What is Order Management: Meaning, Process, and Best Practices

12/23/2022

What is Order Management: Meaning, Process, and Best Practices

The COVID-19 Pandemic has changed the course of the eCommerce industry forever. 

As lockdowns became a new normal, businesses and consumers went increasingly digital, leading to a surge in eCommerce and accelerated digital transformation.

According to a source, online sales in Australia increased by 55% in December 2020 compared to the same period in the last year.

And the good news is that the eCommerce industry will continue to grow in the coming years as well.

So, if you’ve been planning to take your retail business online or launch a brand-new eCommerce brand in 2022, right now is the best time. 

However, launching an eCommerce store in 2022 is only half the battle. The other half, and the most important one, is ensuring every aspect of your eCommerce store runs smoothly.

Order management is one of the most important parts that ensure the smooth functioning of your eCommerce store.

Unfortunately, it’s also one of the most difficult parts to manage. 

This is mainly because the order fulfilment aspect of order management has become challenging due to the increased volume of transactions. 

Though eCommerce retailers from all around the world have started offering Click and Collect to combat this challenge. But that alone is not enough to manage orders smoothly in your eCommerce store.

So in this article, we’re going to dive deep into different aspects of eCommerce order management. 

What is eCommerce Order Management?

Ecommerce order management is the backend process of fulfilling eCommerce orders. It includes everything from order routing to order packing and returns management. 

In the past, eCommerce order management used to rely on obsolete processes and manually-updated excel spreadsheets. 

Unfortunately, these outdated processes cannot support the demands of modern consumers. This is the primary reason why eCommerce brands need to adopt scalable & flexible solutions to survive in the market and stay competitive. 

Put another way, eCommerce brands need technology that is flexible to scale for meeting the ever-changing demands of modern consumers. 

And this is where eCommerce order management comes to the rescue. 

Order management enables automation and allows integration throughout the entire order journey. This, in turn, helps eCommerce brands deliver a consistent experience through different channels. 

And that’s just one of the many benefits of eCommerce order management. The rest are shared right below!

4 Key Benefits of eCommerce Order Management

Benefits-of-eCommerce-Order-Management

In the age of ever-shifting demands of consumers, it’s impossible for eCommerce brands to survive (let alone grow) without an effective order management system in place.

On the bright side, eCommerce order management provides an abundance of growth opportunities to eCommerce brands. Here are the four major benefits you can expect when you incorporate an order management system.

Improves Inventory Accuracy

An eCommerce order management system that comes with in-built inventory management software can drastically improve the overall performance and efficiency of your warehouse. 

For starters, it can help to monitor inventory levels accurately matching the fluctuation in business demands. More importantly, such a system can easily anticipate stock levels based on key performance indicators. 

Faster Delivery & Fulfilment

After inventory management, the next important aspect of eCommerce order processing is the speed of the order fulfilment. 

As you might already know, the sooner you can deliver an order to the customer, the more satisfied they will be. And the more satisfied they are, the more often they will purchase from you.

Conversely, if you fail to deliver an order on time, it could drastically affect the bottom line of your eCommerce sales. As per loqate's recent report, 57% of consumers have admitted that they become reluctant to re-purchase from the same eCommerce brand once delivery is late. 

An eCommerce order management system can help to avoid such processing delays and ensure swift delivery of all orders. 

The order management system does this by choosing the closest warehouse whenever a new order comes in and sends an automated fulfilment request to the staff members of the selected warehouse. 

This way, the order can be prepared as soon as possible and delivered within the promised time period.

Enables Omnichannel Selling

The eCommerce order management system comes with reporting and analytics capabilities that ultimately help eCommerce brands to make informed decisions. This is especially critical because consumers nowadays expect a cohesive omnichannel experience from eCommerce brands. 

However, managing multiple channels can be labour-intensive and complicated. An eCommerce order management system can help you unify customers, inventories, suppliers, and sales channels into one system. This, in turn, can help omnichannel eCommerce brands to manage multiple channels much more easily. 

