Order management plays a key role in ensuring the smooth and efficient running of your eCommerce business and contributes to your overall customer experience.
What’s more, mastering your entire order fulfillment process can do wonders for your customer retention rates. After all, a streamlined approach to order management helps to maintain customer satisfaction and boosts your bottom line.
So, how exactly do you perfect your order management? What’s the secret to a speedy picking, packing and shipping process? How should you manage your eCommerce returns?
In this guide, we talk you through the following:
What is order management?
Order fulfilment options
Order picking process
Order packing process
Managing eCommerce returns and refunds
What is order management?
Order management, also known as order fulfillment, refers to everything from tracking incoming orders to managing the processes required to fulfil each of them.
And it doesn’t stop there.
While some online retailers see the order management process as one that ends after the order has been shipped, a strategic approach will always involve the after-sales experience and the management of eCommerce returns and refunds.
In a nutshell, order management involves order fulfillment, picking, packing and shipping, as well as the after-sales experience and dealing with eCommerce returns and refunds.
An order management workflow coordinates tasks between your staff and synchronizes inventory data between various systems.
A typical workflow may look like this:
Customer places order >> Payment is successful >> Warehouse receives order >> Stock levels are updated >> Order is picked, packed and shipped >> Order is delivered >> Measure customer satisfaction and resolve any issues accordingly
In addition, automated order management workflows can:
- Increase the efficiency of order processing
- Provide a level of transparency with real-time updates
- Boost the productivity and efficiency of your team
How do eCommerce retailers manage their orders?
Around forty years ago, most retail companies had manual processes in place to manage and fulfill their orders. Even today, it’s not uncommon for paper processes to still be used.
However, these time-consuming tasks bring a high risk for lost orders, frustrated customers and loss of revenue due to the ease with which paper can be lost or entered incorrectly.
When scaling an eCommerce business today, it’s paramount to automate and streamline this process so that you are better equipped to deal with an influx of orders. You can achieve this through a robust inventory and order management system.
Types of order fulfillment
Fulfilling the orders that you sell online is a big task. One that becomes even bigger, and all the more complex, as your order volume scales.
First things first, you’ll need to decide how you will fulfill your orders.
There are three main types of order fulfillment:
When it comes to order fulfillment, the self-fulfillment model works exactly as it sounds – you fulfill your own orders and have complete responsibility over everything from storing inventory, right through to picking, packing and dispatching.
- Third-party fulfillment
Another option is to use a third-party fulfilment service.
Outsourcing to a 3PL (third-party logistics) usually occurs when:
- A retailer is spending too much time picking, packing and shipping orders
- Has little to no space for storing inventory
- Needs to free up more time to spend on other areas of the business (e.g. marketing)
- Has little to no interest in managing their own distribution infrastructure
3PLs deal with the entire order fulfillment process, including the processing of returns.
As you’ll likely know, dropshipping is an online selling method where the retailer never holds the products that they sell.
Instead, the products are produced, stored and shipped by the manufacturer or supplier.
When one of your customers places an order from your online store, the order is sent to the manufacturer to dropship the products directly to them.
Order processing is a part of the order management process and is an umbrella term that encompasses order picking, packing and the delivery of items to a shipping carrier.
It is a sequential process that involves:
- Order picking (taking and collecting items to fulfill orders)
- Sorting (separation of items according to destination)
- Packing (including weight, labeling and packaging)
- Consolidation (gathering packaged orders into loading units ready for transportation)
As its name suggests, the order picking process consists of locating and collecting products within a warehouse in a specified quantity ready to fulfill your customers’ orders and sits within the overall order management process.
Order picking has a huge impact on the productivity of a supply chain and, as such, is one of the most controlled logistic processes within an eCommerce business.
There are variety of order picking strategies, including:
Piece picking (or picker to part) is a picking method where the order picker simply moves to collect the items needed for one order. This can also be referred to as single order picking.
