Getting the sale is just one step in running a successful ecommerce business. Customers also want their orders fulfilled quickly and seamlessly, every time. A modern order management system is essential for scaling sales growth across additional channels.
Manually processing orders or using channel-specific tools can work for a while if you have a low sales volume and only one or two channels. But if you’re serious about growth, you’ll need an order management system that streamlines workflows and allows you to manage multiple channels more efficiently.
This order management guide reviews everything you need to know about how these systems support your growth while delivering the best possible customer experience.
What is the order management process?
Order management, also known as order fulfillment, is the process of capturing, tracking and fulfilling incoming orders. This spans the entire journey from customers placing orders through delivery and the after-sale experience, including returns and exchanges.
The order management life cycle, paired with your inventory management process, ensures that customers receive complete and accurate orders on time and that you have the right products available when your customers want them.
The basic steps of order management are similar for most companies, but you should still understand each part of the process and how they work together to provide a great customer experience.
Here are the core stages of the order management process.
- Placing an order
The first step of order processing is also one of the simplest, as it requires little to no effort on behalf of your business when you have accurate product listings. After a customer places an order, your business should spring into action. In this phase, you’ll also collect essential order and customer information, including payment and shipping details.
- Receiving an order
Once your company receives an order, inventory should be updated immediately, if not automatically, to reflect the new volume. Real-time updates are even more critical if you sell across multiple channels or locations. Sales history and trends can be substantially different across each area, which affects your ability to forecast demand and stock needs.
After inventory levels are updated, the order details are sent to your warehouse to begin preparing the order. This stage is also a great chance to examine and improve operational efficiency. Examples of improved efficiency include routing orders to a closer warehouse or using a third-party shipping carrier that can fulfill your order quickly.
- Picking, packing and shipping
Preparing orders for delivery is another prime opportunity to provide an excellent customer experience. Picking orders from warehouse shelves may seem like a simple task, but improving your picking method can help make the entire fulfillment process more efficient. Even simple tasks such as warehouse layout optimization or batch picking can considerably impact warehouse efficiency and your ability to fulfill orders quickly.
How you approach the packing portion of fulfillment depends on the type of products your business sells. Shipments of fragile or perishable goods will likely have special handling requirements. Other orders, however, might be ready to ship immediately. It’s important to develop policies and packing procedures for each product category to avoid lost productivity, delays or damaged goods.
Finally, after picking and packing an order, it’s time to prepare it for shipping. Shipping labels are added to the package, and the order is either passed to a third-party courier service or shipped directly to the customer by your delivery team.
- Delivery and returns
Customer delivery is often discussed as the end of the seller’s order management journey. But increasingly, customer satisfaction requires sellers to stay involved after delivery for any order issues or other customer needs. After-sale service includes critical customer questions about incomplete orders, damaged products and incorrect delivery time. Returns are also an important part of ecommerce order management, including pickup, product assessment and, in some cases, restocking.
Meeting the customer’s needs after the initial delivery is essential to ecommerce order management. The right system can help you ensure mistakes are corrected and avoided going forward.
How do multiple channels change order management?
Your business will hit a growth ceiling if you only sell through one sales channel, such as your website. Adding sales channels helps you reach new customers and makes ordering more convenient. 90% of consumers prioritize businesses with a convenient online experience that meets them where they’re already spending their time.
While the appeal of more customers and higher sales is obvious, the challenge for sellers is figuring out how to incorporate new channels into your order fulfillment processes.
Managing multichannel orders is possible with manual processes, but it’s not recommended. Manual order management is time-consuming and inefficient, creating more opportunities for human error. Keeping track of inventory by location is more difficult when you can’t track sales trends across channels, especially during peak season. If you’re looking to expand your business and you’re not using order management software, these issues present a strong business case for implementing one.
With an order management system, inventory and order data can be synchronized across all channels and warehouses, ensuring you have real-time visibility into your products and workflows. This is especially important when managing a high sales volume, as incorrect restocking orders can leave inventory stranded and cause stockouts that cost your revenue. Visibility and data also inform your long-term planning through more accurate forecasts.
How an order management system can improve efficiency and performance
Effective order management isn’t just about getting products to customers. An order management system can help you improve overall performance and operational efficiency. These systems link your sales channels with order and fulfillment processes, helping to keep workflows aligned as you scale. Automating common manual processes, such as purchase orders and inventory replenishment, saves time and helps avoid costly mistakes.
Connecting customer orders with third-party logistics providers (3PLs) and warehouse locations helps streamline communications, as orders can be assigned automatically to the optimal fulfillment center location. Workflows can be established for repetitive tasks and important processes, such as assigning orders to warehouses for the pick, pack and ship process.
Good order management systems also provide you with real-time reporting and insights. This influx of data provides valuable information for tracking sales during specific time periods or sales volume by channel, helping you make informed decisions about your business. Such centralized data also helps you identify and resolve problems in your supply chain because you have access to the most up-to-date information and can coordinate your response.
3 essential elements of a modern order management system
Choosing an order management system is an important decision that can affect business performance for years to come. Consider these features when choosing an order management system.
Real-time data and tracking
Real-time visibility into your business is essential to track products and sales, especially across multiple channels. When you have visibility and accurate, up-to-date information, you can make data-driven decisions that account for changes in consumer demand. This contributes to new opportunities, such as more accurate forecasts, and to proactively addressing potential problems in your supply chain.
Platform integrations can play a vital role in expanding the functionality of your ecommerce operations. Integrations expand the reach and functionality of existing systems and are often available to existing platform customers at no additional cost. Your order management system should accommodate a range of marketplaces and sales channels to reach your customers while also offering additional applications and providers, such as major carriers, 3PL fulfillment centers and Fulfillment by Amazon.
Ability to scale
When considering vendors for your order management systems, it’s understandable that you’d want to focus on your current business needs. Combine that near-term outlook with a consideration of long-term plans and what you’ll need at the next level of growth. Look for a platform that scales functionality and integrations alongside your growth, including the ability to manage additional sales channels and locations.
Goodbye order management headaches. Hello Linnworks.
Improving order management can have enormous benefits for ecommerce sellers, including saving time and money and providing a better customer experience. Optimizing order management processes improves overall performance and empowers you to scale without losing the efficiency you’ve enjoyed as a smaller company.
You’re investing in an order management system to meet customer needs and provide effortless convenience. Make sure you invest in a solution that prioritizes convenience through improved efficiency and performance from order placement through on-time delivery and after-sale service.
Now that our guide to order management has covered the essential aspects of order management systems, make sure you’re ready to expand your business to new sales channels. Check out our guide to multichannel ecommerce to discover how to meet customers where they are while delivering a high-quality experience.