Improve your order management process for e-commerce success
The success of any e-commerce business rests on how well it manages and fulfils orders. When your customers are satisfied (or preferably, ecstatic), your business thrives, making you money and opening up growth opportunities. If your e-commerce order management isn’t up to scratch though, they won’t order from you again. Even worse, they’ll tell all their friends not to either. And the bottom line is: no orders, no business.
What is e-commerce order management?
E-commerce order management describes the process your business follows from the time a customer places an order online, right through to fulfilling that order and delivering the product to the customer. It’s by no means an isolated process as it touches on every aspect of your business along the way. When you have orders coming in from multiple sales channels, it gets even more complex.
In very simplified terms, the process includes the following steps:
Getting feedback from your customers, as well as handling any queries, complaints and returns, could also be considered as part of this process.
You might be able to deal with order management manually while your business is small. The bigger your business though, the more involved it gets and then automation becomes essential.
Why is e-commerce order management so important?
Order management involves many different processes and departments. If it’s not extremely well managed, the risk of things going wrong is very high. Just for starters:
- Orders can get lost and never be fulfilled, leaving customers waiting fruitlessly for their products.
- Incorrect items may be picked from the warehouse, creating frustration for customers and inaccuracy in your stock levels.
- Products can be damaged in transit due to inadequate packaging.
- Goods might be shipped to the wrong address.
All of these possibilities (and many more) result in unhappy customers and lost sales, both now and in the future, not to mention the damage to your business’s reputation.
Essentially, the goal of your order management process is to deliver the right products to the right place as fast, efficiently and cost-effectively as possible.
In a nutshell:
How to improve e-commerce order management
Order management requires co-ordination across many departments. E-commerce, accounting, inventory processing, shipping and delivery teams all need to work together to get the order to the customer.
These tips will help you improve your order management process:
1. Manage expectations upfront
When the customer knows beforehand what to expect and how the process works, they are more likely to make good choices and to be satisfied with the results. Clearly explaining policies and procedures on your website also helps them to feel safe, gaining their trust and building loyalty.
- Provide excellent product information, including images, descriptions and specs.
- Make sure stock availability is clearly and accurately displayed for each product.
- Explain shipping options, costs and time-frames in several places, including your home page, product pages and during checkout.
- Include links to the following policies:
- Terms and conditions: These tell the visitor what to expect from your business, as well as establishing boundaries around what they can and can’t do.
- Website disclaimer: This limits your liability for how your website and its content are used.
- Shipping policy: This explains exactly how your shipping works, along with costs, times and any restrictions.
- Refund and returns policy: This clearly and simply lays out what they can do if they aren’t happy with their purchase. It also explains any restrictions and special conditions, for example, if they used a gift voucher or coupon.
If you process credit card or EFT payments online, you are required to adhere to certain consumer protection laws. Make sure you understand what’s required as these may affect your business processes. It’s worth consulting a lawyer to ensure you are in compliance. These laws include the:
- Electronic Communications and Transactions Act of 2002. This act takes preference over the Consumer Protection Act when selling goods online.
- Protection of Personal Information Act of 2013
- Value Added Tax (VAT) Act of 1991
- Regulation of Interception of Communication and Provision of Communication-Related Information Act (RICA) of 2003
2. Help customers place an order
If no-one is placing orders, you have no business. Customers order from you if they value what you have to offer, your business reputation is good and your website is easy to navigate. So if you’re not getting those orders, go back to basics to investigate what’s going wrong and then fix it.
- Keep an eye on your KPIs to make sure these numbers are growing:
- New customers
- Return customers
- Conversion rate
- Average revenue per customer
- Total transactions
- Total revenue
- Make sure everything about your site is creating a sense of safety and trust for your customers, for example:
- Your site is secure
- Products are categorised in a way that makes logical and intuitive sense
- Navigation is user-friendly
- Site search works very well
- Your About Us page helps customers feel a personal connection with you
- You regularly update your blog with content that adds value and builds credibility
- You provide social proof that other customers love your products and your brand
- The payment methods you offer suit your customer base
- Checkout is quick, easy and secure
- Make sure your payment processor is secure and reliable, and that customers know they can trust it.
