailers to maximize fulfillment options based on product availability.
- They maximize customer experience across all channels: Customers use different channels when making a purchase, so omnichannel ecommerce functionality is essential to maximizing the customer shopping experience. An OMS can coordinate customer information across channels, align inventory across suppliers and warehouses, and make it as easy as possible to receive their items.
Key Features To Look For In An Ecommerce Order Management System
A modern OMS organizes and optimizes orders, using business rules to calculate the best order routing, predict how much inventory is needed at specific fulfillment centers, and help retailers understand what fulfillment options are valuable for their customers.
Here are some features B2C businesses should look for when purchasing or utilizing an ecommerce order management system.
- Integration: Your OMS should integrate across all your existing systems. Headless software with open APIs allows data to flow easily and enables custom workflows between UIs. OMS’s that are microservices-based let retailers select the functionality they need at the moment, then scale as needed. This sets you up for future growth.
- Ease of use: Your OMS should be compatible with your existing tech while being easy to use for all employees, regardless of technical ability. A high-end OMS is intuitive, enabling retail and marketing staff to set up workflows, open new fulfillment options, and change promotions.
- Automation: An ecommerce OMS should enable retailers to set up automated processes that save labor costs, reduce errors, and increase productivity. Automating fulfillment tasks like order rerouting means that customers get their orders more quickly.
- Inventory forecasting, reporting, and reordering: Robust inventory management includes inventory forecasting, reporting, and automated reordering. Real-time visibility into your inventory smooths out supply chain kinks and improves how your company processes and manages orders, streamlining stock replenishment by connecting the OMS via one central platform.
- Omnichannel: A modern OMS enables retailers to manage orders across channels by integrating customer information and inventory in a central location. The OMS is a single interface that allows your staff to manage orders from every source—online and in-store. It’s also much easier to train new employees since there’s only one system to learn and reduces error since many processes and tasks can be automated.
Order management systems optimize the customer journey
An effective eCommerce order processing software is an integral part of delivering a good customer experience.
Modern OMS’s help retailers deliver orders more quickly, facilitate seamless omnichannel customer shopping experiences and aggregate inventory and customer data into one central platform.
The primary goal of an order management system is to reduce fulfillment lead time as much as possible regardless of how a customer chooses to get their order. Learn how Kibo’s order management system for B2C ecommerce can help you curate your customer journey.
