When building your brand for success, it is easy to find yourself focusing two things—traffic and conversions. How are you bringing people to your site? Once they arrive, how are you convincing them to make a purchase?
The online shopping experience—and thus, what retailers prioritize—is built around making anything customers want available online. Or, if they want it even faster, it’s about giving them the ability to pick it up at a brick-and-mortar store on the same day.
But what happens after a purchase is made? How is this order going to be fulfilled? How can you meet your customer’s expectations of having a product in their hands in less than two days (or in some cases, even quicker)?
Delivering on modern ecommerce conveniences such as same-day deliveries and in-store pickup brings problems for the retailers who need to handle streams of orders from a growing variety of sources.
In a survey, 57 percent of all those surveyed—and 63 percent of the CEOs—said that they would need to profitably deliver same-day shipping in order to double their revenue. We also found that profitably delivering same-day shipping becomes a more significant factor as a business scales.
Download Here & Now: A Guide for the Modern D2C Brand to find out how today’s brands are addressing the challenges of omnichannel ecommerce.
Each source, whether it is an online store or a marketplace, has its complexities. Without the proper tools to handle this influx of orders, modern ecommerce can create an inventory and order fulfillment nightmare.
Thankfully, there are tools available to help operations and logistics managers address the difficulties of keeping up with this standard of shopping.
What is an order management system?
Order management systems are specialized software built to track sales placed on sales channels, facilitate order fulfillment, and adjust inventory simultaneously across your listings. It is central to a product-based business because it brings together your core operational functions, allowing you to control fulfillment from one system.
By unifying your orders, fulfillment, and inventory, you unlock opportunities to eliminate manual work through automation and data analytics. This software works differently depending on the industry, but it is built specifically to get products to the customers who bought them.
What types of business can benefit from an order management system?
Order management is critical to any e-commerce business. While many businesses can succeed without an order management system, there is a point where this level of software is required to continue growth. Some indications of this include:
- Growing multichannel distribution: Listing your products on more than one sales channel naturally gets your products in front of more customers. However, the more channels you are selling on, the greater the risk you have of overselling. This could mean handling orders and inventory updates from two, three, four, or more online and offline locations, which can be cumbersome if done manually.
- Multiple warehouse locations: Having multiple warehouses may give you a geographical advantage across the country or the globe, but it makes distributing your products more complex.
- Worldwide customers: Shipping can be complex, especially if you ship worldwide. Manually calculating the best rates for best shipping times requires a lot of careful work and consideration, which is difficult to do when you need to quickly turnaround orders.
- Increasing staff costs: Augmenting staff is a quick fix as your business starts growing, but it makes it difficult to scale. Make sure that you are not just throwing more people at a problem that automation with an order management system can solve.
- Increasing inventory and fulfillment errors: Most order management systems will keep track of the inventory, making sure channels are updated quickly and accurately as products are shipped from your warehouse. The updates all need to happen seamlessly and in real-time so you mitigate overselling to customers.
Why is having an order management system important?
You’ve invested time and money to build a brand. Those investments have led to customers purchasing your products, but that doesn’t mean the journey ends for them after checkout. This same investment needs to stretch through to the fulfillment experience.
Order management systems help maintain your brand experience both before and after a purchase is made. Order management systems work by integrating directly with your sales channels, your shipping providers, your vendors, and your warehouses. They are the nerve center of your business, automating processes that were once manual and freeing up your time to focus on your company’s growth. It ensures inventory availability is accurate at all times, and it also helps you process orders quickly.
Having products in different warehouses can also make a mess of your order fulfillment process. This is a key aspect of your supply chain. You make sales, but your warehouses need to be organized so products can be shipped out as soon as orders are processed. An effective order management system will also help you save on shipping costs by finding the best rate for packages.
Fulfillment depends on one essential element of your business: your inventory. Orders can come from any one of your sales channels, and keeping your inventory updated is key to your business’ success. For example, say a company has one unit of Product A, which is currently available for sale on both Shopify and Walmart. A customer then places an order for the product on Shopify.
If you don’t have an order management system, you would need to manually update the Walmart listing to show that the last unit was purchased. Unless you are actively tracking your purchases, this might take a few hours.
In those hours, another customer might purchase the product on Walmart, now forcing you to have to cancel one of the orders or place it on backorder.
Order management systems prevent this from happening by providing real-time inventory updates to your integrated channels as soon as an order is placed.
Order management problems can fill your inventory with errors. These can create disgruntled customers, especially when you don’t have the product to fill an order. On the other hand, if you have too much inventory for a product, you may also see your storage costs increase due to unmoving inventory. Managing your inventory requires a careful balance, which order management systems can help facilitate. The right order management software can also improve supplier relationships by making the process of placing purchase orders easier.
Order management software trends
The way we handle orders has changed a lot over the years. First, we had paper records. Then, we had spreadsheets. With the internet came ecommerce, which led to the first generation of order management systems that connected your inventory to online sales channels.
As online marketplaces like Amazon and Walmart continued to gain prominence in the industry, simple order management was no longer enough. Orders and inventory had to be managed simultaneously across all channels. This change led to the development of more advanced systems like Skubana that are built to integrate more aspects of the modern shopping landscape. Skubana prioritizes automation, providing more flexibility for companies to scale.
