In the eCommerce industry, the future belongs to those who have the least order fulfillment lead time. It’s a truth that almost all online retailers are aware of, in fact, many have already started providing next day delivery with help of a order management system for eCommerce that can be automated like Amazon does for its Prime members.
“According to research done by Voxware , 69% of consumers are less likely to shop with a retailer in the future if a purchase is not delivered within 2 days of the date promised.”
You might ask, “ The facts and all are ok but how can I speed up my order fulfillment process?” Well, the answer to that is not a one-liner solution because the Order fulfillment process is like a machine, and for it to be ultra-efficient, all the parts (right from accepting the order, checking and packaging to delivering it) of the machine should run flawlessly with consuming as little time and energy they can.
Order fulfillment process largely depends on how you manage your orders and now, with almost every eCommerce industry being multi-channel or omnichannel, the importance of efficaciously handling orders and shipping has risen along with its tediousness.
So, what to do now? How to manage your orders efficiently?
Well, you can manage your orders irrespective of the quantity with the help of an Order Management System for eCommerce (OMS).
What is an Order Management System For eCommerce?
A Software that automates and smoothens the order processing for eCommerce retailers by constantly updating inventory, storing vendor information, customer information, managing returns, and keeping a database of bills, payments, order processing records and general information.
Order management software for eCommerce can be arguably called the central part of the entire order fulfillment process. The software can be integrated with other software to make the entire order fulfillment cycle quick and smooth or you can buy one software like Orderhive that encompasses all the softwares to manage your business effectively.
Of course, you are now curious about how an Order Management System works? Read on –
How Does an Order Management System For eCommerce Work?
The order management software is linked to all the online outlets thus allowing you to manage the orders from different channels. The software immediately notifies you about the new orders and also segregates them to the orders that need confirmation( because the payment is pending) and the automatically confirmed orders for the shipment processing (if the payment is done online).
For example, let’s take the Orderhive Order management system for eCommerce to get a closer look at the process.
This is a kanban view, you can change the view from the drop-down to a list or a grid view of the tool.
The entire tool is divided into four sections.
- To Confirm
All the products that are ordered by customers from all the online channels of an eCommerce company are listed here for confirmation. The unpaid orders, backorders and other specialized orders that need confirmation before moving forward are displayed along with the amount, customer name, date and warehouse name.
- To Ship
Once confirmed, the products are moved to this section to start the shipping process. The prepaid orders are automatically transferred to this part where the tool helps you to create a pick list, create an invoice, shipping labels and print the manifest. You can also re-check the order value, payment status, shipping address and the type of shipping you want to provide. The tool also helps you to put a tag if the product is delicate or corrosive or dangerous and requires special care while handling.
You can also partially ship the order according to consumer’s demands or inventory availability, choose the delivery partner after comparing the prices of different delivery partners. By clicking on the More, a blue-colored tab below on the right you can create a PO at this stage (for backorders).
After completing all the formalities, the shipping partner collects all the products and takes them for delivery. In simple words, the products that are shipped are shifted to this section.
After this stage, you can track your shipped products with a shipment tool.
The orders that are handed over to the customers, reflect in this section for you to make sure that all the products in the shipped section have moved to the Completed part.
The drop-downs that you can see above in the image –
Stores, Countries, Tags, Status, Date, Services, Carriers, Invoice and Due Date allow you to sort your products on the basis of different stores, countries, special tags, order statuses, order dates, type of services, invoices, and due dates so that you can check and manage the orders if you want to prioritize certain batch of orders from a certain online channel.
Order management software for eCommerce is the bridge between inventory and the online POSes, and not just that it is also a bridge between you and your customer and if you manage your order management properly you can create a beautiful relation with your customer that will thrive on the basis of trust.
To know more about the Automated order management system for ecommerce in detail, click here to watch the exclusive video in which Tatiana James, an online business owner, Amazon FBA expert and popular influencer shows how you can manage orders and your inventory with the help of automated inventory management software.
What are the Benefits of Order Management System for eCommerce?
