What is an Order Management System and How does it Help Your eCommerce Business?

eCommerce has evolved by leaps and bounds in the past few years and it continues to grow. This evolution has brought about a major transformation in the modern buyer as well and that governs how you conduct your business. Your customer expects you to be available across sales channels that include giants like Amazon, eBay, Instagram, and Facebook, in addition to your own D2C website. To make the most out of each of these channels, you need to have a system to keep a track of your activities and customer service on these platforms.

And, running omnichannel eCommerce operations manually by maintaining multiple spreadsheets is not a feasible option in the long run. Here are some of the major challenges associated with it:

1. The process is time-consuming and can push order-fulfillment
2. Huge reliance on the workforce increases the labor cost and the chances of errors, rectifying which comes with an incremental cost
3. All of this can negatively impact brand perception, thereby affecting business growth

A missed delivery, wrong transaction update, and incorrect order details are just enough to push your brand off the digital playfield. Running a business requires you to have an impeccable centralized order management system that curbs any challenges and resonates with omnichannel selling.

Here in this article, we introduce you to the know-hows of an Order Management System (OMS), the benefits of shifting to one, a complete step-by-step process of a functioning OMS, and how to choose an Order Management System that best fits your eCommerce business requirements.

Let’s start with the basics.

What is Order Management?

Order management includes everything you do to keep a track of orders coming to your business and manage all the processes required to fulfill them. It starts right from the point of receiving an order through its delivery, followed by the relevant returns or a general after-sales experience. The sheer number of tasks involved here makes it quite evident that all of this can’t be done manually. And, that’s when an order management system (OMS) chimes in.

What is an Order Management System (OMS)?

An Order Management System (OMS) is a platform that enables online sellers to seamlessly manage their orders and inventory across sales channels.

It helps you improve inventory and order management by:

• Automatically adding new inventory across sales channels
• Tracking sales across multiple channels from a single dashboard
• Managing both B2C and wholesale orders from a single portal
• Giving access to your warehouse team, sales team, finance team, etc based on their information requirement (no more delay due to communication gaps between teams!)

All in all, an OMS streamlines your workflow, increases order-fulfillment rate, and thereby increases repeat purchases from your customers.

A modern order management system will automate the entire process starting from accepting orders to fulfilling them.

To summarize, here’s a quick rundown of everything that it does for you:  

1. Accept customer orders and payments irrespective of the source and payment mode.
2. Route your order to the nearest warehouse (in case of multiple warehouses) from the customer location (to ensure faster delivery)
3. Update inventory levels in the OMS system and across sales channels on real-time bases
4. Track order-shipment real time
5. Forecast inventory and help you plan optimal inventory purchase decisions to avoid stock-outs.
6. Integrate with your accounting management tool to generate invoices and calculate tax for every order processed in the system
7. Manage order returns (in case there are any)

Now that we have covered the basics of a typical Order Management System for eCommerce, let us move on to the details of how it works.

Order Management System Essentials: Step-by-Step Process

For efficient and cost-effective order management, it is important that you acquaint yourself well with all the processes and how a good OMS can contribute at every step of the way. Here, we have a step-by-step detailing of the order management system for you to understand.

Step 1: Customer orders from your sales channels

Your order management process begins once a customer places an order on any of the sales channels. Your team needs to keep a track of all new orders coming from multiple channels.

This certainly is an easy task when the daily new orders are few, but it can get a lot more tricky and time-consuming once your order volume increases.

Hence, using an OMS can help you track your orders across channels seamlessly from a single dashboard.

Step 2: Accept and Process Payment Via Different Modes

Your OMS should have integrations with multiple payment gateways to process payments securely. Without this in place, you can miss out on sales, or even process orders without receiving the payment!

We are sticking to eCommerce here but if you want to know how it would work for offline orders, integrate your system with a Point of Sale (POS) platform. This will help you record and track all payment information from a dashboard.

Step 3: Pick-pack-ship process

In the thickly competitive world of digital commerce, customers expect you to fulfill the correct order quickly or they will shift to any of the thousand other options available at their disposal.

To prevent this from happening, you need to ideate to deploy an efficient pick-pack-ship process for your warehouse.

An order management system can route your order to the warehouse nearest to the customer’s location in case you own multiple warehouses.

Picking Process

While deciding on the picking process workflow, you should always consider the daily order volume and then pick a method.

There are 3 types of picking methods that you can consider:

1. Single Order Picking: The items of each order are separately picked and placed at the packing table one by one.

2. Batch Picking: You assign specific batch orders to the picker that are on the packing table and need dispatching.

3. Zone Picking: Each picker gets allotted to a zone in the warehouse and the items continue to add in the order while passing through each zone.

Packing Process

Once the order items are at the packing table, the warehouse team packs the products in their respective boxes. Make sure that you pack the right items and use appropriate packing material to ensure product safety during transit.

Shipping Process

Once you have accurately picked and packed the orders, you simply ship the products.

Before shipping your orders, ensure that you have completed the following steps:

1. Print out shipping invoice and labels
2. Mark the order as shipped

Step 4: Order Delivery Status

It is now a standard practice to send customers shipping confirmation messages, and share order tracking status with them.  