3. Automate order processing
Once the order is placed, make sure you eliminate human error and delays wherever possible, and get the fulfilment cycle in motion as soon as possible. The sooner the customer gets their order, the happier they will be (and the more money you will make).
- Integrate your e-commerce system and your ERP so that all the necessary processes happen automatically, for example, orders are sent to the ERP, inventory is updated, the customer receives update emails, etc.
- If you have multiple sales channels, ensure they’re all integrated either to your e-commerce store or directly with your ERP. If possible, consolidate your orders from these different channels into one dashboard (some ERPs will allow this). You should be able to see the progress of all your orders in one place, whether they come in via phone, your website, Facebook Shop, Amazon, eBay, PriceCheck or any other channel.
- If you can integrate with your suppliers’ systems as well, that streamlines the process even further.
4. Keep a tight rein on your inventory
It’s impossible to fulfil orders if you run out of stock and/or don’t have cash available to buy more. A lot of capital is tied up in inventory and it can easily be lost due to bad practices and processes. Managing your inventory well is critical, right from when you place orders with your suppliers through to how you organise your warehouse.
- Consider implementing an inventory management system that helps you track stock through the supply chain process.
- Get really good at demand forecasting so you can plan ahead and communicate accordingly with your suppliers.
- Know the re-order point for each product so you know when to order more, taking lead times into account.
- Keep the correct amount of safety stock.
- Calculate the true costs of products, including hidden costs involved in ordering and storing them.
- Understand the cost implications of differences between your economic order quantity (EOQ) and your supplier’s minimum order quantity (MOQ).
- Check your inventory turnover rate (i.e. your ability to sell goods) against that of other companies in your industry.
- Have contingencies in place for when things don’t go according to plan.
5. Organise your warehouse for maximum efficiency
When your warehouse is well organised, you know exactly where everything is, products take up less space, they’re used in the right order (first in, first out), and you’re able to pick, pack and ship much faster. You save on time and cost, and your customers will be satisfied.
- Make sure your warehousing works for you. If you operate nationally and/or across several channels, you may need to store products at multiple warehouses so you can deliver more quickly to local areas.
- Select the right picking method for your business, for example, single order, batch, zone or wave picking. A paperless operation that uses barcodes and scanning will ensure the right products are picked.
- Include packing materials in your inventory and store them close at hand.
- Keep an eye on your warehouse KPIs, like order cycle time, picking accuracy, inventory accuracy and inventory carrying cost.
- Consider outsourcing your logistics to a third party provider (3PL) like Parcelninja. This allows you to save on warehousing and takes packing and shipping off your hands.
- If you do outsource, integrate your e-commerce store and your marketplaces with your 3PL.
6. Concentrate on speed and accuracy during picking and packing
If you deliver a product that is incorrect or damaged to a customer, you damage your reputation too and it’s unlikely that customer will come back. Make sure everyone gets what they ordered, and it arrives intact, by putting the right picking and packing processes in place in your warehouse.
- Double check the order is correct as it’s packed.
- Make sure special instructions are clear, for example, if an order requires fast delivery.
- Consider implementing an integration like SmartFreight, which automatically generates labels and waybills as part of the picking and packing process.
- Go above and beyond, for example, for orders above a certain amount, include a free gift, a discount on their next order or a hand-written letter. This creates a “wow moment”, increases personal connection with customers and builds trust and loyalty.
- Use the right box size for each product, taking shipping prices into account.
- Use the right packaging to protect each item. The most popular are:
- Regularly check picking and packing KPIs to make sure your processes are as efficient as they can be. For example, calculate the cost of packaging, cost per line item, average number of items picked per employee, total and average values of picks and any other labour costs.