Each order picker is assigned a batch that consists of multiple orders. They then enter the warehouse and pick all these orders in one go, returning the items to the packing desk.
Generally speaking, batches are made up of 10-30 orders, but this will depend on the physical size and weight of an average order.
With zone picking, each order picker is assigned to one specific area within the warehouse and only picks products from that particular zone.
In the case of an order involving products from multiple areas, the items will be collated at the packing bench within the warehouse. For example, a foot picker may be responsible for small and light items, while another may use a powered pallet truck for heavier products.
Similar to zone picking, all order pickers are given a specific area to collect items from. Each picker will gather several orders at once and take them to a central packing bench.
A dedicated packer will then package the orders, while the order pickers return to collecting products off the warehouse shelves.
A sorting systems picking method requires next to no movement from any order picker.
Instead, the items are brought to the packing bench via an automatic system, such as a conveyor belt or automatic storage.
Pick to box method
The pick to box method follows the same strategy as the sorting systems, but when an item is picked, it is placed straight into a packing box.
Automated warehouse picking methods
There is also a variety of automated warehouse picking systems, such as pick to light, whereby an order picker will follow lights in a warehouse to find certain products, or mobile scanner-based picking.
As the name aptly describes, order packing is part of the order management that consists of packing all necessary items of one order into an appropriate container before shipping it out to the customer.
Order packing involves the selection of suitable packaging, weighing the final parcel, printing out relevant labels and invoices, and selecting a courier to complete the delivery.
The packing process typically takes place within a warehouse in a central location, known as a packing area or packing bench, and is important for a number of reasons:
- Prevent damage to items during delivery
- Promote brand identity (e.g. personalized packaging)
Keep in mind that your order packers are the last people to see and touch your products before they get to the customer.
As such, they are the last people that can catch simple errors, such as incorrect counts, wrong SKUs, an incomplete order, wrong colors or sizes or even product damage.
A streamlined order packing process should be all about speed, accuracy and efficiency.
Here’s what a basic order packing process might look like:
Choose an appropriate box >> Add packing material to protect order during transit >> Weigh package for shipping >> Print relevant invoice/packing slip and add to box >> Choose most suitable courier, print out shipping label and stick to sealed box >> Mark order as shipped in shipping software, relevant sales channel or marketplace >> Notify the customer their order has been shipped
Shipping and delivery process
Before you can ship your products to customers, you’ll need to decide your pricing strategy for shipping and define what shipping methods your business will use.
There are a variety of eCommerce shipping strategies to choose from:
Offering free shipping is one of the most effective ways to reduce shopping cart abandonment.
However, in order to make free shipping work for your business, you’ll need to consider how you will incur the costs. Will you pay the full price of shipping out of your own margins? Will you increase product prices to cover the cost? Or will you use a mix of the two?
Real-time carrier rates
Consider using platforms that integrate in real-time with numerous carriers to generate shipping options and living pricing – allowing customers to choose and pay for the service that they want.
Flat rate shipping
Flat rate shipping is when a single rate is applied to a package, regardless of size or weight. It’s an easy way to simplify shipping for your customers and can encourage sales.
Expedited shipping is the process of sending a package at a faster rate than normally expected. What is thought to be expedited will largely depend on your company policy.
Some examples include two-day shipping, next-day delivery, same-day service or overnight shipping.
You’ll also need to decide whether or not you want to offer international shipping for your customers. This can be tricky as it’s likely that you’ll need to work out different shipping rates for the varying countries that you choose to sell goods to.
Once you’ve selected your shipping strategies, it’s then time to figure out how to calculate your shipping costs. These may vary dependent on elements such as package dimensions, weight, destination, shipping service, shipping carrier and total value of the order.
If cost is an issue for your business, you can find out the cheapest courier services here.
Here’s a list of some well-known courier services to get you started:
- Royal Mail
Of course, the shipping process doesn’t end once the carrier picks up an order.
You need to continue to offer an excellent customer experience both during and after the journey of the order. For example, sharing tracking numbers with your customers and creating a seamless eCommerce returns process.