Customer expectations grow each year. Customers expect the products they order to end up in their hands even faster than the year before, and businesses that can’t dispatch products quickly will suffer as a result. The order management software you choose needs to be agile enough to keep up with changes in the retail landscape.
What are the latest developments in order management software?
Modern business problems call for advancements in order management software. Some of the latest advancements in this technology include:
- Multiple warehouse functionality: Inventory management and order fulfillment features in modern order management software should have the ability to track inventory at different stock locations across your warehouses, as well as view inventory holistically or by specific warehouses. Key features to look for here include being able to automatically route orders to warehouses based on stock availability or shipping location, as well as splitting orders between warehouses or dropshipping vendors to optimize fulfillment.
- Order automation: In addition to routing orders to warehouses, the most advanced systems also include capabilities to automate actions in your fulfillment process. This includes rate shopping based on price, delivery date, and distance, assigning packaging, as well as required dimensions and package weight.
- Multiple sales channels: When a customer can buy a product from any one of a dozen sales channels, inventory must be up to date. Cutting-edge order management software will be able to manage all these channels and support real-time inventory adjustments. Some of the latest software can deliver updates to your sales channels in under 15 minutes.
- Inventory control: Another way order management software can mitigate overselling is by controlling how much inventory actually shows on your sales channels. This can be used to increase product demand through scarcity or to reallocate stock across your channels to prevent oversells on fast-moving listings.
- Online return rates: When you sell products, it is inevitable that some customers will return those products. The percentage of returns in online stores is twice as high as in their brick-and-mortar equivalents. The right order management software will track returns, generate return labels, and update inventory to reflect returns.
- Customer personalization: Tracking customer activities will allow you to detect trends in their shopping. With this data, you can improve their experience, find meaningful ways to engage with them, and ultimately increase your sales.
- Open API: As a central part of your fulfillment operations, order management systems must be able to integrate with other operational tools. They should have an expansive library of native integrations with sales channels and shipping providers, but also have the flexibility to connect to accounting software, data warehouses, marketing platforms, warehouse management systems, etc. The more you can customize the software, the better it can fit within your business processes.
As order management systems continue to become more advanced, new categories of the software are starting to emerge. The need to adopt multiple channels, fulfillment methods, and warehouse locations are leading systems like Skubana to blur the lines between inventory and order management to create a more unified process. Analysts and industry experts are starting to refer to this software as distributed order management systems due to their capability to handle the omnichannel ecosystem and integrate all parts of your business.
Order management software buyer’s guide
When you are choosing the order management piece for your supply chain, you need to look for features that benefit both you and your customers.
What factors should you consider before purchasing order management software?
You need to take a look at the kind of inventory types you stock. Are there configurable products? Product bundles? You need to make sure that the order management software you choose can handle your product line.
How many sales channels are you using? You need to make sure that the inventory system you choose will work with them all. You may think you can deal with a few manual steps for one channel that your software can’t handle. However, as sales increase, you will need a bigger team to track all of your data manually. Larger teams can lead to higher overhead costs, which you can minimize through automation.
How many warehouses are you managing? Are they all in-house or third-party logistics? If you want full visibility into your inventory, it can be easier to track it within one system instead of switching between the preferred system of each warehouse.
How can you determine the right order management software for your business?
Inventory management is a cornerstone feature of any software you choose. It should be able to adjust inventory on any of the channels you are using. But it should also be capable of facilitating your stock replenishment process and make recommendations on how many units you need. It should predict future sales and create purchase orders for you, automatically removing the manual step of calculating this on your own.
Does the software provide you with insights on your profits and losses? Make sure the order management software you choose can give you profit margin reports on all your SKUs. It should give you a deep understanding of what you need to do to increase your bottom line.
Does the software provide the order fulfillment features you are looking for? Does it integrate with all the shipping providers you use? Can it split an order, place an order on hold or locate alternative fulfillment methods? There are many choices when it comes to fulfilling orders, but it’s important to prioritize streamlining your fulfillment process. It should take a lot of manual work off your plate and automatically adjust to the needs of your business.
What is the typical cost of order management software?
The cost of order management software can vary widely; most systems will bill on a monthly cycle. Some basic order management software can cost a few hundred dollars a month, but it won’t include many of the automation features you need. There may also be limitations on the number of channels you can connect to, warehouses you can set up, or products you can manage.
Advanced systems might cost a few thousand dollars a month, but they allow you to integrate with more warehouses and channels. Advanced systems will also give you higher order and product count limitations and provide more customization. You also get access to more automation features built into them, which usually makes up for the cost of paying for the software. Other features of premium order management systems are cross-platform capabilities to manage orders and inventory from different channels, periodic feature releases, and responsive support staff.
Take a look at your budget and choose the best order management system that fits your needs. Don’t sacrifice service and capabilities for the price; you don’t want a software that will fall short of the features necessary to keep your business operating.
Choosing the best order management software
The most popular order management software is the most unobtrusive. It should be a tool that works behind the scenes, streamlining your order processing. It should make it easier to manage your order fulfillment process and keep your inventory updated without input from you. It should keep pace with inventory changes so you never have to adjust it manually.
If you implement an order management software, you should no longer fall into the trap of rising inventory management costs.