What is an Order Management System (OMS) for eCommerce?

From a customer’s perspective, the ordering process seems pretty straightforward: select, pay, confirm, wait for delivery. Yet that seemingly simple click triggers a domino effect of tasks, checks, and movements that span multiple technologies and organizations.

What is eCommerce Order Management?

eCommerce order management is exactly what it sounds like – the process of managing, fulfilling, and shipping all orders completed on eCommerce channels, whether that’s through your own website or a third-party marketplace, such as Amazon.

The average order fulfillment process looks a little something like this:

1. 1. Order placement: The customer places an order on an eCommerce platform, and kicks off the order management process.
   2. Order confirmation: Once the order is place, an order confirmation is sent to the customer to acknowledge receipt of the order and should include important details such as items purchased, prices, order number, and expected delivery details.
   3. Order processing: The order is then processed internally by the company, and includes verifying payment, checking the availability of items purchased, and routing the order information to the nearest warehouse or fulfillment center.
   4. Order picking, packing, and shipping: The ordered items are picked and packed for shipping in the warehouse or fulfillment center, and a shipping label will be printed and attached to the packaging before it is dispatched from the facility.
   5. Order tracking: Once the order has left the warehouse or fulfillment center, the customer should be provided with a tracking number that allows them to monitor the shipment’s progress.
   6. Delivery: The package has arrived! A delivery confirmation should be sent to the customer.
   7. Returns Management: The order fulfillment process should also account for reverse logistics, including receiving the returned items, inspecting them for compliance with return policies, processing refunds or exchanges, and restocking items when appropriate.

This process can be complex for even a small business, and can quickly become overwhelming and unmanageable when you start to manage thousands of orders across multiple channels and distribution centers.

Traditionally, and still in many cases today, order management involves a combination of manual and automated processes designed to streamline operations from the point of sale to delivery to the customer.

In the early days of eCommerce, processes such as order entry, inventory checks, and communication with customers were all manually handled in spreadsheets or basic software and database solutions. These tools helped businesses to organize and visualize data, but still required a lot of manual input and lacked in-depth integrations with other systems.

So, the technology market responded – specialized Order Management Systems (OMS) emerged to offer more sophisticated features for handling complex order processes, including omnichannel selling, backorder management, and returns processing. 

What is an Order Management System (OMS)?

An Order Management System (OMS) is simply a platform that helps businesses manage this complex order process, from start to finish. 

Here’s a breakdown of core functionality for an OMS:

• Order entry and processing: An OMS provides a centralized platform for entering and processing orders from various channels, ensuring accuracy in capturing order details and customer information.
• Inventory management: An OMS should monitor stock levels across multiple locations in real-time and send alerts when stock levels are low, enabling businesses to forecast demand and manage their inventory efficiently.
• Warehouse management: Within the broader order fulfillment process, an OMS can offer insights into the most efficient ways to pick and pack orders.
• Shipping and logistics: An OMS tracks orders through the delivery process,often integrating with shipping carriers and logistics services to offer real-time tracking information to both the business and the customer.
• Customer service: An OMS enhances customer service by providing a complete view of an order’s status, history, and any issues that may arise, enabling support representatives to offer informed support and solutions to customers.
• Returns and exchanges management: The reverse logistics process should also be handled by your OMS, as it should update inventory levels, and ensure customer refunds or replacements are processed efficiently.
• Cross-channel integration: An OMS integrates with various sales channels, including eCommerce platforms, brick-and-mortar operations, and marketplaces, to provide a seamless shopping experience for customers and a unified view for the business.
• Analytics and reporting: An OMS should offer analytics and reporting capabilities, providing insights into sales trends, order volume, customer behavior, and operational efficiency.

How an OMS Can Improve Operations

An OMS provides a single location to centralize the entire order management process, which enables:

