Order Management and Processing: A Guide for Ecommerce Businesses

/ ecommerce / 16 min read
Jake Rheude

For customers, once they hit the “Buy Now” button the hard work is over. All they’ve got to do is sit back and wait for those Amazon leggings to arrive on their doorstep.

But if you’re an eCommerce business, that’s where the hard work truly begins. Each new order sets off a complex chain reaction—from accepting the payment through to picking, packing and finally shipping it to the right place.

When you’re a small business you might be able to handle this process with a legal pad, a few cardboard boxes and some postage stamps. But as your business grows you’ll need to start looking at dedicated tools to fulfil those orders rushing in.

With that in mind, in this guide Jake Rheude from Red Stag Fulfillment outlines the order management process and highlights a few of the best order management tools on the market.

What Is Order Management?

Order management is the term used to describe the set of processes a company uses to track, handle and fulfil an order from the time it’s made by a customer to when it’s safely delivered.

Nowadays, order management even goes beyond delivery as well. If you're a business that accepts returns, the process really only ends when your customer holds on to the product past the return window.

Effective order management is integral for every eCommerce business, regardless of size. Not only does it ensure you keep the revenue you generate, it helps with brand loyalty and customer retention.

The smallest mistakes—from processing delays to shipping errors—can cut profits through refunds and reshipping costs, and have long-term repercussions for your brand reputation.

Which is exactly why you need an order management system. They’re an all-in-one solution for managing the order process, and will help make sure your customers (and stock) remain fulfilled.

What Is An Order Management System?

Order management systems (OMS) are software tools that monitor and manage the customer order journey. They cover the process from start to finish and streamline workflows to make stock management and fulfilment as smooth as possible.

To put it simply, OMS tools organize and automate processes so you can keep track of your merchandise, monitor the delivery process and guarantee customers get the right order in the right condition.

Say you’re running an online bakery and a client places an order for cupcakes. The OMS would check payment was successful, send the order to the warehouse, track the cupcakes through being picked, packed and shipped, and finally make sure the cupcakes were delivered satisfactorily.

Most OMS tools also record any customer service actions that occur along the way, such as notifying customers of a delay or having to perform returns or exchanges.

They also collect important metrics about success and efficiency, so your business can see what’s working and define potential areas for improvement.

Why Order Management Is Important

The last thing you want to do is add new processes to your business just for the sake of it. But order management is far from a luxury. It's a necessity—for businesses of every shape and size.  

Here are a few of the major problems the right OMS can solve for your business:

Keep accurate stock levels. Both over-and under-stocking causes problems. Overstock and you're spending money on products you might never sell, while if you're under-stocked you risk losing customers to competitors who can offer what they want immediately. An OMS makes sure you've got the right amount of stock at the right time, keeping your profits stable and your customers satisfied.

Cut down on fulfilment mistakes.In theory the fulfilment process is simple, especially when you're a small business. But as you grow you'll have orders coming in from around the world across several sales channels. By using the automations and streamlined workflows an OMS allows you, you can worry less, while achieving more.

Collect useful data. An OMS gives you the power to see all your sales and order data in one place, making it easier to glean useful insights into the process and make changes to your business based on cold, hard numbers. Real-time data collection also makes it easier to spot issues as they occur.

Save time. How many times have you had to deal with a customer enquiry about shipping? A delayed shipment? A problem with a product SKU? A refund? By using an OMS you can look after all of this with automation and free up time to concentrate on other parts of your business.

The Order Management Process

There are seven main steps to the order management process. Check out the image below explaining the main steps that usually occur when a client makes an order.

As you can see it’s a complex chain involving multiple processes and stakeholders. And just like any chain, it only takes a single weak link to make the whole thing fall apart. Let’s take a more detailed look at the order lifecycle below.

1. Receiving an order

The first step is the most fun part: someone visits your website and decides to buy something. But before you start spending that sweet, sweet cash, there are a whole bunch of things that need to happen behind the scenes.

Payment processing. Your payment process needs to be secure, frictionless and reliable. It’s important to choose the right payment processor that does all this, while linking up nicely with your OMS of choice.

Highlighting unique orders. Some orders require special attention. Maybe a customer paid for express shipping, or made a request about changes to the product. These need to be brought to the attention to the team looking after the order so they can make the requisite adjustments.

Merging multichannel orders. Most businesses have an omnichannel sales approach across mobile, desktop, brick and mortar and social media. Rather than using spreadsheets and manually managing these orders, an OMS can automate this process to get rid of busywork and eliminate errors.

