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Is Your Order Management Focus Leaving Customers Out in the Cold?

Posted on 9.18.2016

:: Enterprise Order Management is On Every Retailer’s Wish List This Year – and It’s Being Put to the Test as Retailers Head into the Holiday Shopping Season ::

By Shane Desrochers, Aptos

To meet today’s omnichannel shoppers’ expectations, retailers are doubling down on enterprise order management (EOM). A new report says a full 54 percent of retailers will have this capability this year with more to follow as investments in distributed order management systems and ship-from-store technologies continue to be a significant area of investment for retailers.

This is not surprising as traditional brick and mortar retailers make the move online, while other traditional e-commerce players have established a brick and mortar presence. Retail business models are fluid and morphing, yet many order management systems remain siloed presenting big barriers to providing the customer with the delivery/pick-up flexibility, options and speed they expect and demand.

To obtain a single view of the customer, inventory and the order to profitably manage all orders throughout their lifecycle, from initiation to fulfillment and back (RMAs), retailers are adopting EOM. For retailers with a physical and online presence, EOM is a critical capability to help retailers turn their brick and mortar store fleet into a competitive advantage. Having a single order management system that allows for shipping from the warehouse, pickup at store, or simply traditional store fulfillment is key to not only surviving, but thriving in the future.

The growing adoption of EOM is in part due to the fact that the role of order management has pivoted significantly. Rather than simply shuttling orders to legacy systems, such as warehouse management systems (WMS) and enterprise resource planning (ERP) systems, retailers must orchestrate order fulfillment scenarios that allow customers to receive items more quickly and wherever they choose. According to research from industry analyst firm Forrester, 25 percent of U.S. online adults feel that it’s “important” for a retailer to offer a “buy online, pick up in-store” (BOPIS) service, and 26 percent already have used the BOPIS fulfillment option. Today, 15 percent to 20 percent of retailers have some form of omnichannel fulfillment capability. And Forrester says it expects that number to double capabilities such as “buy online, ship to store” and “buy online, pick up in-store” in the next 12 months. 

While the importance of order management as the centerpiece of successful omnichannel retailing is being recognized, many solutions approach the order management equation through a purely operational lens. To date, retailers have invested millions into processes and technologies that are primarily focused on improving the efficiency of the order management lifecycle by optimizing inventory productivity.

With all this emphasis on getting inventory from point A to B efficiently, we could expect the industry would be flush with profits. But unfortunately, research indicates otherwise. Last year, we, along with EKN Research, investigated how much order management is costing retailers. The survey results were shocking. Despite significant efforts by many retailers to optimize profits throughout the order lifecycle, the research found that retailers spend, on average, 18 percent of online sales getting orders into the hands of shoppers. That 18 percent is in addition to the cost of goods, the cost of marketing, the cost to maintain and manage the website, etc. 

To compound the problem, while most retailers have tried (and largely failed) to make order management more profitable, they also haven’t always done right by the customer. That’s because while the priority to date for order management has been on getting inventory from point A to point B, many have overlooked the art and science of getting goods to point C – the customer. 

To evaluate retailers’ efforts to optimize the omnichannel order lifecycle experience, we commissioned a second study – this time with Retail Systems Research. And the results showed retailers’ use of order management to support the customer experience were equally lackluster:

Only 12 percent indicate that their omnichannel operations are differentiating, while 16 percent indicate their operations are inefficient or inconsistent, at best.

Only 54 percent of retailers said they had fully implemented tracking when fulfillment happens in a different location than demand.

Just 52 percent provide internal inventory visibility across sales channels.

Barely half (51 percent) offered online shoppers visibility to in-store inventory.

Somewhat shockingly, only 48 percent of retailers track customer satisfaction with store fulfillment processes.

Most surprisingly, only 48 percent had the ability to take, edit or view orders across multiple channels.

These struggles highlight several questions, chiefly: Given these tallies, how many shopping journeys end in disappointment?

Clearly given the need for retailers to serve an increasingly empowered consumer base through exceptional seamless customer experiences, inventory productivity can no longer be the sole focus in the order management equation. While retailers should do everything they can to manage costs and streamline supply networks, customer experience must also be a priority throughout the order management lifecycle. If not then we are just giving lip service to putting the customer first, and in the long run, profits won’t matter if we disappoint and alienate shoppers.

Placing profits ahead of the customer experience isn’t enough to retain shopper loyalty, and a course correction is now required for any retailer hoping to remain agile enough to keep pace with shifting customer demands. As a result, EOM requires a new approach where order management processes anticipate, adapt and align to shifting customer expectations, rather than supply-centric processes that are focused on optimal inventory productivity.

Putting the customer first in the order management equation to enable seamless customer experiences—no matter where, when or how your customers shop requires a singular commerce platform that integrates every part of the enterprise; this is table stakes.

For omnichannel retailers, this entails integrating order management to the point of sale (POS) and CRM solutions to create interconnected experiences. This will empower shoppers with personalized and integrated choices that are rich with the flexibility they expect. Additionally, this brings clarity to retailers by providing a 360-degree-view of their customers, completed orders and pending orders at every customer touch point – POS, e-commerce and the call center. Only with all this interconnectivity in place, can retailers maximize their chances of converting and keeping customers.

Once order management systems are aligned to support a customer-first focus, retailers can then develop strategies to optimize profits within the context of what best serves the customer. What’s more, they can shift their focus from integration to innovation in customer experience. Retailers will be able to conduct omnichannel shopping journey mapping and craft experiences that offer value to the customer. For example, a customer who realizes a sudden storm is headed to their final travel destination can order inclement weather gear online on the plane and have it delivered to their hotel. The possibilities to delight and win over the customer with highly relevant and personalized experiences are endless once the right systems and integration are in place. 

The current period of disruption in the retail sector offers tremendous opportunity, but the stakes are high. Without a doubt, the upcoming holiday season will accentuate retail customer experience leaders and laggards and all the omnichannel “oopses.” With Enterprise order management in place and in use to empower the customer, retailers will avoid leaving their customers out in the cold this holiday shopping season. 

Shane Desrochers is the vice president of digital commerce and retail analytics at Aptos, which empowers retailers to engage customers differently with personalized, efficient and seamless experiences, no matter when, where or how they shop.

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