Step 5: Managing returns and refunds (if any)

The best-case scenario is always when there are no order returns and customers are satisfied with your product. However, the chances of getting returns are always there for a business of any size and stature, and how you deal with it makes all the difference in your brand perception.

Ensure that you have a customer-friendly return policy that is easily located on your website and well-understood by your customer. Also, ensure that you ship the refund amount or send the replaced product as quickly as possible.

Your order management system should be able to process all the return orders seamlessly and help your team identify return reasons and rectify issues to avoid returns in the future.

What can an Order Management System (OMS) do for your eCommerce business? Real-life Examples

Increases order-fulfillment rate

As we mentioned earlier, fulfilling customer orders in the shortest possible time is what sets you apart from the competition. Order Management Systems automate the order fulfillment process for you and helps you process orders faster,  thereby increasing your order fulfillment rate.

Once the order is placed, the OMS automatically routes it to the warehouse that is closest to the customer’s location in case of a multi-warehouse setup. It streamlines your picking and packing process by enabling the warehouse team to process orders in bulk. Once the pick and pack process is complete, it will also automatically assign the carrier partners for your orders.

An order management system will also enable you to smoothly manage inventory across multiple channels, send you alerts whenever your stock is low, and help you plan optimal inventory purchase decisions. This again will help you prevent delays in shipping and extra marketplace fees.

Example

EasyEcom streamlined order management for Beardo by providing them a one-stop solution to seamlessly manage their inventory, orders, shipment tracking, and warehouse management.

The system enabled Beardo to track inventory movement on a real-time basis, and automated order routing by assigning orders to carrier partners that helped streamline their overall eCommerce operations across warehouses.

Prevents Manual Errors

Since the system automates most of the routine tasks involved in order fulfillment, you can drastically cut down on human errors. This, in turn, helps cut down the cost incurred in rectifying errors and doesn’t delay the fulfillment process.

Also, no one wants to delay the order-fulfillment process for the following obvious reasons:

1. It leaves a negative brand perception in customers’ minds, and you can lose out on potential future sales.
2. eCommerce marketplaces can charge you an extra fee in case the order is not shipped in the stipulated time frame.

Example

Rust Orange got onboard with EasyEcom to combat their order management issues that delayed their fulfillment process.

The system synced their inventory across all channels, and drastically reduced their pick-pack errors, manual labor requirement, and any overselling situation.  

Scalability

With the evolving eCommerce market, the means of selling have also expanded. Omnichannel sellers can list their products on third-party marketplaces like Amazon, their D2C website, and social media channels.

Unlike a manual entry system, an OMS can smoothly adapt to a growing business and can help you process more orders daily as your business grows.

Benefits you derive from these are:

1. Process more orders smoothly
2. Track order shipments in real-time
3. Easily manage your inventory,  plan optimal purchase decisions to avoid over-stocking and under-stocking

Example

As MamaEarth’s business started scaling, it became difficult for them to manage large volumes of orders and inventory. The delay in the order fulfillment process led to an increase in order cancellations and huge shipping costs.

To combat these issues and many more, the brand integrated their backend systems with EasyEcom. This helped them improve their inventory visibility, process high volume orders smoothly, automate shipment management, reduce shipping costs, and improve inventory forecasting.

Multi-channel Order Processing

An order management system can help you track multi-channel orders and inventory movement from a single panel. This is one of the key advantages that an OMS offers to omnichannel sellers. It can help you smoothly process orders incoming from all channels without segregating inventory for each channel.

Example

MCaffeine streamlined their multi-channel order management process by integrating the sales channels they list with EasyEcom.

This helped them optimize their order return management, identify the most profitable and least profitable products across channels, avoid extra marketplace deductions, and manage unsettled orders across channels.

Choosing the Right Order Management System (OMS) for your business

The right OMS for your business is the one that best fits your business requirement and helps you scale your business smoothly.

Here is a quick list of basic features that you should look for in an OMS:

1. Integrations with marketplace channels, storefronts, ERP tools:

Your OMS should have integrations with all marketplace channels where you list your products, with your storefront like Shopify, BigCommerce, etc, and the ERP platform that your business uses.

This will help you sync all your data on a single platform, and thereby improve operations efficiency.

2. Inventory forecasting and purchase order management:

For any eCommerce seller, it is imperative to have adequate inventory available to fulfill customer orders. Your OMS software should have a strong inventory forecasting system that helps you in inventory purchase planning. Besides this, it should also streamline your Purchase Order Management.

3. Access to the entire team: Your business has separate departments for Operations Management, Sales Management, Purchase Management, etc. These departments require information about their field of work. Hence, your OMS
4. B2B and B2C eCommerce Order Management: Your OMS should be well equipped to manage the needs of both your B2B and B2C orders.
5. Customer Support: Reliable customer support is a key requirement for selecting an OMS. This will ensure that you have a smooth onboarding process and that your queries are handled in the least time duration possible.

If you are an eCommerce seller, manufacturer, wholesaler, distributor, or someone interested in online order management, drop us a line at care@easyecom.io to schedule a demo or talk to our solution experts.