The right OMS tool looks after all these crucial processes and more. They create a bridge between your inventory management, your eCommerce platform and your fulfilment team that keeps everyone up to date.

2. Order transmission

After the customer has placed an order and the payment has been processed, both the order and customer information is transmitted to your warehouse or fulfilment partner.

An order management system uses automated workflows to look after this. It could update the order status and send the order through to your fulfilment team with all the necessary details like SKU and customer preferences.

Automations like this are where these tools really shine. They help you cut down on manual processes and make the order lifecycle smooth and efficient, especially for online orders.

For example, say you have multiple fulfilment partners across the country. An OMS could automatically send your orders through to the fulfilment centre closest to the customer to reduce shipping costs and allow you to offer faster delivery.

3. Picking the order

So a product is bought and the order fulfilment process is underway. Now it’s time for a process that can’t quite be automated, unless you’re planning on using robots to look after your stock (looking at you Amazon.)

It’s time for a team member in the warehouse—or you in your garage depending on the size of your business—to actually pick the order out of existing stock.

The process usually works something like this:

  1. A team member receives the purchase order
  2. Picks the appropriate SKU from inventory
  3. Brings the products to a separate location to be packed.

It’s recommended that you use an inventory management tool that has support for barcode scanning. This helps track products from sourcing through to packing and is designed to eliminate human error as much as possible.

The automation within your OMS will also update your inventory levels throughout this process. This kind of real-time inventory visibility is crucial so you know where stock levels are at, if any products are on backorder and when to restock.

4. Packing the order

Once they have the item the picker brings the order to the packing station. As a general rule, it’s up to another team member to confirm the order is correct and then pack it so it’s ready to be shipped.

If you have a dedicated packing station there are a few things to consider, like the fragility of your products, the weight of your order and the physical size of the box when selecting packaging materials.

For example, the kind of packing station you need for sending out baked treats will differ greatly from a fashion retailer or a sporting goods store. Make sure you have the right setup to avoid any nasty surprises for customers opening their orders.

Note: carriers use the size to calculate dimensional weight (DIM). They then charge based on the higher value of either true weight, or DIM weight.

5. Shipping the order

You’ve made it. Your product has been purchased, picked and packed up in a neat package. All that’s left to do is ship it. Though it’s not as simple as waltzing down to the post office and tossing it in the big red box.

The warehouse/packing team has to:

  1. Select a shipping option
  2. Print out a shipping label for each customer order
  3. Mark the order as shipped in your OMS
  4. Communicate order status with customer (most OMS’ do this for you)

Try to shop around among fulfilment partners to find the best shipping rates for your orders. Fulfilment centres work with multiple carriers and will be able to estimate the costs and delivery times based on the type of products you sell.

6. Order delivery

This is where the carrier picks up the order and delivers it right to the customer’s doorstep. This is out of your hands, so it’s important you’ve done everything in your power to control the rest of the process.

Keep in mind that you aren’t stuck with a single carrier just because you chose one. Track the reliability of your deliveries, as well as any time products are damaged or even lost. If problems occur too often, you might want to check out other options.

7. Internal and external follow-up

The product is delivered. The customer has received it. But you don’t just wash your hands of the process—you need to follow up with your customers and employees to make improvements and further optimise the process.

You can’t go wrong with a customer satisfaction survey. You can automate this with a quick email after delivery is confirmed. It’s an easy and fast way to check that the order was correct, the delivery was timely and make sure customers are happy with their purchase.

Simple interactions like this nurture customer relationships and foster loyalty. Just make sure you’re ready to take on feedback and fix any genuine issues that people identify.

Once you’ve touched base with customers you can look at your metrics and analyze the data to improve the internal processes. Are there problems to solve with label creation? Order pickup? Delivery?

Do your best to constantly look across your order management ecosystem. No one is ever perfect. So keep an open mind and you’ll be able to create a smooth process for your employees and customers.

Order Fulfilment As You Scale

Of course this process is going to evolve as you scale. Jeff Bezos started Amazon in his garage and turned it into a multi-billion dollar company. He’s not still using the same order management process. That would be, well, insane.

You might not ever reach Amazon’s scale, but you might outgrow your warehouse. This is an issue we see often. It’s common for a business’s inventory to evolve and for business’ to be impeded by a lack of space.

We also often see companies that face seasonal demand. For six months they might need a space the size of an aeroplane hangar, but may only require minimal shelving the rest of the year.

