eCommerce Order Management Best Practices

Order management and processing are more important than ever in today’s increasingly digital driven retail environment where shoppers expect fast, affordable delivery.

In a recent survey, 83% of consumers reported that they plan to do more shopping online than in previous years. Similarly, 71% said a 2-day shipping option is important to them. 

As such, sellers that continually deliver an ideal customer experience will be more likely to drive repeat business and increase market share. Additionally, 80% of shoppers have said they’re likely to make a second purchase from a brand after a positive delivery experience. 

This can be easier said than done for fast growing small-and-medium-sized businesses (SMBs) continually adding new SKUs, expanding into new sales channels, and relying on multiple fulfillment partners. How can SMBs implement data-driven order management processes as they evolve from in-house to multichannel on-demand fulfillment?

Below we look at how order management systems help solve this challenge and simplify order processing for expanding ecommerce businesses. 

What Is Order Management?

Order management encompasses the process of receiving an order, tracking the order, and fulfilling the order. This includes managing all the people, components suppliers, assembly, packaging, warehouses, distribution centers, cross-docking facilities, and more involved to guarantee nationwide 2-day shipping. 

With this many components to manage, it’s clear how easy it would be to lose control and visibility of cargo during shipment. And this workflow has become even more complex as more shoppers turn more and more to mobile ordering. This is why fast growing companies, especially those selling many items across multiple sales channels or to customers seamlessly across physical and digital channels, utilize an order management system (OMS) to automate manual inventory management processes and reduce errors.

What Is an Order Management System?

Over time, as orders became continuously more digital and automated, systems had to be put in place to move this complexity away from manual processes. Enter order management systems (OMS). 

OMS are software applications that connect with warehouse management systems (WMS), enterprise resource planning (ERP), customer relationship management (CRM), accounting, business intelligence and supply chain planning functions. In other words, the OMS stores customer data in one, central place where orders can be viewed and managed from the “Buy Now” button being pushed through the last mile to delivery. 

Accordingly, top performing order management systems send and receive data from integrated ecommerce platforms, such as Shopify or BigCommerce, to give full visibility throughout the entire fulfillment process. With access to past buying habits and demand forecasting, leadership can avoid costly stockouts, avoid dead stock, and allocate marketing spend to the most profitable SKUs and buying periods, for example. 

The result –happier customers who regularly receive shipments intact and on-time, along with higher profits driven by removing costly manual processes throughout the supply chain. 

What Is the Difference Between Order Management and Order Processing?

The terms order management and order processing are often used interchangeably, but they’re actually quite different. Order processing is part of the larger OM cycle beginning with the processing of ecommmere orders and automated orders through the manual fulfilment work of picking, packing, tracking, and shipping.

Order processing takes place in three primary ways:

1. In-House Warehouse Fulfillment – Employees pick, pack, and ship items from the warehouse to the customer. Businesses control the entire process and are responsible for any issues and unforeseen costs, which is why many utilize perpetual inventory systems and inventory protection to mitigate against potential revenue loss.  
2. Dropshipping – Products are sold through the ecommerce website but merchants don’t keep inventory in a warehouse. Instead, orders are passed along to the supplier, who packs and ships directly to the customer. Unfortunately, this technique isn’t sustainable for high growth companies, but it is an effective way to test new product lines. 
3. Outsourcing Fulfillment to a 3PL – In this scenario third party logistics (3PL) providers handle fulfilment. However, unlike dropshipping, the merchant owns the goods being shipped. Inventory is just held at the 3PL’s warehouse, which allows businesses to invest more in production instead of a warehouse network.  

What Are the 8 Steps in the Order Management Cycle? 

1. Order Placed – Customers place orders in-person or digitally through an ecommerce storefront, physical locations, over-the-phone, or other medium.
2. Order Received – The placed order goes to the fulfillment team as close to real-time as possible.
3. Inventory Picked – Once the order is received, the fulfillment team locates the SKU’s. Ideally, an inventory management process is in place so no time is wasted finding items throughout vast warehouses.
4. Inventory Packed – Once goods are collected, they are assembled and packaged appropriately to ensure they arrive intact. Stock packaging can make sense because it’s cheaper. Some fast growing shops sending fragile items opt for custom packaging to ensure products don’t break during their journey and to promote their brands.
5. Order Shipped – With packing complete, shipments are now ready to be sent to the customer, who increasingly expect items to arrive within 1-2-days. To continue meeting this demand cost effectively, more and more merchants are investing in strategies like cross-docking, freight consolidation, and transloading. Similarly, customers must be kept informed along the way through the last mile. 
6. Order Delivered – Products are delivered to the customer. Companies with proper order management processes in place will be notified immediately that the right items arrived intact and on-time. 
7. Customer Follow-Up – Part of creating customers for life is following up to make sure both the product and delivery met the shoppers’ expectations. Ideally, they’ll provide a stellar review and share their positive experience with friends and family. However, refunds or returns may be necessary. Plus, spotting recurring issues and identifying trends helps business improve, as HyVIDA did when customers reviews highlighted that products often arrived damaged. 
8. Measuring Success – Order management allows companies to holistically analyze the entire ecommerce fulfillment process. Tracking qualitative feedback like customer reviews and key performance indicators (KPIs) helps businesses improve, ultimately increasing customer satisfaction and cutting costs in wasted areas. 

Streamlined for Success

Implementing an order management strategy in tandem with the right order management system prevents costly stockouts and empowers better decision making. Ultimately, this single integration point between all sales channels leads to faster fulfillment, lower costs, and repeat customers.

Created by UPS, Ware2Go’s integrations allow sellers to easily and quickly integrate any order management, ecommerce platform, and marketplace. 

To learn more about how Ware2Go can help you simplify shipping and tracking across multiple channels, please reach out to one of our fulfillment experts.