• Efficiency across order processing, fulfillment, and shipping: Automation and data centralization reduces manual intervention and speeds up the entire order-to-delivery cycle.
• Higher data accuracy: Data is the lifeblood of decision-making in today’s business environment; an OMS ensures that the data across sales channels and touchpoints is synchronized and updated in real-time, supporting better inventory management, forecasting, and planning to minimize stockouts or excess inventory.
• More scalability: As businesses grow, their order management requirements become more complex. An OMS provides the scalability needed to handle increasing order volumes without a corresponding increase in chaos or overhead costs, ensuring that businesses can grow without being hamstrung by their operational capacities.
• Expansion to new markets and geographies: Entering new markets or expanding geographically can be daunting due to the complexities involved in managing orders across different regions, but an OMS can simplify this process by managing orders from multiple markets in one system, enabling businesses to adapt their operations to local requirements and preferences.
• Enhanced supplier and vendor relationships: By providing real-time data on inventory levels, order statuses, and forecasts, an OMS can improve collaboration, leading to better relationships with vendors and suppliers.
• Better employee experience: The automation and efficiency provided by an OMS reduce the burden on employees, freeing them from repetitive and error-prone tasks which only improves productivity but also enhances overall work experience.
• Improved customer service: With faster order processing, accurate fulfillment, and timely shipping, customers receive their orders when expected, leading to higher satisfaction levels. Plus, the ability to provide accurate and timely information to customers about their orders enhances the overall experience.

PIM & OMS in the Ecosystem

A Product Information Management (PIM) system houses crucial information such as product descriptions, titles, specifications, images and pricing that the OMS relies on, and the OMS tends to hold important order information such as order status, tracking information, and inventory adjustments that the PIM may need, so it’s crucial to ensure these systems are integrated and communicating efficiently.  

Integrating a PIM system with an OMS ensures real-time data exchange, where the PIM provides up-to-date product information to the OMS for accurate order processing, while inventory levels and order status updates from the OMS keep product availability current across all sales channels. 

Plus, this integration facilitates more personalized shopping experiences, offering product recommendations tailored to individual customer preferences and purchase history. Overall, the integration of an OMS with a PIM not only optimizes operational efficiencies but also plays a crucial role in building and maintaining positive customer relationships through a superior shopping experience.

How to Choose the Right OMS For You

Choosing the right Order Management System (OMS) for your organization involves a thorough evaluation of your business needs, technical requirements, and growth plans. 

Here are key considerations to help you select the right OMS:

1. Understand your business needs

Order volume and complexity: Consider the volume of orders you process and the complexity of your order management needs, including multi-channel sales, international orders, and custom product configurations.

Customer experience goals: Identify the aspects of the customer experience you want to improve, such as delivery times, order accuracy, or return processes.

2. Evaluate the system capabilities

Integration with existing systems: Look for an OMS that can easily integrate with your existing eCommerce platform, CRM, PIM, and ERP systems to ensure seamless data flow and minimize disruptions.

Automation features: Check for automation capabilities that can streamline order processing, fulfillment, and returns, reducing manual errors and operational costs.

Inventory management and forecasting: Ensure the OMS offers robust inventory management features, including real-time inventory tracking across multiple locations and channels.

Analytics and reporting: Access to detailed analytics and reporting can help you make informed decisions about inventory management, sales strategies, and customer service improvements.

3. Consider the technical aspects

Cloud-based vs. on-premise: Decide whether a cloud-based OMS, which offers flexibility and lower upfront costs, or an on-premise solution, which may offer more control and customization, is right for your business.

User interface and ease of use: The system should be intuitive for your team to use, with minimal training required. A good user interface can improve efficiency and reduce errors.

Security and compliance: Ensure the OMS meets industry standards for data security and privacy, especially if you handle sensitive customer information.

4. Assess the vendor

Support and training: Evaluate the level of support and training the vendor provides, including the availability of resources, response times for support requests, and ongoing training opportunities.

Vendor reputation and reliability: Research the vendor’s reputation in the market. Look for reviews, case studies, and testimonials from businesses similar to yours.

Cost: Consider not only the initial cost but also the total cost of ownership, including any ongoing fees for support, updates, and additional features.

5. Plan for the future

Flexibility and customization: Choose an OMS that offers flexibility and customization options to adapt to future business needs, such as launching new products or entering new markets.

Innovation and updates: Consider whether the vendor regularly updates the software with new features and stays on top of industry trends to support your business’s growth over time.

OMS for eCommerce

Selecting the right OMS requires careful consideration of how the system will fit with your current operations and support your future goals. It’s beneficial to request demos, free trials, and to discuss your specific needs with vendors to ensure you find a solution that aligns with your organizational objectives and enhances your operational efficiency.

As the digital marketplace continues to evolve, the selection and integration of an OMS become crucial for businesses aiming to streamline their operations, enhance customer experiences, and scale in a competitive landscape. 

Ultimately, the success of eCommerce hinges not just on what the customer sees on the screen, but on the sophisticated, behind-the-scenes orchestration of technology, logistics, and strategy that transforms a simple click into a seamless delivery experience.