Order Management Systems: How to Pick the Best OMS for Ecommerce
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In ecommerce, the merchant and the customer share a common goal: to get the product from customer order entry to customer porch as quickly and accurately as possible. To achieve this, businesses must have an efficient and flexible order management system that can keep up with what your business needs to meet modern buyer expectations and competition.
The only thing more important to online consumers than time is money, evidenced by the fact that 70% of shoppers will seek a product elsewhere rather than waiting any length of time for back orders, but 87% of customers are willing to wait two or more days for free shipping.
Good order management requires a thorough understanding of your customers’ preferences and your own abilities to deliver the product efficiently and profitably.
Order management goes beyond fulfillment times and shipping costs, though. The ability to accurately track inventory across all channels is essential to maintaining a fluid system. 43% of small businesses don’t track inventory at all, and this can limit growth significantly.
Human error also accounts for 46% of inventory mismanagement. Statista states that from 2016 to 2017, 25% more retailers and manufacturers invested in better warehouse management technology to resolve these issues.
Finally, payment processing and collection should be consolidated throughout all touch points. A solid OMS presents a comprehensive, connected solution.
This entire process is referred to as “order to cash”—a term that encompasses your end-to-end order processing system. It can be broken up into two main components:
- The order management process: how an order is written, submitted for processing, and fulfilled.
- The bill-to-cash process: invoicing and receiving payment.
What is an Order Management System?
An order management system tracks sales, orders, inventory, and fulfillment. It also enables the people, processes, and partnerships necessary for products to make their way to customers. An effective OMS provides one centralized place to manage orders from all sales channels.
With a unified order management system, you can manage customer information and interactions, access your accounting data, customize your retail point of sale system, and update your warehouse inventory — all from one system.
With the right tools, you can also use the data collected to employ business intelligence practices to improve your business processes — including your supply chain management.
The diagram below illustrates some of the functions of an order management system during a typical customer interaction.
If you have an ecommerce business, you likely already have an OMS in place. It is critical to ensure security and meet regulatory standards, but you may not have the ideal system in place, and this would be apparent in both customer satisfaction and overall losses.
You may not even be aware of these losses, especially if you are a small company or operating over a single sales channel.
If your company intends to grow, making certain you are using the best order management system will be a vital step in making sure you can do so effectively.
An efficient OMS will mean less manual work for higher order accuracy, along with better tracking and reporting. This transparency allows you to clearly see how your business is performing at each step and illustrated by metrics, so you can know where to focus improvements.
A good order management system will also enable a smoother customer experience, as it provides easier access for the consumer to get information about their order status.
Functions of an Order Management System for Ecommerce
1. Track orders.
Most importantly, the order management system will allow you to manage all aspects of your orders, even if it’s omnichannel — for instance, if you’re selling through a marketplace like Amazon or eBay.
Orders placed on the phone, in-store, and most importantly, on your website, can be easily tracked and recorded. These orders should be accessible from everywhere, and the benefit of an order management system is to centralize this process.
2. Locate inventory.
A staggering 43% of retailers rank inventory management as their number one challenge. This is because without the proper systems in place, the time and profit losses compound.
Tracking inventory and inventory levels across multiple warehouses can be a challenge. An order management system can simplify this process using practices like item-level tagging, RFID technology, and automated inventory management.
3. Fulfill orders.
The number of warehouses has risen approximately 7% in the last five years. This makes it easier for retailers to leverage 3PL or even just utilize warehouse space throughout regions.
Speed is the name of the game. Having inventory in close proximity to your customers is the best way to ensure fast and consistent delivery. Your order management system can help you send through orders to be packed and shipped with correct shipping labels.
4. Manage returns.
Returns are inevitable in ecommerce. Incorrectly tracking them can significantly offset the actual number of paid orders, causing issues in many other aspects of the business. An OMS can help ecommerce shops see hand processing of returns and refunds.
Can I Just Use My Ecommerce Platform as My Order Management System?
While some businesses choose to use their ecommerce platform as their order management system, it is not generally advised — especially if you’re already bringing in more than $3 million in revenue.
However, if you are a small business (and intend to stay that way), all orders are placed on your website, and your site is closely tied with your fulfillment and inventory (allowing customers to review their order history), it may be a good option for the current state of your business.
Using your ecommerce site for order management might not be the best fit if you:
- Have multiple sales channels.
- Foresee long-term growth.
- Fulfill orders from many different warehouses.
- Have orders from many different places — e.g., marketplaces, point-of-sale, websites, etc.
- Have a complex order fulfillment process.
- Hold inventory that is your own but also dropship with other providers.
Separating the sales channels from the background management processes allows you to segment and focus clearly on the unique function of each.
Choosing the Best Order Management System: 6 Criteria
1. Site integration.
Does the OMS easily integrate into your site, or will you have to build a whole new system around it? Many leading order management software systems are designed to integrate with major ecommerce platforms. Our list of the best OMSs below will provide examples that are easy to install directly to your ecommerce store.
2. Supplier consideration.
Will this system make it harder for you to purchase and process orders from your suppliers? This should absolutely not be the case. The right OMS should simplify complex supply chain considerations and make it easy to connect with suppliers.
3PL, warehouse, and fulfillment integration.