Improves Brand Loyalty and Trust

Your eCommerce business may struggle to keep up with the consumers’ demands and competition without a modern eCommerce order management system. 

The point here is that you don’t want your customers to associate your eCommerce brand with words like ‘Slow’, ‘Aged’, ‘Old-Fashioned’, and so on. 

With a modern & reliable order management system, your customers will surely notice the enhancement in the order fulfilment speed and overall customer experience, which will improve their brand loyalty and trust in your company.

Ecommerce Order Management Process

Ecommerce-Order-Management-Process-2

The purpose of an eCommerce order management process is to provide a great customer experience. This includes everything from order placement to delivery and managing returns as well as refunds. 

To elaborate, a total of seven steps are involved in an eCommerce order management process. 

As you can see, eCommerce order management consists of multiple complex steps. And just like every other chain, it only takes a single weak link to destroy the entire process. 

This warrants a thorough understanding and implementation of different stages of the order management process. Let’s learn more about them in-depth. 

Step 1 - Receiving an Order

For eCommerce brands, receiving orders is the most fun part of their business. But in order to get to that part, there are a whole lot of activities that need to be done behind the curtains.

  • Payment Processing - The payment process in your eCommerce website must be secure, smooth, and stable. So, make sure that you’ve incorporated the best payment processors that do all these, and on top of that, can be integrated seamlessly into your eCommerce order management system.
  • Highlighting Unique Orders - In any eCommerce business, some orders require special attention. Orders for which customers paid extra for shipping or made a request for special changes in product, and so on. These requests must be brought to your staff that handles the order so that they can ensure requested adjustments are made.
  • Merging Multi-channel Orders - Most eCommerce brands nowadays approach multiple sales channels to stay competitive in the marketplace. An eCommerce order management system can help to merge orders received from each sales channel automatically and eliminate busy work. 

All in all, the right order management system can create the much-needed bridge between your eCommerce website, inventory management software, and order fulfilment team that keeps everyone on the same page at all times.

Step 2 - Order Transmission

After the payment is processed, the next step is to transfer the order information along with payment confirmation to the warehouse or eCommerce order fulfilment partner. 

At this point, the order management system can help transmit the order & payment information smoothly. The in-built automated workflows update the order status in real-time and forward the order details to the fulfilment team along with essential information such as SKU, customer preferences, delivery address, and so on.

Step 3 - Picking the Order

Once an order is forwarded and the fulfilment process is initiated, it’s time for your warehouse staff to pick the order from the inventory. This process usually works like this:

  • A warehouse staff member receives a notification regarding the order
  • He or she then picks the SKU from the inventory
  • Lastly, he or she brings the product to a dedicated location to be packed

The automation feature within your eCommerce order management system will update the inventory levels, which is crucial to be up-to-date about stock levels. It informs you when to restock certain products when they are on backorder

Step 4 - Packing the Order

Once the items of an order are picked up from the inventory and brought to the packing station, the next step is to confirm that the order is correct and pack it.

If you sell products of multiple categories, you need to consider a few aspects such as the weight of the products, the fragility of the products, physical size, etc. for deciding the best packing materials. 

Remember, the packing station will differ greatly for baked treats, sporting goods, fashion items, etc. So, make sure you’ve built the right packing setup for the kind of products you sell.

Step 5 - Shipping the Order

After you’ve finished packing the order, all that’s left to do is ship it to the customer’s delivery address. 

Unfortunately, shipping the orders is not as simple as going to the post office and putting it in the red box. 

The warehouse staff needs to:

  • Choose a shipping option
  • Print out a shipping label of the order
  • Update the order as shipped in your order management system
  • Forward the order status information to the customer

Step 6 - Gather Customer Feedback

Once your carrier has picked up the order and delivered it to the customer, your job here is NOT done! It’s extremely important to follow up with the customer and gather feedback.

Customer feedback offers invaluable insights into which part of your order management process fell short. Based on these insights, you can make the necessary improvements, and further optimise the process. 

