The Role Order Management Plays in Scaling a Retail Business

July 3, 2023 - 12 minutes read

All you need to know about order management

As a retail or eCommerce business owner, you no doubt understand the importance of running a well-oiled operational machine.

To keep your business profitable and primed for continual growth, handling your inventory with razor-sharp efficiency is absolutely essential. That’s where order management comes into play.

As a vital part of the inventory and stock handling process, taking measures to improve order management strategy will offer you endless business-boosting benefits.

To help you get ahead of the pack, let’s discuss the essential role of order management in a successful retail business and look at ways of improving your processes.

Ready? Let’s begin.

What is order management, exactly?

Before we dig any deeper, we’re going to answer the question, ‘what is order management?’

At its core, order management is the process of monitoring and controlling various aspects of your customers’ purchases as efficiently as possible. The order management process involves the whole lifecycle of an order, from procurement and purchase to fulfillment, delivery, and aftercare.

The aim of successful order management is to make the entire process as efficient, reliable, and profitable as possible. Order management plays a vital role in any successful retail business as it’s directly linked to the customer experience (CX). By offering a frictionless ordering experience and consistently delivering on your fulfillment promises, you will improve your brand reputation while inspiring loyalty—boosting your bottom line in the process.

Improving your order management strategy will also boost your retail business’s overall output while eliminating any financial inefficiencies related to your operational processes. In turn, your business will become more cohesive, more profitable, and experience accelerated commercial growth.

Why is investing in a solid order management strategy important?

Without a solid and streamlined order management strategy, it’s unlikely that your retail or eCommerce business will ever reach its true potential.

If you adopt laborious manual order management processes, you will always be overstretched as a business—you will also make frequent fulfillment mistakes that drain your budget and hinder your brand reputation.

Having a solid order management strategy empowers you to automate certain processes, allowing you to improve the way you distribute your resources while meeting your delivery promises, even during your busiest periods.

Taking charge of your order management strategy means that you can identify any inefficiencies and take targeted measures to tackle them head on. Armed with the right tools and processes, you will also ensure you’re delivering the very best experience to your customers, which is one of the cornerstones of retail success.

Essential parts of the order fulfillment chain

To understand just how important order management is to running a successful retail or eCommerce business, knowing the essential parts of the order fulfillment chain is vital. These are:

Order received: The order management process kicks off with a customer order. Once an order is placed, the fulfillment process begins. At this point, it’s also a good practice to send your customer a well-crafted confirmation email and order tracking options.
Picking and packing: With the order confirmation and tracking options sent, it’s now time to physically pick the order from the warehouse or stockroom swiftly and with accuracy. Once the order is picked, it must be packed securely.
Shipping: Your packed order must be labeled with the appropriate shipping information and handed to your in-house delivery operatives, third-party couriers, or a shipping partner.
Tracking: As mentioned earlier, offering your customers accessible order tracking options is critical for managing expectations and offering a brand-boosting customer experience (CX). In addition to giving your customers the option to check in with their order, being able to track the progress of your goods will also give you the tools to uncover any issues within your delivery chain and make improvements that will optimize your processes.
Delivery: This is the part of the process where you physically give your customer their order. Ensuring this is a positive exchange is key to your ongoing success.
Aftercare: This often overlooked phase of the operation is one of the most important as it will make you stand out from the crowd as a retailer. Checking in to ensure your customers are happy with their order will demonstrate your commitment to quality service while giving you an engaging outlet to gather essential feedback and reviews.

FYI: To ensure every single phase of your order management operation is a complete success, verifying that your inventory handling operations are razor-sharp is essential. Without ensuring the right stock is available and accessible at all times, your order management strategy will fall flat at the first hurdle. Our inventory management guide will help you keep on top of your stock management activities.

What are the benefits of improving your order management strategy?

By investing in your goods handling processes and working with the right platform—or order management system (OMS)—you will ensure your business thrives long into the future. Leveling up your order management strategy comes with its fair share of business-boosting benefits—and we’re going to look at them now.

Improved order processing scope

Did you know? 10am and 8pm are the two most popular times for online shoppers to place orders.

With the right order management strategy in place, you automate key parts of the process, giving you greater scope to acknowledge orders and management fulfillment expectations out of office hours. In turn, this will increase your order management capacity and boost your profits over time.

More accuracy. Fewer errors.

Not only do antiquated and labor intensive order management processes slow down organizational progress, they may also result in the kind of errors that damage your brand name while costing you money to resolve order management issues.

Working with the right OMS and adopting a strategic approach will help you sharpen every key aspect of your order management chain, ensuring razor-sharp accuracy while keeping any errors or operational misjudgements to a minimum.

Increased intelligence

Working with the best tools for the job will allow you to consolidate your most valuable order management data into one accessible dashboard. Doing so will give you the tools to uncover essential insights with ease, offering the intelligence you need to scale your retail business while improving your merchandising strategy.

Uncovering patterns and trends over specific timeframes will help you drill down into individual parts of your order management chain to capitalize on strengths or eliminate weaknesses. Knowing which items or inventory categories are selling the most will help you highlight the products that are likely to offer the best returns while boosting your customers’ average order value (AOV).

Read: Our practical guide on the art of upselling and cross-selling for tips on maximizing your customers’ average order value (AOV) and making your business more profitable.

Essential order management metrics you should track

Now that you’re up to speed with the importance and benefits of successful order management, let’s look at the metrics that will help you squeeze the most juice out of your operational data:

Cost per order: This handy order management metric will tell you how much, on average, it costs you to fulfill an order. Working with cost per order will help you eliminate inflated costs from your fulfillment processes while managing your profit margins effectively.
Shipping costs per order: This particular metric will give you an accurate overview of your average shipping costs. Drilling down into this metric frequently will help you tighten up your shipping strategies while regularly assessing the value of your fulfillment and delivery partners.
Order fill rate: This is a very telling order management metric as it will tell you how successful you are at fulfilling orders without having to order excess stock. The idea here is to make sure your inventory is always readily available when required, steadily improving your order fill rates over time.
Orders picked per hour: Working with orders picked per hour will give you a clear cut insight into the efficiency and productivity of your order management processes. Setting accurate order picking benchmarks will help you improve your processes consistently over time, ensuring you scale steadily in the process.

Final thoughts

Order management plays a critical role in any successful retail or eCommerce business. Walking the line between the logistic and the consumer-facing, solid order management will streamline the operational foundations or your business while shining your brand in its very best light.

With a controlled approach and solid inventory and order management software, you will accelerate your business’s success and ensure you continue to thrive in a cutthroat digital landscape.

We wish you the best of luck and for more insider advice, read our guide to the impact of ChatGPT on today’s retail industry and how you can use it to your advantage.