Order management takes on new importance as retailers fulfill orders from many locations.
Mark Brohan , Research Director
Order management once was rather routine, especially for an online-only retailer that held its own inventory. But it's quite different today. Many retail chains are fulfilling web orders from stores and letting shoppers pick up online orders in stores, and web retailers of all kinds are using outside logistics companies to deliver orders or rely on drop-shippers as a way of expanding online selection.
No wonder there was a lot of talk about order management at the 2013 Internet Retailer Conference & Exhibition.
"We had a lot of retailers at IRCE asking what's new about order management technology," says Dydacomp CEO Fred Lizza, a show attendee and exhibitor. "With retailers at all levels dealing with more sophisticated forms of inventory control and fulfilling orders from multiple locations, various merchants told us that having a better order management system is becoming a higher priority."
One indication of the interest in stronger order management systems is the number of IRCE exhibitors offering them. At IRCE, 123 Exhibit Hall vendors offered order management tools, or included order management modules in broader e-commerce systems; that's about 21% of the 588 companies exhibiting at the conference.
Many retailers who spoke at IRCE explained that an effective order management program needs to integrate with multiple systems, including online shopping carts, payment gateways, and fraud detectionÊand prevention applications. An up-to-date order management system also must store and track products and item availability across multiple geographic locations where merchants have fulfillment hubs, they said. No wonder there's a big variation in the price of software labeled "order management": Gartner Inc. says costs range from $2,000 for entry-level software to $50,000 and up.
At Ann Inc., a women's apparel retail chain whose brands include Ann Taylor and Loft, for example, the company at one point organized a meeting with some 30 people and came up with 17 ways to fulfill an order placed in one channel with inventory from another, said chief information officer Michelle Garvey in a session called "A roadmap for transitioning to a web powerhouse." That included shipping online orders from stores, reserving an item online for in-store pickup, and placing an order in one store for fulfillment by another store. Ann looked at the various scenarios before deciding to start with shipping online orders from stores, a program the retail chain introduced during the 2012 holiday shopping season.
But syncing up systems to ship online from a network of nearly 1,000 stores is not easy, Garvey said. "This is a wholesale culture change that requires just as much change in people as in systems," she said. To be sure, systems are important, she said, especially the ones that manage customer orders from all channels. "The order management system, which ties together our inventory, is the beating heart of the enterprise," Garvey added. "It takes a lot of technical focus, management attention, load testing and scaling to be successful."