When you reach this inflection point don’t despair. There's no need to lock yourself in to an expensive lease, or buy a permanent location—you can outsource the order management process to a third-party fulfilment company.

Outsourcing to third-parties

These companies are experts in the order process. They give eCommerce brands the flexibility to scale up or down as needed, allowing them to match inventory to demand and only pay for the space they need when they need it.

The beauty is you don’t need to revamp your whole process. Third-party fulfilment companies can integrate natively with your OMS and eCommerce platforms on the backend to make things as smooth as butter.

They can also customise the support to your needs and help you avoid the hidden fulfilment costs that tend to occur as you scale. If you choose to go this route, just make sure your fulfilment partner has experience with supply chains like yours.

For example, Red Stag Fulfillment specialises in working with companies that sell large, bulky items. Their expertise allows them to safely ship things like furniture and outdoor recreational equipment.

They can even negotiate lower carrier rates thanks to the volume of items they ship. So while their experience and contacts make them a great partner if you sell lawn chairs, it might not be the right fit if you’re selling iPhone cases.

How To Choose The Right Order Management Software?

Your goal is to find an order management system that makes the order process as smooth as possible. It’s not about the sales orders you have now—it’s about setting up systems to put your business in good stead sustained growth.

OMS tools are deceptively important. They’re not just a way to get things shipped to people. They’re a key pillar of a smooth customer experience and an important part of increasing your company’s profitability.

Whatever tool you choose, make sure that it:

Fits your sales channels. You want an OMS that can handle orders from each channel you use to sell products. Traditional retailers might also need to use a tool that covers point of sale (POS) orders too.

Can reach your customers. Not every tool is designed for international shipping. Verify that the platform you choose supports shipping to existing customers and markets you may target in the future.

Plays nicely with existing tools. The usefulness of your OMS relies on being able to integrate with your existing software stack. Take stock of your stack and make sure the software is compatible—especially ERPs and CRMs.

Is within your budget. There are a wide array of OMS solutions with pricing that differs dramatically. Determine your budget and see what you can get at that price point. Remember: costly software is also not necessarily better for your specific needs.

Addresses your pain points. Note any existing order management issues and choose a tool that offers a specific solution for it. For example, if you forget to email customers their tracking codes, look for a tool that automates that for you.

Suits your team. Don't forget the all-important consideration for any piece of software: will my team use it? Pick a tool that your team will actually want to use. It should fit existing workflows and streamline work instead of complicating it.

The Best Order Management System Platforms

Skubana

Skubana homepage screenshot

Pros
✅  Plenty of integrations
✅  Can handle a large number of orders
✅  Customisable via its API
✅  Advanced functionality

Cons
🔺 Integrations required for full functionality
🔺 Steep learning curve
🔺 More expensive than competitors

Skubana is an order and inventory management tool designed for high volume sellers. It emphasises automation and offers highly customizable solutions for everything from rate-shopping to order routing.

The ‘killer app’ here is the business intelligence solutions on offer that empower you to automate replenishment based on sales velocity, lead time and other factors.

ShipStation

ShipStation homepage screenshot

Pros
✅  Super affordable (especially when shipping >3,000 orders per month)
✅  Web-based portal with minimal tech requirements
✅  Excellent automations
✅  Good options for branded shipping

Cons
🔺 Questionable live chat support
🔺 Some bugs with integrations
🔺 Advanced features are relatively unintuitive

ShipStation is a multi-carrier shipping and inventory tool that has grown in leaps and bounds over the past decade. Core features include omnichannel order management and automation, access to discounted shipping rates, and a suite of branding tools.

You also get access to a variety of integrations and partner support completely free.  There are a variety of plans that support up to 10,000 orders per month, so most businesses will be able to find a suitable solution.

NetSuite

Netsuite homepage screenshot

Pros
✅  Expansive features cover business processes far beyond an OMS
✅  Can connect to nearly all sales channels including multiple POS systems
✅  Highly-customisable
✅  Unique features like fast SKU creation and SEO recommendations

Cons
🔺 Steep learning curve for non-developers
🔺 Pricing can scale quickly
🔺 Customisations are needed to get the full benefits

NetSuite from Oracle isn’t just an order management system. It’s a full Enterprise Resource Planning software that covers supply chain, manufacturing, services, finances and even human resources and customer relationship management.

As it’s so expansive, it’s best for large organisations needing a broad set of tools. It's the jack of all trades. If you’re a small-to-medium eCommerce business looking for a simple OMS system, there are options that are better suited to your needs.