The easiest and best way to gather feedback from customers is with a customer satisfaction survey. 

The best part is, you can even automate this process within your eCommerce order management system. You can schedule the survey email to be sent after the customer has received the delivery of their order.

This will help to find out if the order was correct, the delivery was timely, and the customer is happy shopping from your eCommerce brand.

Step 7 - Scale

In any eCommerce business, the order management process needs to be evolved as the company scales. 

Take Amazon for example. Everyone knows Jeff Bezos started Amazon in his garage and scaled it to a trillion-dollar company. 

But would Amazon have scaled to this level by using the same order management process as they did back during the working out-of-a-garage days? 

It would be dumb to ask that, we know!

As for your eCommerce brand, it might take a while to reach such a level of scalability as Amazon. But one thing that’s for sure is you’ll definitely outgrow your warehouse.

This is, in fact, a common issue among countless eCommerce brands. For a quarter, you might need a warehouse the size of an automobile factory. But for the rest of the year, minimal shelving can easily get the job done. 

When you reach this stage, it wouldn't make sense to buy a permanent location or lease an expensive space. Instead, outsourcing the order management and fulfilment to a third-party logistics (3PL) provider makes better sense.

Outsourcing to a Third-Party Fulfilment Company

eCommerce fulfilment companies are experts when it comes to fulfilling and managing orders. These companies enable eCommerce brands to scale up and down as and when needed, and only pay for the space when they actually need it. 

The beauty of this arrangement is that eCommerce brands don’t have to revamp their entire order management process. Fulfilment companies’ software can be integrated into your existing order management system seamlessly. 

Moreover, you can always switch between fulfilment companies if you’re not satisfied with the one you chose at the beginning. Doing so is highly encouraged. 

Simply monitor the reliability of your order deliveries and make a note whenever an order gets damaged or lost. If such problems happen more than they should, just transition to another eCommerce order fulfilment provider.

Ecommerce Order Management Best Practices

Ecommerce-Order-Management-Best-Practices

Now that you have finally learned how to implement the eCommerce order management process, you’ll have to revisit it periodically and optimise it as your business grows.

But how do you keep the order management process in your eCommerce store intact as your business grows? 

Answer: by utilising industry best practices. 

The eCommerce order management process can be divided into three major categories:

  • Processing Orders
  • Order Fulfilment
  • Post-Sale Experience

Below, we’ve shared best practices for each.

Processing Orders

Order processing is the first part of the order management process you need to optimise by leveraging the industry best practices.

Ideally, you should start by allocating a centralised space for all your orders along with a single source of truth for tracking your inventory levels. This is especially important if you accept orders from multiple channels. 

Remember, how you process orders after they’re received and paid for largely depends on how you store your products. If you’re managing the order fulfilment in-house through a warehouse, you’ll be required to manually update the order status as they move throughout the order fulfilment process. 

On the other hand, if you’re using a 3PL service provider to take care of the order fulfilment process, make sure that they can be seamlessly integrated with your eCommerce platform.

Order Fulfilment

As we learned earlier, the eCommerce order fulfilment process can be split into the following three stages. 

Let’s discuss how to improve efficiency at each stage of the process.

Picking

Like it or not, most eCommerce brands that take care of the order fulfilment in-house would agree with the fact that the picking process often takes an ample amount of time & effort. 

Moreover, there are various methods when it comes to picking items from the inventory such as Single, Batch, Zone, etc. 

While technologies like voice-picking systems or time-tracking software can help to improve the efficiency of the picking process to a certain extent. But, there is no substitute for designing an organised warehouse.

Here are a couple of tips to keep in mind for warehouse organisation:

  • Place your best-seller items/products nearest to the packing & shipping stations
  • Place the items that are most often purchased together in the same area
  • Arrange your inventory from the hottest items to the coldest in your warehouse

Lastly, apply these rules of the organisation even if you’re shipping orders out of your garage. 

