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5 Business Benefits of an Order Management System

Jun 27, 2024

The order management process is often handled in various systems including the ERP and the commerce platform. But there are good reasons for omnichannel businesses to consider a specialized Order Management System. Here are 5 benefits you can expect.

What is an Order Management System?

Order management is the process of filling, shipping or drop shipping, and tracking customer orders through physical stores and online sales. It is what keeps goods and orders organized, allowing processes to be efficient and easy for all involved. An Order Management System (OMS) helps companies organize and streamline inventory and order management across all sales channels, providing customers with a unified shopping experience. As such the OMS provides businesses with a centralized view of inventory, orders and fulfillment. With a growing number of sales channels and delivery options, as well as the increasing customer expectation for speed, the OMS plays a critical role in every omnichannel business’ success.

1. Improve Profitability by Preventing Over- and Underselling

Overselling and underselling can both undermine the success of your business. Overselling occurs when the inventory on your e-commerce site is not up to date with the actual stock levels in your warehouse resulting in customer orders being cancelled after the fact. In today’s connected world customers have little (or no) patience with inaccurate inventory information and will easily shop elsewhere if you cannot fulfil the order as promised. Overselling leads to customer dissatisfaction and will hurt your brand image. Plus, it will ruin your momentum when a product has been performing well.

On the other hand, underselling can tie up your capital and leave you with unnecessary stock. To offload this stock, you may have to take a loss through markdowns or sit on it for months. Either option will cut into your profitability and impede growth.

Fortunately, you can prevent both problems thanks to the real-time inventory visibility that you’ll get from a specialized Order Management System.

2. Boost Conversion Rates and Upsell

In today’s “now economy” it’s the customer who controls the marketplace, not the business. To serve the customer who wants something *now*, retailers require a single view of product availability. They need to know where products are, and how soon customers can receive (or collect) them. Otherwise, customers will shop elsewhere.

With a specialized Order Management System you can provide a real-time view of product availability – how many items are in stock for online orders, if it’s available to Click and Collect in the local store and when customers can except to receive the product if ordered today. This way, you’ll make the journey to the buy button smooth and easy for the customer browsing your site. An OMS can also help you grow the average order value by providing relevant and accessible product recommendations. As a customer browses, they see lots of related items on the product page. But all too often, these recommendations don’t factor in fulfillment.

With an OMS you can prioritize which upsell products to display based on which items are currently in stock at the same location as the main product. That way, if the customer adds an additional item to their cart, they can pick it up from the same store at the same time if they choose Click and Collect. Or you can avoid a split shipment if they choose home delivery.

3. Build Customer Loyalty

When inventory data is inaccurate customer experiences will suffer. So will your business. A lack of accurate inventory information can negatively influence virtually every point of engagement in the customer journey. These are just a few examples:

  • A customer sees your social or search ad, clicks and places an order, only to receive an order cancellation notice shortly after due to the product being out of stock.
  • On the product listing page in your e-commerce store the customer wants to filter on availability – when that is not possible, it takes too long to find the information and they leave the site frustrated.
  • The customer visits the product details page to find out where the product is available in store but when they get to the store, they find out the product is actually out of stock.
  • Your customer eagerly awaits their order, but it arrives later than expected which leaves your customer feeling disappointed and frustrated.
This customer frustration can be avoided with an OMS that helps you keep inventory information updated and available to provide better customer service. And as a result, build strong and long-lasting customer relationships.

4. Improve Order Fulfillment Efficiency

When a customer orders a product, they expect to receive their item quickly. They also want the ordering process to be simple. Implementing an OMS can help businesses offer multiple delivery options and make order fulfillment more convenient for customers.

Customers who live near a store might be able to Click and Collect an item on the same-day, or get it delivered the next day. They no longer have to wait several days for the item to ship from a distribution center.

The automated order routing offered by an OMS allows retailers to optimize the fulfillment process. Not only will products be delivered faster. Also, retailers can implement a sourcing strategy that allows them to maximize margins by using the most cost-effective fulfillment method. The sourcing logic in the OMS can steer orders towards the store closest to the customer or the distribution center with most inventory depending on your product strategy.

5. Handle Returns with Ease

Many retailers struggle with high volume of returns and inefficient return processes. According to Teamwork Commerce, $761 billion worth of sold products were returned to retailers in 2021. This is not projected to change. To keep up with demand, companies must find convenient and efficient ways to handle returns.

An order management system can make the return process easier for everyone involved – it can even offer customers multiple ways to return products. Some might prefer to return to a local store, drop off at an in-post locker, return via a local drop off center. The options are endless..

And the OMS can handle many aspects of the return process, from creating shipping labels to distributing tracking numbers to finding the most efficient carrier. It can also take note of restocks, which can help to keep inventory numbers more accurate.

Is implementing a specialized Order Management System on your agenda? Contact us to discuss your needs and we’ll help you find the best solution for your business.