Not only does your OMS need to integrate with your site, it also needs to work with those that pack and ship your orders (assuming you use a fulfillment partner). A system that’s already proven within the industry will have the framework in place to combine distribution and adequate resources, making it easier to manage fulfillment.
Will your order management system be able to scale with you if you’re experiencing rapid growth?
Many systems have their limitations, and it is well worth the time to discover what those are. Make sure the system is capable of aligning with your growth goals and beyond.
Order management systems aren’t meant for just sending through orders; they are also great for tracking demonstrated performance. Revenue, shipping, and demographic reporting are top features, and the system should also help you easily stay within regulatory requirements.
Are they able to manage your sales — even multi-channel orders — regardless of where your customer is in the world and what currency they use? Ecommerce opens the door to the entire planet, so language, currency, and taxation differences can cause headaches.
If your order management system is equipped to automate the majority of this through a single platform, it gives you more time to focus on growing your business instead of dealing with order management issues.
Additional Considerations and ERP Integration
There are many important factors to consider when attempting to choose the right OMS for you, including business size, growth expectations, order volume, and your number of sales channels.
One vital consideration is how it integrates with your ERP (Enterprise Resource Planning) system. Seamless integration of the two systems can improve business process efficiency and customer satisfaction.
In addition to being aware of the relevant considerations, you must establish which capabilities are most critical to your business to find a good match.
6 Best Ecommerce Order Management Systems
The OMSs listed below vary in benefits and emphasized features, so it’s important to research further to determine the most suitable for your business.
Brightpearl integrates with BigCommerce to manage high order volumes and other complexities of your business. As a result of great efficiency, Brightpearl can enable merchants to, on average, increase revenue by 60%, increase order volume by 68%, and decrease shipping times by 13%, year over year.
2. Order Desk.
This hosted order management system enables integration of your store’s workflow with many third-party providers. It can help you:
- Keep track of order status,
- See your order overview at a glance, and
- Create custom folders to align with your workflow.
Order Desk also simplifies shipping and refunds by making it easy to change shipping addresses, email tracking numbers, offer refunds, and hold orders for review.
An advanced out-of-the-box distributed OMS (DOM) combines with BigCommerce to help you realize a unified commerce experience. With OrderDynamics, you’ll get:
- Deep fulfillment capabilities — order orchestration, real-time inventory visibility and stock levels, order routing, and returns management.
- Shipping capabilities like rate brokering, split shipments, and advanced order consolidation (multi-item orders shipped in a single box).
- Support for internationalization with capabilities around multilanguage, double-byte character sets, and multi-currency.
This software service integrates and manages your inventory and shipping orders from your ecommerce site and a variety of other shipping channels. Skubana supports single products, bundles, and kits for managing your listings. It also supports inventory storage options like 3PL warehouses and dropshippers.
5. Spark Shipping.
This OMS processes feeds from your suppliers to automatically keep inventory updated and in sync across all vendors. It also automatically routes orders to vendors, distributors, suppliers, or fulfillment centers. And, when vendors send you tracking updates, Spark Shipping will automatically update to your BigCommerce store.
Zentail simplifies multichannel ecommerce, offering a simple, cost-effective way to streamline and grow online businesses.
Benefits of Order Management Software
The benefits of an order management system are clear when considering the time saved and the reduction in tedious manual tasks.
1. Less manual work.
Your OMS should reduce your manual work to process sales orders by expediting manual processes and increasing automation.
2. Higher order accuracy.
As mentioned earlier, human error accounts for 46% of inventory mismanagement. OMSs should be able to send order information to the right partner and ensure that it is tracked and manageable.
3. Better reporting.
Your OMS should enable accurate, actionable reporting so you can build a better business and remain within regulatory requirements.
4. Faster, smoother customer experience.
Customers should be able to get information about their order status much easier.
As ecommerce continues to expand and break down barriers internationally, it’s even more important to employ the right system to manage purchase orders. As you’re searching for the right one for your business, make sure you first:
- Identify your business processes, goals, and objectives.
- Assess the benefits, costs, and features that align with your plan.
- Research OMSs to find the one that works best for your needs.
Order management is an inherently complex process. Selecting the right order management system is not only vital to business longevity and quality, it’s an often overlooked area where you can get some easy wins.
A dedicated OMS presents a complete view throughout the lifecycle of all orders across all channels, giving business owners the extra time to focus on what they really want: growth.
Businesses will save money by increasing business processes’ speed without sacrificing quality, while increasing customer satisfaction and retention.
Frequently Asked Questions About Order Management
What is the order management lifecycle?
The order-to-cash process that encompasses all events, from customer order through the supply chain to fulfillment and final delivery. This usually goes in five steps: order placed, order processed, payment, shipping, delivery.
What does an order management specialist do?
Ensures all orders are processed and delivered on time. They work closely with suppliers and distributors to maintain order processing standards and optimize the order management cycle.
What is the order management process?
Similar to the order management cycle, it begins with the customer order and ends with fulfillment. The difference is that the “management” factor involves the tracking of each and every order throughout the entire cycle.
Does an OMS support my ERP?
Most modern OMSs should work seamlessly with ERPs. However, this depends on the specific OMS and ERP in use. Confirm with your OMS software provider which ERPs would be supported.
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