Packing

This stage of the order fulfilment process is where you can make a massive impact on the customer experience. 

Put it simply, the packing process is more than just tossing order items in a box and shipping it as quickly as possible. It’s also an opportunity to demonstrate that you care about your customers by ensuring that the right products are being shipped 100% of the time. 

Here are a few tips to get started:

  • Arrange the packing area as near to the shipping station as possible
  • Avoid cutting costs when choosing the packing materials
  • Use appropriate size of packing boxes for every order
  • Examine the product returns and find out if packing was the cause

Shipping

The last stage of the order fulfilment process is the shipping process. And while you do not have control over the actual delivery of the order as it is mostly handled by shipping carriers.

But, what you can control at this stage is ensure that the delivery address is correct and that the customer is aware that his or her order is on the way.

Once the order is finally delivered to the customer, the post-sale experience is the final step in the eCommerce order management process. 

Post-sale Experience

The post-sale experience is vitally important because it can help to increase the number of repeat customers, referrals, and ultimately the overall revenue of your eCommerce business. 

Here are the key best practices to improve the post-sale experience for your customers.

Post-Delivery Follow Up

Following up with customers after they’ve received their order delivery is an incredible way to build brand loyalty & enhance the post-sale experience. 

Here are the easiest and most effective ways to follow up with your customers after the sale:

    • Check-In - A quick follow-up email after the order has been delivered is a fantastic way to connect with your customers, educate them about the product(s) they just purchased, and ask for their opinion on the same.
    • Surveys - Surveys help to touch base with customers and collect valuable information about their experience shopping from your brand. 
  • Sales/New Product Launches - Personalised updates about upcoming sales or new products is another surefire way to be on top of your customer's minds. Best yet, allow your loyal customers a chance to buy the new products before everyone else.
  • Special Occasions - Sending personalised follow-ups on special days like birthdays or anniversaries of their first purchase on your eCommerce store will also help to further elevate the overall post-sale experience.

Custom Packaging

Unboxing videos are all the rage right now on Youtube, Facebook, Tiktok, and other popular social platforms. In fact, a quick search for “unboxing” returns over 100 million search results on Google. 

The point is that anyone who is selling any kind of product online should consider implementing custom packaging in their branding strategy. 

The idea behind the unboxing experience is to build excitement throughout the unveiling process. And if you can nail that part in your eCommerce business, you’ll definitely create a positive post-sale experience which will help to yield repeat customers. 

Order Returns Management

Order returns are an inevitable part of the eCommerce business, so why not turn it into a positive experience? The best way to reinforce your commitment to your customers after a bad experience is by implementing a customer-focused return policy.

Here are the best practices to incorporate into your order returns policy:

  • Make it easy to find & understand
  • Make it quick and painless
  • Define clear conditions and expectations
  • Offer free return shipping
  • Provide options and refund alternatives

In a nutshell, aim to provide an overall positive post-sale experience that helps to stand apart from your competitors and it should be evident at every stage of the customer journey.

Summary

Having a proper eCommerce order management system and the process is no longer just an option but a necessity to stay competitive in the market. As an eCommerce brand, you must constantly evolve your order management process and make it more modern as well as personalised.

With the right eCommerce order management system, you will have a bird’s eye view of exactly what’s happening in your business, which will assist you in offering unmatched customer service, experience, and satisfaction through your world-class order and fulfilment process. 

Frequently Asked Questions (FAQs)

What is order management?

In layman's terms, order management is the process to manage the customer order from the time it’s placed until they receive the product. 

What is order management system?

Order management system is a software application that helps you manage and track customer orders throughout the order fulfilment cycle. An efficient order management system helps you manage orders coming in from multiple sales channels and facilitate automation within a single interface.

What is order fulfilment in supply chain management?

Order fulfilment in supply chain refers to the process of fulfilling an order once a customer purchases a product from your website. Once an order is placed, it’s passed on to the warehouse or fulfilment centre where it’s packed and shipped to the customer’s address. This entire process is called the order fulfilment process. 

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