Brightpearl

Brightpearl homepage screenshot

Pros
✅  Useful automations
✅  Easy to handle multiple sales channels
✅  Excellent customer service
✅  Robust order management and routing tools

Cons
🔺 Expensive
🔺 A complex system that requires dedicated training
🔺 Warehouse management requires a premium plan

Brightpearl is a Digital Operations Platform designed for omnichannel retailers and wholesalers. It’s generally seen as the go-to option for companies selling $1 million or more and working across multiple marketplaces.

The platform provides all the infrastructure you need to centralise and automate the post-purchase process for you and your companies. It looks after everything from inventory to supplier management and helps your business be as efficient as possible.

Quickbooks Commerce

Quickbooks Commerce homepage screenshot

Pros
✅  Useful mobile sales app
✅  A variety of advanced features
✅  Intelligence and analytics reporting
✅  Excellent articles and help centre

Cons
🔺 Highest plan ($799 monthly) tops out at 5,000 orders per month
🔺 Mixed reviews for its customer support
🔺 Inventory and automation tools can be difficult to handle

An inventory management app for small and mid-sized companies, Quickbooks Commerce (formerly TradeGecko) offers a robust platform for every part of your business. It helps you sell more, work smarter and take control.

Premium options support up to 5,000 per month and offer most features you would expect—though unfortunately Quickbooks Commerce lacks POS support, so it isn’t quite suitable for brick and mortar businesses.

Orderhive

Orderhive homepage screenshot

Pros
✅  Popular order processing and automations
✅  Integrations are effective and quick to setup
✅  Intuitive workflow migration
✅  Free trial doesn't require a credit card (plus a free plan for Shopify users)

Cons
🔺 Setup can reportedly take a while and may need ongoing troubleshooting
🔺 Searching and sorting issues with larger datasets
🔺 Automation tools have mixed success according to reviews

Orderhive uses automations to simplify every step of your workflow. It empowers businesses with a strong suite of eCommerce automations, inventory control and shipping management to cover the order process.

Beyond that, there are excellent analytics and reporting features that allow you to get useful insights into your business. They're generated in real-time too, giving you the luxury of making changes on the fly.

Veeqo

Veeqo homepage screenshot

Pros
✅  User-friendly with slick UI
✅  Sync across sales channels is easy
✅  Real-time stock management
✅  Large list of partners and mobile support

Cons
🔺 Amazon FBA comes with an extra cost for all plans
🔺 Customer support reviews are mixed
🔺 Reports of software lag

Veeqo has everything you need to run a smooth, paperless warehouse. Grow your business with one all-in-one eCommerce fulfilment platform that covers inventory, picking, shipping and reporting.

It might sound like many of the other OMSs on this list, but Veeqo is one of the big dogs in the industry. They are used by huge brands like Brewdog, Dove and Harry Potter (the brand, not the character) and offer a great suite of tools for businesses of any size.

Paperform

Paperform homepage

Pros
✅  Cost effective and flexible
✅  Easy to customise to your brand
✅  Excellent customer support
✅  3,000+ integrations
✅  Automatic invoicing and receipt generation

Cons
🔺 Not a dedicated OMS platform
🔺 Integrations required for some advanced functionality

Paperform is the easiest way to create a simple landing page to sell your product or service. It’s a blend of eCommerce platform and OMS in one— just customise your page to your brand, connect a payment account and start selling your products.

From the Dashboard you can look after all the usual OMS processes. Manage stock levels and SKUs, automate refunds, and send customised emails to your customers updating them on shipping. Need something else? Use one of the many integrations to connect with your favourite apps, automate processes and track every step.

Paperform won't be a solution for enterprise-scale businesses needing a dedicated OMS platform. But if you’re a small-to-medium company after a solution that isn't complicated, you can’t beat it.

Over To You

It goes without saying that when it comes to tools, eCommerce businesses have a lot of options. So where to begin?

We recommend taking a second to think about what you really need. What are your pain points? What could you improve? Consult with staff and employees and try not to make a hasty decision or pick the most expensive tool for the sake of it.

Remember: the goal is to find the right product for your business, whether that’s a dedicated order management system or something more flexible like Paperform.


About the author
Jake Rheude
Knoxwille, TN
Jake Rheude is the Director of Marketing for Red Stag Fulfillment, an ecommerce fulfillment warehouse that was born out of ecommerce. He has years of experience in ecommerce and business development.

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