Ecommerce Order Management: Choosing the Right System for Your Business
If you’re an online merchant, you know the challenges that come with ecommerce order management related to capturing, tracking, and fulfilling orders.
Not only do you have to align your inventory and orders across multiple channels, but you also must manage complex shipping schedules and order profiles. From there, you’re caught dealing with tracking fulfillment through third-party logistics.
And after all that, you need to report, analyze, and evaluate each transaction.
Manually performing these processes pushes businesses to a breaking point. It’s easy to make mistakes, displease customers, and overwork employees.
If you’re still tracking your orders and inventory in spreadsheets or working with a legacy system that wasn’t designed for ecommerce, you need an order management system (OMS).
What Does an Order Management System Do?
Order management systems are nothing new. An OMS is a tool or software that tracks sales, orders, inventory, and fulfillment. It delegates the processes required to get products to the customers who ordered them.
While the process of order management hasn’t changed, buyer expectations and the sales landscape have.
Today’s ecommerce order management systems need to touch nearly every facet behind operating your business, including:
- Sales channels
- Product information
- Inventory levels and location
- Customer service (think returns and refunds)
- Order printing, picking, packing, processing, shipping, and tracking
To have a fully integrated OMS means your business is entirely automated, running smoothly and efficiently.
What Processes Does an OMS Control?
Today’s ecommerce order management systems treat the entire supply chain as an interconnected ecosystem. This allows you to automate your merchant processes from order to fulfillment.
A fully-integrated system should:
- Accept orders and payments from any channel origin or currency
- Route orders from warehouses and suppliers based on proximity
- Streamline inventory levels across all systems and sales channels
- Provider order details to warehouses or suppliers for fulfillment
- Track customer orders
- Forecast stock levels to avoid stock-outs
- Work seamlessly with internal functions such as accounts receivable and payable to generate invoices and accept payments
As a business owner, we know you understand the steps of selling a product to a customer. But let’s look at a typical customer transaction and what an OMS does throughout the process.
1. The Customer Shops Your Store
Whether they’re shopping online, in person, or through a catalog, this step always begins with customers browsing your inventory.
Your OMS is working before this step takes place. It’s displaying accurate inventory to the customer and guaranteeing that your inventory numbers are up-to-date.
In ecommerce transactions, the OMS will notify you when a shopper adds something to their online cart. If a customer bails on the purchase, you have the opportunity to pinpoint why or provide an incentive to get them to return to your site and complete their other.
2. The Order Process Begins
If you make a sale, your inventory numbers are updated immediately by your OMS. If applicable, your ecommerce order management system creates a unique tracking number for your customer. Then, the system links that number to the customer’s order.
During this, your OMS updates your projected sales information to include this transaction. You’re getting the data in real-time.
4. The Accounting System Collects Payment
As your customer provides payment information for their order, your OMS works with your accounting system to verify payment and generate a receipt or invoice.
5. The Order is Fulfilled
Once the order is placed successfully, the shipping and tracking process begins.
The OMS updates the process from leaving the warehouse (yours or your supplier’s) all the way to final delivery.
All of this takes place for every single customer transaction. It’s difficult to manage each step of the process manually, which is why you need a sound order management system to streamline these processes and keep them in one centralized location.
What About Dropshipping?
In a traditional supply chain, there are two different order processes.
The consumer order is the one between the customer and retailer at a point of sale (online or physical store).
The purchase order is the order between a retailer and its vendors. The purchase order happens first as the retailer buys wholesale inventory, while the customer order happens second.
If you’re in the business of dropshipping, you know that this sequence is reversed. You receive an order from a consumer that is then transferred to your supplier. Essentially, the consumer order transforms into a purchase order from you to the supplier.
Most back-office and virtual storefront technologies are created to handle one or the other type of order. It’s vital to choose ecommerce order management software that understands this change of sequence and the hybrid nature of dropshipping orders.
The Main Benefits of an OMS
So, you now know that an OMS can streamline your processes, but let’s get into the benefits in more detail.
Using an order management system in ecommerce can help you run the internal operations of your business, save time and money, and reduce errors. It will also play nice with your existing systems so that you won’t see a dip in productivity.
Ecommerce Order Management is a One-Stop Solution
An OMS is constructed with all the parts needed to run the internal operations of your business.
Without a fully-integrated order management system, you may have separate tools for accounting, customer service, POS, and warehouse management. With an OMS, you can access all of this data and work with suppliers to manage inventory from one centralized system.
When choosing an OMS, look for one that will provide almost instant information on inventory levels, orders, and sales forecasts. Having this centralized information allows you to make strategic decisions and adjustments quickly. You can spend more time creating effective marketing campaigns and remove the guesswork out of replenishing inventory.