7. Ship as quickly as possible and track the delivery
Regardless of the shipping option a customer chooses on your website, the faster you can get their order to them, the happier they will be.
- Ship as soon as possible after the order has been placed.
- Choose a shipping method and service that makes sense based on your products, location and cost.
- A SmartFreight integration helps you find the most competitive rates for shipping, schedules pick-up, tracks the delivery and much more.
- If you’re using order or inventory management software, the system will automatically update when an order is shipped. It will also notify the customer that their package is on the way, giving them shipping and tracking information.
- If you prefer not to manage the shipping process internally, it can also be outsourced to a third party.
- Monitor your shipping KPIs, for example, the number of items shipped vs the number that were scheduled for shipping. The more efficient your operational processes, the closer this gets to the ideal number of one. If it’s less than one, investigate the source of the problem, which may lie within the warehouse or elsewhere.
8. Communicate to your customer throughout the process
Keep customers informed every step of the way, from setting up an account and placing an order to shipping confirmation and expected arrival time.
- Automate communication to your customer by using marketing automation software. You can set up many different types of emails:
- A welcome email when they buy for the first time or subscribe to your newsletter
- Purchase confirmation that thanks them for their order and verifies it is being processed
- A post-purchase email that gives them added-value information, such as how to use or look after the product they bought
- Shipping confirmation that tells them their order is on the way
- Cancellation confirmation if they no longer want that product
- Refund confirmation if they have cancelled or returned an order
- A review request sent a specific length of time after their product has been delivered
- Personalise as much as you can by using the customer’s name and suggesting other products they might be interested in.
- Include useful info like contact information, links to social media for easy sharing and links to shipping policies or FAQ.
- If anything goes wrong, for example, shipping is delayed or a product is out of stock, immediately let the customer know in the most honest and positive way possible, before they have a chance to complain online.
9. Keep building the relationship after shipping
According to the Microsoft 2018 State of Customer Service Report, 90% of customers believe that organisations should give them the opportunity to provide feedback. Show your customer you care and build your relationship with them by being proactive.
- Follow up after the customer has received their order, giving them an opportunity to give you feedback or let you know by email if there is a problem. This pre-empts negative publicity and gives you a chance to fix any issues.
- Ask for a review. This type of social proof is extremely valuable. People trust online reviews and are more likely to buy from you if they can see that other customers are satisfied.
10. Use returns to differentiate yourself
Because of the way customers shop online, returns are becoming the norm, rather than the exception. Instead of thinking of them as lost profits, use them to build your relationship with the customer by making the process as easy as possible for them.
- Set up logistics for returns, including reverse shipping and the process for updating your system and either disposing of the item or returning it to inventory.
- Have a clear returns policy and process that is very accessible on your site. This encourages the customer to buy because they feel safe knowing they can return their order if there’s a problem. It also protects your business, so returns don’t become a drain on your profits.
- Explain any limitations up front, for example, if a product must be returned within a specific time frame or the customer needs to pay for return shipping. Decide for each case how closely you stick to your policy. Sometimes the goodwill you create makes it worthwhile to work around strict rules.
- Keep track of the main reasons for returns so you can fix any process problems as soon as you notice a pattern.
- Process refunds as soon as the return is agreed upon.
- Train your team on your order management process and how to effectively deal with issues, and empower them to make customers happy.
- Monitor the KPIs for your reverse logistics, especially the rate of return (number of units returned divided by total number of units sold). A high number indicates an issue either with your fulfilment processes or with your products, which you can then address with your supplier.
The bottom line…
Good order management ensures that customers receive what they ordered, in perfect condition and on time. For this to happen, every step of the process from initial order through to delivery and follow-up needs to be carefully managed and monitored. When it’s done well, the result is satisfied customers who can’t wait to buy from you again, automatically boosting your sales and helping your business to grow.