The benefits are quite visible from the above explanation of how the order management system works but let me highlight some important benefits of the software.
Decreases the Order Fulfillment Cost and Increase the Bottom Line
“Did you know that according to a survey, the average cost to fulfill an order is 70% of the average order value?”
This is quite a lot of money for a business and it should be brought down to increase – the bottom line because isn’t that the reason why we are looking for options to cut down on expenses?
An efficient order management system for eCommerce will not only handle all the orders with almost zero possibility of errors but also will reduce the latency issues and human effort.
Fewer errors mean less possibility of returns and losses due to damage or any such issues.
“An average order is considered to be handled 20 times or more and according to research, the average eCommerce package is now dropped 17 times”
With effective order management system for eCommerce integrated with fully automated Inventory management software, you can decrease these losses.
Real-Time Processing of Order
As mentioned before, the customers are more likely to buy from an eCommerce company that will promise immediate delivery. The order management system for eCommerce will allow you to manage orders perpetually hence keeping each and every stakeholder of the process informed and aware of the current situation.
This perpetual order processing system will assist you in making the most of the upcoming hike in online shopping by the customers.
Order Management System for eCommerce Allows you to Identify Order Process KPIs and Create Reports and Analytics
One of the prime benefits of an order processing system for eCommerce is that it assists in recognizing the KPIs of order processing which is crucial to plan your investment, marketing, and sales strategy by observing the customer behavior -right from the order placement to delivery or returns.
- KPIs that Automated Order Management System for eCommerce can Determine with its Automation are –
Per Day Order Rate – The total number of orders received in a day is a very critical parameter that should be measured to know the performance, and maintain optimum inventory levels.
Per Day Shipping Rate – The number of orders shipped per day is an important thing to gauge the efficiency of the shipping team. The higher the shipping rate the happier customers are. Ideally, a per-day shipping rate should be more than 95%
Per day SLA Breach rate – Service level agreement is the service promised by the business to the customer and mostly it is for order fulfillment time duration. The SLA breach means the failure to provide the services promised which is a huge turn down for a company’s image. The per-day SLA breach rate can be calculated by dividing the numbers of orders that breached the SLA by the total number of orders fulfilled.
For Amazon, 4% is the maximum SLA breach rate that is permitted and if the rate reaches 7-8% the account gets suspended and to get it unblocked one needs to show that they have changed their order processing flow.
Inventory Turnover Ratio – This would determine that the flow of products is smooth and you aren’t stuffing money in your overstuffed inventory. The inventory turnover ratio should be always high. The ideal Inventory Turnover ratio should be between 4-6.
Demand forecast accuracy – Reviewing how accurate were the demand forecasts by the sales team by comparing the orders received with the forecast done.
Per Day Risky Orders Rate – Nobody wants risky or fraudulent orders because it costs the company money, time and energy. However, you need to keep a track of these types of orders and make sure that per day risky order rates are at the lowest.
COD Orders Per Day – Knowing the number of COD orders per day you can track the pending payments and also you can plan strategies to motivate those customers to pay online at the time of order placement.
In Transit Cancelations – In transit cancellations can be frustrating and hence knowing the amount and the reason for in transit cancellations will allow you to improve the problematic areas in shipping and increase sales.
Warehouse Cancelations – Warehouse cancellations happen when the customer cancels the order after placing the order and before the order gets shipped, this can be due to delay in order processing and the customer being unhappy with SLA breach. Warehouse cancellations can be decreased by speeding up order processing with the use of an apt Automated order management system.
Customer Cancelations on Arrival – This is again concerning for an eCommerce portal and this signifies that either the shipment for order processing has gone wrong.
Fill Rate – A ratio of the number of orders that are filled completely as per customer requirements to the total number of orders shipped. The fill rate should be higher to make sure that customer cancellation on arrival and returns can be avoided. The fill rate should be above 95% to stay in the market and to be a leader it should be 98% or more because the market leaders have already achieved that.