Every ecommerce business is unique and rapidly evolving, so an OMS must be adaptable to your needs. If it isn’t, you’ll miss opportunities because of working inefficiently.
Save Time and Reduce Errors
We all make mistakes. Especially if you’re taking orders with one system, printing shipping labels with another, and personally coordinating between your supplier or shipping departments.
What can an ecommerce order management system do for your business? If you’re spending less time organizing departments and updating policies and processes, you can put your energy into other facets of your business. An OMS will reduce errors in order processing, accounting, shipping, tracking, delivery, and inventory levels. How? There are fewer steps required to bring these components together.
With a one-stop solution for making all of your business’s moving parts work together seamlessly, you’ll experience greater accuracy and turnaround time. You can focus more on satisfying customers and growing your business.
Who doesn’t want to save money?
By investing in an OMS, you’ll quit wasting money on separate software platforms. Instead, you’ll have everything you need in one program.
You’ll also save money by analyzing the data provided by your OMS in real-time. Think about it: if your inventory data shows that certain products aren’t selling as well as they should, or being returned at a high rate, you can figure out why.
You might decide to remove products from your store or improve the product photos or descriptions to increase sales. This interconnected data will increase the overall financial health of your ecommerce business by giving you the information needed to improve your bottom line.
Integrating with Existing Systems
It’s common for business owners to hesitate to switch to an OMS because they rely on other systems that have been in place for a long time.
They worry that an OMS may not interact well with their ecommerce suppliers, email marketing systems, or accounting software. Or they don’t see that an OMS adds value if it requires them to replace something that’s been working for years.
Hope is not lost. A modern ecommerce order management system can integrate with most existing systems without a hitch. You can simply interact with a program you trust within your OMS and then everything will work together.
Weaving an existing system into your order management system just reduces the steps needed to complete a task. You’ll no longer need to worry about manually moving data from one system to another.
Many merchants want to integrate their operations with several online channels or suppliers. Omnichannel is a great strategy—but only if it works well. The best order management systems fully integrate into all channels, which gives you the ability to list products, update inventory levels, and receive orders from all channels. This integration makes omnichannel selling more powerful and easier to manage.
If you’re suspicious about how an OMS will integrate with your existing programs, you may be pleasantly surprised. The best ecommerce order management software is adaptable, so you can incorporate it in a way that doesn’t disrupt your existing processes. Having this versatile, fully-supported system will help you stand out among your competitors.
How to Choose the Right OMS for Your Ecommerce Business
The right order management system in ecommerce can be a game-changer for your business. Now that we’ve convinced you that you need one, here’s how to choose the right one for your business.
1. Define Your Objectives
Engage your internal stakeholders in a discussion about your goals and objectives. By the end of this step, you’ll know which features you absolutely need versus those that are nice to have.
During this phase, do some future thinking and factor scalability into your decision.
2. Create a Request for Proposal (RFP)
An RFP is an essential step to getting organized. Drafting one will help you and any potential vendors understand the technical requirements and limitations of any future system you implement.
Your RFP should include order volumes, lists of SKUs, existing software, hardware, and networks. You should also provide a timeline for implementing the system as well as details on system training and enablement.
3. Research Your Options
Compile a list of vendors to compare and reach out for demos or free trials. It’s unlikely that your first pick will be an ideal fit, so have a back-up plan.
4. Evaluate the Responses
As you receive proposals, determine a method of scoring each of them based on your objectives. Pick the top three finalists to examine further.
5. Ask the Right Questions
It’s not likely that you’ll find a system that is a 100 percent fit for your business, so your final selection will be based on trade-off criteria. Features and functions are important, but you should take into account the business relationship you are entering.
As you review your top picks, the following questions will help you choose the ecommerce order management system that’s right for your business:
- Is it possible to eliminate manual processes through system automation?
- Can the system support multiple warehouse locations or various dropship suppliers?
- Do they provide reporting and forecasting to aid in strategic business decisions?
- Do they support native and third-party integrations?
- Is there access to an API that will allow you to innovate in the future?
- Will you be able to manage sales across multiple channels, currencies, and locations?
Find the Right Fit
Choosing the right OMS is like choosing a life partner for your business. It’s essential to transform the operations of your business and supply chain digitally.
To find the best fit, you must understand your needs now, as well as those in the future. Understand the capabilities and limitations of the choices presented to you.
With this guide, you’re on your way to making the right decision and ensuring the long-term success of your ecommerce business by implementing an order management system.
Get in touch—let us show you how easy it can be. We can recommend a plan to suit your business or chat about a custom solution that meets your needs.