The Power of Retail Order Management Systems
Tuesday, October 23, 2018

The Power of Retail Order Management Systems

Editor’s Note: This post was originally published in May 2014 and has been updated for freshness, accuracy, and comprehensiveness. 

Reflecting on how far we have come in retail order management systems (OMS), I came across an article written some time ago. The article is “The Power of Omni-channel” in Direct Marketing Magazine. It was written by Michael Turcsanyi. Michael was a founder and former members of the OrderDynamics team.

What interested me was that some concepts Michael discussed in his article still stand. For example, the idea that an order management solution is the linchpin to a seamless shopping experience. Despite the progress in retail order management systems, this remains the same.

Similarities

At the time, Forrester had just published “The State of the Canadian Online Retail – 2013.” At the time they called out that 29% of consumers could not order online from their desire retailer. Fortunately, that has changed. The Omni-1000 research shows that 82% of Canadian retailers have ecommerce. These figures are 89.4% for US, 93.5% for UK, and 89% for Australia.

However, the Omni-1000 research showed a new challenge for our times. That being the low adoption of omni-channel customer services among retailers. See the chart below for the respective countries:

  • Canada: 23.5%
  • US: 29.1%
  • Australia: 25.33%
  • Nordic: 57.5%
  • UK: 67.0%

Actually, in most countries, omni-channel retailers are a rarity

Outside Western Europe, omni-channel services are not widespread in retail. Actually, in most countries, omni-channel retailers are a rarity. It is odd given that ‘omni-channel’ is such a buzzword in the industry. Also odd are that many reports point to the increased sales results from omni-channel practices. Despite that, the strategy has still not caught on… yet. Good news is that the retail renaissance seems to be changing this trend.

An early look at the Omni-2000 research shows that an additional 10% of US retailers have started offering BOPIS. BOPIS being buy online pickup in-store. This being the clearest part of omni-channel retail. It is also known as click and collect.

What Does It Give Me?

What do retail order management systems do for a retailer? Michael pointed out these systems give retailers more business levers. First, it just doesn’t make sense to invest in the technology unless it is cloud-based. The days of on-premise systems are over. That was true years ago and is even more clear today. Second, every order management solution should include:

  • Real-time Inventory Visibility
  • Order Orchestration
  • Order Routing
  • Returns Management
  • Analytics & Advanced Functions

Third, retail order management systems are the hub of your retail system. They are the core part of unified commerce. Whether from a single platform or best-of-breed technology, the OMS is the center piece. It controls and displays accurate inventory, and connects to the entire retail tech stack. That includes the warehouse management system (WMS), point of sales (POS) system, ERP, PIM, and Ecommerce platform (ECP), and others.

Optimizing for Order Fulfillment Power of Retail Order Management - Picture of lights at night

Michael aptly pointed out that retail order management systems are more than just sub-systems. It goes past just having a module with light OMS functions. Retailers that just connect the WMS to the ECP to offer inventory visibility, are missing out. Even basic functions internally coded, miss the mark. A full retail order management system offers robust capabilities. They are scalable. They have functional depth. Most importantly they are flexible solutions.

Flexibility, lets retailers make changes to adjust to their needs. It lets retailers provide seamless customer experiences across buying channels. Nice words, but that basically means a shopper can shop any way they want. Be it online, in-store, on mobile, on Google Home (voice), or text, they are one customer to the retailer. This is the most important step toward satisfying customers. Let them buy, collect and pay for their goods any way they want.

But order fulfillment is one of the key deliverables of retail order management systems. An OMS is built to take multi-channel retail and to unify it into a single customer experience. They are built for order processing from any source. After that, the system routes the orders to the best location to fulfill it. The system takes a rules-based approach, to pick the best location for the sourcing, delivery or pickup.

Existing Retail Stack

Good Retail Order Management Systems are designed to adapt to existing retail technologiesBack to Michael’s article, there is one particularly important point. Michael stated that the “true value of a retail OMS is in its ability to immediately integrate with and work alongside legacy retail systems.” It allows “retailers to deliver a full and sophisticated omni-channel experience without having to replace multiple systems within an existing infrastructure.” That means you don’t just throw away your old systems.

In other words, good retail order management systems are designed to adapt to existing retail technologies. It does so to integrate them, creating a unified commerce stack. So, retailers don’t have to rip and replace their entire network. It does not require a full new network purchased from a single vendor. A good OMS is the central system that creates the unified commerce experience. In effect, it is the central management tool that processes omni-channel orders.

Rip & Replace Not Needed

Although the article was written a few years ago, its key points still stand. The principles have not changed. Omni-channel retail is still a challenge for most retailers. Yet it does not have to be. Many have been scared by the prospect of replacing their whole retail network.

Rest assured. That is not needed. Good retail order management systems help by using your existing tech. It unifies what you have, to provide the omni-channel experiences today’s shoppers expect.

Author:

Charles Dimov - Director Marketing OrderDynamicsCharles Dimov is the VP of Marketing at OrderDynamics. Charles has 23+ years experience in Marketing, Sales and Management across various IT and Technology businesses. Previous roles include Chief of Staff, Director Product Marketing, Director Sales and Category Management for ecommerce and channel goods. Charles has held roles in brand name firms like IBM, Ericsson, HP, ADP, and OrderDynamics.