Carrier Success Ratio – A ratio of the number of orders successfully delivered to the total number of orders shipped by a particular shipment partner.
Orders Completed Per Day – It’s important to know the number of orders delivered every day to introspect about the efficiency of the entire order fulfillment process. This number should be very close to the number of orders received per day.
Perfect Order Percentage – A perfect order is when you ship the correct order in the promised time duration, without any damage and accurate documentation. When these all criteria are achieved it’s called a perfect order. Perfect order percentage is derived by multiplying – % Orders on time X % Orders Shipped Complete X % Orders Shipped No Damage X % Orders with Correct Documentation 3% increase in perfect order percentage = 1% increase in profit margin
Orders Returned rate per day – Orders returned rate per day can be found by dividing the total number of orders returned every day by the total number of orders shipped. Currently, most of the eCommerce businesses have a return rate of around 30%-33% and it is always better to make sure it comes down.
Return Reasons – Reasons for the returns are very critical and one should always listen to the reasons why customers are returning an order. With the help of this, you can identify the issue that is repeating itself and needs attention.
Understanding why the customers are returning orders, avoiding those mistakes and ensuring that the order is packed and shipped in the manner that invites more business is also something that Identifying KPIs will help.
The software also caters reports and analytics to you with the help of which you can learn about the product performances across all channels.
Which product is leading? And which one needs to be promoted? Everything can be contemplated with the help of the reports and charts.
The reviews and analysis make it easier for you to forecast demand with the use of different techniques.
And since the automated order management system provides real-time updates it also empowers the supervisors to be able to identify if there is any fault in the system that needs urgent attention.
Perfect for Multi-Channel or Omnichannel eCommerce
Companies like Amazon and Apple are becoming omnichannel business giants and the reason behind it is that it would give them more flexibility to provide services in the way their consumer wants.
The centralized automated order management system collects data and orders from all the channels be it online or offline brick and mortar stores and displays them in one very simple, proactive and easy to use portal shown above in the picture of the Automated order management system for eCommerce of Orderhive. This spares you from shuffling through different softwares or excel spreadsheets and find each and every order.
Ofcourse you might ask – How will we come to know that which order has come from which platform or marketplace?
Now here the beauty of an automated order management system comes in to the picture. You can select the store names, country names, tags, transaction status(paid-not paid-partialy paid), date and etc. from the given drop downs and bifurcate the orders and select the orders specifically from your desired store, country, date and transaction status. Moreover, the automated system for order management will also help you prepare shipping labels, invoice generation and pick list for the products of different stores, marketplaces or POSes kept in a centralized inventory. This way, software will help you to manage your order fulfillment process in an omnichannel way and march forward to become an omnichannel ecommerce company.
In Orderhive, the order management system for eCommerce is linked with shipment software, inventory management software, returns management tool, purchase software, listing software and many other softwares that allow you to manage your entire retail business with the help of automation by just logging in to one portal.
Isn’t it something that an omnichannel or multichannel business wants?
To get a live demo and experience the positive change that will reflect on your profit and loss statements with the help of an automated order management software click here
Best for the Festive Season Sales – Black Friday & Cyber Monday
Whenever there is a festive season sale like Black Friday or Cyber Monday, its both a happy and tedious time for an eCommerce business owner because he/she gets overflowing orders(which is good) but at the same time there is a pressure of processing all the orders correctly and ship them accurately without causing inconvenience to the customers. It becomes really tough to keep the perfect order percentage high. Hence a dynamic automated order management system for ecommerce is the choice you should make when getting ready for sales like Black Friday.
To recapitulate, Automated Order Management System for eCommerce is the software that can’t be ignored if you want to keep up with the growing consumer needs. It’s time to believe in the fact that the automation has arrived and it isn’t the future anymore. The system helps you decrease the order fulfillment hassles and increase consumer satisfaction. What else do you want?
“Consumers are like that vulnerable partner who won’t think twice before dumping you once they find a better option. So, it’s better you satisfy them in the way they want i.e. with accurate and quick order processing.”