Why do retailers need an advanced order management system?

Why do retailers need an advanced order management system?

Why do retailers need an advanced order management system?

The online shopping market has grown quite significantly in the past few years. According to a report by eMarketer, the Asian eCommerce market is estimated to reach US $ 1.8 trillion by end of 2018, accounting for 60 percent of global retail eCommerce market. While on one hand, the rise of omnichannel shoppers have created greater business opportunity for brands, on the other hand it has also led to the compelling need of an advanced order management system to cope with the demand and facilitation.
For a retailer, an order management system is not a small effort. It involves quite a lot of investment both in terms of finance and human resources. Generally, retailers use basic order management features incorporated in their online sales channels, which might run out of gas in case of aggravated order complexity or during sales period, when there is sudden spike in order. Hence, it becomes quite essential for retailers to understand the importance of an advanced order management system that can support the complexities of modern omni-channel retail environment.
Today’s retailers need to consider multiple fulfilment options to ensure smooth and efficient operation that prioritizes on customer satisfaction. Some of the questions or challenges that arises frequently are – What happens when the brand’s fulfilment team thinks that a product was available in the warehouse, only to realize that it is broken? Do they ship it from somewhere else or should the team wait for replenishment or do they cancel the order? The brand need to ensure that the order is fulfilled at any cost and communicate the delay in delivery well before the situation irates the customer.
Advanced order management solution allows brands to have the workflow and procedures in place to deal with any situation that may arise during the fulfillment or return of and order to enable a seamless experience.

What does an advanced order management system involve?
There are few pre-requisites of building an advanced order management system. This involves:
Real time updation of inventory Mismanaging an inventory can hamper the customer experience. An out of stock item being displayed as available might ruin the shopper’s brand experience leading to wrong order placements and refunds. Advance integration with the point of sale system, warehouse management system and the sales channels (including offline and online) can help brands manage inventory real-time enabling superior sales strategy.

Building best -in-class fulfillment strategy An advanced order management system has the capability to seamlessly integrate with the stock points (or points of fulfillment) making it easier for retailers to provide option such as pay online and pick up from stores, express delivery or same day delivery. However, in order to efficiently optimize fulfillment, the brand needs to have a single view of inventory across all stock points to enable a seamless and optimum fulfillment option.

Benefits of an advanced order management system
No longer can an order management system be considered as only an operational tool. The impact of an advanced order management system goes far beyond operational efficiency:
Increased inventory availability If the brand is not displaying inventory, customers can’t purchase it or even make a buying decision at least from that particular brand. This is something brands need to take into consideration, given the rising frequency of ‘out of stock’ situations. Retailers shouldn’t depend completely on the warehouse, rather they should utilize on what is lying in the store, for online customers.

Driving traffic in offline store What about a situation when the product is not available in the store, but the customer wants the flexibility to reserve and pickup in store. Should the brand offer this option? If they don’t, there is a high chance that they will lose traffic. Another factor that can drive foot traffic are returns. Offering returns in a store not only provides a retailer a chance to save the sale, but also provide with an opportunity to up-sell the customer. Perhaps, the customer who has just exchanged a pair of jeans, would like to buy a leather belt that goes well with it. These accessories are typically of higher margin than the jeans and therefore is a significant sales loss by not offering customer the choice to return to the store.

Chance to reduce markdowns Retailers typically have a silo-ed approach towards their eCommerce operation. This results in setting up separate facility to hold additional merchandise for online sales. Unfortunately, this leads to additional markdown as the product reaches the end of their life cycle. Subsequently, retailers resort to deep discounting on these products and also incur additional cost in shipping these items back to the distribution centers. An advanced order management system helps retailers to liquidate the merchandise earlier due to availability of multiple fulfillment options – store or warehouse.

Reduction in shipping cost Your brand just received an order from a Delhi customer for a next day delivery whereas your warehouse is located in the outskirts of Chennai. What do you do? Given the high shipping cost involved in two- day delivery, an advanced order management system, can help retailers save this cost by leveraging the store nearby to the customer. A smart retailer can take this one step further and ship standard ground from the store knowing that the delivery time will be the same given the proximity to the customer leading to further savings. An advance Order Management System can fully automate this process.

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Karishma Kiran
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