Although not often associated with the order management process, creating an effective after-sales experience is crucial for customer retention and many big online retailers incorporate it into the overall fulfillment strategy.
There’s plenty you can do to streamline your customers’ after-sales experience.
Consider sending a thank you message that goes beyond the standard confirmation email of receiving their order. You could include a handwritten note within the actual package or even add in a small item for free when a customer orders a number of products.
It’s also good practice to follow up with a personalized email to check with a customer that everything is okay.
You don’t need to ask for anything in return (e.g. a review request should come separately) but you could include a discount to encourage repeat purchasing.
With confirmation emails, think about letting your customers know when you have dispatched their order. Or go one step better and include a live tracking link so that the customer can keep an eye on their order at all times.
Generally speaking, eCommerce retailers should aim to send a minimum of three emails – confirmation, on the way and when it’s been delivered. Each of these presents an opportunity to offer discounts or similar to encourage further purchasing.
You should also be ready to embrace negativity in the after-sales experience.
It’s fairly easy to turn bad customer experiences into positive opportunities to learn from and grow your business.
Social media is an excellent example of this.
For instance, did you know that 69% of people who posted a negative tweet felt more positively towards a brand when they received a response to their problem?
And that customers that receive responses from brands on Twitter are willing to spend up to 20% more and are 30% more likely to recommend the brand?
Taking charge of the after-sales experience can do wonders for your business.
Managing eCommerce returns and refunds
Taking care of eCommerce returns and refunds is the final step in the order management process. You will need to define your route to return and ensure that you document it for your staff to follow.
How will you accept returns? Will you offer a returns label with each order? Or would you prefer to get your customers request returns?
Remember to create an official returns policy and place it in a visible location on your website. Some key elements to incorporate in your eCommerce returns policy include:
- The timeframe that a customer has to make a return
- Packaging (will you only accept items in original packaging or is any packaging okay?)
- Condition of return (does the item need to be in original condition?)
- Returns label (how will your customers access returns labels? Will you put one with their order or do they need to go to your website to print one out?)
- Cost of shipping (will you cover the cost or do your customers need to pay?)
- Refund process (how will you refund your customers? Original payment method or something similar to PayPal?)
- Refund options (will you issue refunds or store credit? Or both? Are there any items you sell that you won’t accept returns for?)
Depending on your business model, you may also need to think about other types of return strategies, such as how you will process drophipping returns or wholesale returns.
If you dropship products to your customers, then you never actually come into contact with the stock you sell. As such, it’s important to know your supplier’s return policy, as it will directly affect what you can offer in your return policy.
You’ll need to find out:
- Your supplier’s restocking fees (if any)
- The timeframe they give to return a product after a sale
- Who must pay the return shipping fees (e.g. your brand or your customer)
- Whether or not they accept returns on incorrect orders (e.g. wrong size or color)
- How your supplier handles the entire returns process
Once you’ve got to grips with their returns policies, you can use them as a framework to build your own return policy.
For example, if a supplier offers a 28-day window to accept returns, don’t extend your timeframe beyond this, simply because you will not be able to accommodate it.
Instead, it’s good practice to get into the habit of offering your customers a lower timeframe than your suppliers as it gives you and your customers some extra time to account for any shipping delays or errors.
If you have multiple suppliers, you’ll need to encompass all policies within your own.
If one supplier has a 20-day return window while another offers a 30-day timeframe, you’ll want to make your return policy between ten to 15 days.
Alternatively, you could go down the route of offering different return timeframes for these different products but may run the risk of confusing your customers.
As a dropshipping retail company, you’ll need to remember not to include a returns address on your policy page. Rather, you’ll need to instruct the customer to contact your brand and then provide them with the appropriate address.
Perfect your order management to boost business growth
Ultimately, improving your eCommerce order management will help you to streamline your business processes, boost customer satisfaction and retention rates and increase your profitability.