Every eCommerce store owner loves to hear the word “order”. A customer making an order from their store means two things: first, the customer is happy with what the shop offers, and has had a good user experience so far. And secondly, the store is making money, and it’s probably doing well.
Of course, a single customer making a single order is easy to deal with, but what happens when thousands of customers from different locations decide to do the same?
How do you track them? Perhaps you grab a pen and a piece of paper and start writing names, products, and addresses?
That might sound like a joke, yet over 50% of retailers still use the pen-and-paper method at some point in their logistical process.
What is the modern alternative to that, though? Have you ever heard of an order management system?
Not to worry, we will explain.
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What Is an Order Management System?
An Order Management System (OMS) is a digital way of handling the lifecycle of online orders. Such a system tracks the entire order process from entry, through inventory management, and fulfillment to post-sale services.
What’s great about an OMS is that it gives almost real-time information about orders to both buyers and businesses. Now, let us talk in detail about what an order management system can do.
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7 Order Management System Benefits for eCommerce
- Lower Inventory Costs
- Quick and Accurate Order Processing
- Automate Time-Consuming Tasks
- Remove Paperwork from the Process
- Better Inventory Management
- Simple and Transparent Client Invoicing
- Data-Driven Decisions
1. Lower Inventory Costs
The first important benefit of using an online order management system is that it can greatly reduce the inventory costs associated with logistics, storage, and so on.
Since an OMS uses automated triggers, based on the selected delivery method, weight, and value of the package, the need for manual processing of orders is eliminated. This also means that the time spent on such tasks is cut down, if not completely eliminated entirely.
What is more, such software provides you with significant insights about your products, like which locations are best to store inventory, how to best handle certain items (fragile, flammable, etc.).
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2. Quick and Accurate Order Processing
Manual work done by humans always has a chance of producing errors and inaccuracies, not to mention it is a lot slower than an automated system.
In practice, an order management system entirely removes the need for employees to monitor incoming orders. Instead, the system gives you real-time updates from the moment an order is placed, to the shipment.
On top of that, some systems are cloud-based, which means that you will not need big hosting capabilities to run it, and you can check the information from anywhere.
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3. Automate Time-Consuming Tasks
In the modern age, automation is really important, especially when it comes to tedious, time-consuming tasks.
So, to no one’s surprise, one of the biggest advantages of order management systems is that they do just that: they automate processes and ensure everything runs smoothly, and in as little time as possible.
For example, eCommerce sellers can completely rely on an OMS to accept payments, regardless of the currency or shipping destination.
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4. Remove Paperwork from the Process
You should not have tons of paperwork and stacks of receipts lying everywhere like it is 1965. In 2023, digital is the way to go, more so when it comes to managing eCommerce store orders.
You see, not only is paper taking up more of your time, it also takes up physical space as well. Not to mention, it is also not secure, at all. It can get lost, or wind up in the wrong hands, what is more, it is much harder to track, especially when you have huge volumes of orders.
On top of that, it is actually less expensive to use an order management system, instead of paper material, since paperwork requires not only paper, but also ink, printers, postage, and office space to contain the files.
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5. Better Inventory Management
Inventory management is always challenging for eCommerce businesses. Whether certain items are overstocked or hard to track, or quite simply, the warehouse is huge and hard to navigate, many businesses detest inventory management.
But there is a way to make the entire process more enjoyable, and efficient. Yes, we’re talking about order management systems.
An OMS can help:
- Track your inventory levels, and manage inventory through different channels.
- Locate the best selling items by channels or regions.
- Minimize excessive stock, while meeting customer demand.
- Highlight sales patterns, and forecast future sales trends.
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6. Simple and Transparent Client Invoicing
Client invoicing is an essential part of every online business. Yet, invoicing is typically quite time-consuming and not exactly exciting.
So, to avoid the risk of making mistakes, automate the administrative work, you can use an eCommerce order management system for your invoices. It will make the process much simpler and more transparent.
What is more, it will improve the efficiency of work, and reduce the risk of duplicate entries. Ultimately, it will be better for both your business and your clients.
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7. Data-Driven Decisions
Making data-driven decisions is always the best option for businesses. Decisions, based on information and data, can drastically reduce the chances of making errors, and help you provide a more consistent service to your customers.
Additionally, having a centralized view of your entire business from a single platform will help to adjust your sales and marketing strategy.
You can achieve all that by delving into your customer’s purchasing behavior, and planning ways to always have the necessary stock available in the right locations.
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What Are the Challenges of an Order Management System?
Naturally, nothing is perfect, and the same goes for order management systems. The key to using such a system successfully is to understand its problems, and overcome them.
Here are some of the biggest challenges you could face:
- Data gaps or inconsistencies. Even the best eCommerce order management system can deliver less than optimal results, especially when your business scales at a large level, and expands to multiple markets and numerous channels. The worst part is that data gaps and inconsistencies can lead to cancelled orders, inadequate order fulfillment, and ultimately a negative customer experience.
- Missing or unnecessary features. One of the most important aspects you should look at when choosing an order management system for your business is the features it comes with. It would be nice if the OMS offered everything you need in one place, since you would otherwise have to use additional tools or plugins. At the same time, you should check whether there are any unnecessary features that you don’t use or need, and that you are paying for. Ultimately, make sure the OMS offers exactly what you require – no more, no less.
- Issues with bulk or multi package orders. Bulk and multi package orders are essential to eCommerce businesses, whether they are B2B, or B2C. Yet, processing such orders is usually complex and requires special attention. The worst case scenario is when your order management system is not set up to handle the load. Meaning that your company has to now process everything manually.
- Poor integration with external tools. Speaking of external integration and tools, it is vital that your OMS supports them. As your company grows, it is inevitable that you will reach the point where you will need to use new channels and platforms and the features that they offer.
- Bad customer service and support. Sooner or later, you might need the assistance of the customer support of the OMS you are using. The worst thing ever is having to deal with incompetent support, which quite often worsens your problems, instead of resolving them.
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Over to You
An order management system is a very useful tool for every eCommerce business. It makes the entire process of handling orders much easier by automating the complex, and time-consuming parts of it.
However, before choosing the one that is right for you, you should also consider any potential limitations and/or challenges that might arise. Otherwise, you risk not utilizing the full potential of the system, and still end up doing a lot of the work manually.
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